SMM net: Midas Funds portfolio through Tomas Winmill said that in the long run, the growing fiscal imbalance will continue to support gold.
Huge debt levels have been a concern for the market in recent years, with US Treasuries totaling $27 trillion, or 143 per cent of GDP.
Winmill points out that it will be very difficult for the United States to cope with this financial situation.
Generally speaking, financial problems are solved by means of tax increases, growth, inflation and default. Of these methods, inflation is perhaps the simplest, in which case the hedge function of gold will be highlighted.
Gold will return above $2000 an ounce next year as investors seek inflation hedges, while prices will rise sharply over the next five years, Winmill said.
"if you want to preserve value, then gold has been a good choice throughout history."
Winmill points out that inflation will not return to the levels of the 1970s because interest rates are already so low that nothing needs to be done to significantly affect purchasing power. But 17 trillion dollars of bonds around the world are in negative interest rates, including inflationary pressures.
The gold market was weak in November, the worst month in four years, and the positive mood brought to the market by the vaccine news put gold under pressure as a safe haven.
Winmill said investors don't need to focus too much on gold's short-term performance. Despite the good news about vaccines, this is not enough to cope with today's growing debt, so gold remains bullish in the long run.
