Free Articles

Gold’s Year in Review, and Outlook 2022

Through the past year, gold has struggled somewhat as it continues to digest the strong gains of the past two years. Many wonder: has gold lost its golden touch? But remember, gold was $1,200 as recently as late 2018. It’s now almost 50% higher! That looks pretty good to me.

I don’t see an asset that’s struggling. Instead, I see an asset that’s consolidating and building strength before starting a new leg up.

I think that once the market sees the Fed is unable to raise rates meaningfully enough to actually dent inflation, gold will resume its bull market action. And given recent events, that time may not be far off.

Speaking of raising rates, it seems faster tapering may lead to earlier rate hikes. Overall, the Fed’s FOMC members are now expecting 3 rate hikes next year, another three in 2023, and two more in 2024. That’s a long way off. But let’s assume each hike is 0.25%. that would raise rates from the current zero level to 0.75% by the end of next year, and 1.5% by the end of 2023. With current inflation at 6%, real rates would still be -4.5%. I have my doubts the Fed will get even that far, as I think the market will call its bluff, and sell off well before. In all likeliness, the Fed will cave and either stop raising rates or may even backtrack and lower them once again.

So as we get closer to calling 2021 “last year”, look for gold to surprise on the upside. It’s coming. The only question is whether that time is sooner or later. Gold investors’ patience will be rewarded. And I think 2022 will bring that turning point.

Where could gold go? I think there’s a good chance we’ll see new record highs because the right ingredients are starting to fall into place. Last year’s all-time record was near $2,070. That is just 15% above $1,800. And as I write, we’re just below $1,800. As much as 2021 was a frustrating year for gold investors, gold is only down by 1.5% from its mid-December 2020 level of $1,827. Despite a lot of up and down over the past year, gold’s remained surprisingly stable, as contradictory as that might seem.

Consider too that, no matter what they say, central banks always want inflation. They may try to signal that they watch it closely, and won’t let it get too high, because they are supposed to be concerned about overall prices in the economy. But in fact, inflation suits them perfectly.

Remember, most developed countries are running huge deficits. The U.S. deficit this year is expected to run to $3 Trillion! Its official debt is nearly $30 trillion. That means in a single year the U.S. is adding 10% to a national debt that took over 200 years to accumulate. This is insane.

These are debts that can’t be repaid in the true sense of the word. Defaulting is not an option because it would crash the economy and shut the government out of credit markets. And the repercussions would be worldwide. Spending cuts and higher taxes would not be enough and would be extremely unpopular. That leaves inflating away the debt. And that’s accomplished by allowing inflation to run high while interest rates are purposely kept low. This way, governments might be able to repay debts in the future using highly devalued currencies.

There’s a term for this…It’s called financial repression, and it was used three times in the U.S. last century; during the Great Depression, immediately following World War II, and during the 1970s. defines financial repression as:

“…measures by which governments channel funds from the private sector to themselves as a form of debt reduction. The overall policy actions result in the government being able to borrow at extremely low interest rates, obtaining low-cost funding for government expenditures…These measures are repressive because they disadvantage savers and enrich the government.”

But there’s another factor that’s important to consider; the Velocity of Money. According to, the Velocity of Money is:

“…a measurement of the rate at which money is exchanged in an economy. It is the number of times that money moves from one entity to another. It also refers to how much a unit of currency is used in a given period of time. Simply put, it's the rate at which consumers and businesses in an economy collectively spend money.”

The next chart demonstrates money velocity has been falling dramatically since the late 1990s. Interestingly, this coincides with the big ramp-up in public debt since then. Remember, the more money in the system, the more transactions it takes to maintain the same velocity. And money velocity absolutely crashed during the pandemic lockdowns combined with massive stimulus money printing and debt expansion.

But as COVID-19 pandemic restrictions on business and leisure start to fade, money velocity should kick into high gear. The trigger is likely to be a releasing of pent-up demand. As the economy ‘reopens,’ people are eager to travel, renovate, go to concerts and sporting events, or just enjoy a restaurant meal.

Note the lows in the chart above. These were in 1933, at the depths of the Great Depression, and in 1946, after World War II.

Both times dramatic steps were taken by central planners to trigger inflation.

The annual In Gold We Trust report is an authoritative review on gold investing, written by Ronald-Peter Stöferle and Mark Valek of asset management firm Incrementum AG. It’s also considered an industry standard on gold, money and inflation. They stated in the 2021 report:

In 1933 and 1946, the velocity of money was similarly low, and in both cases the US government resorted to radical measures. In January 1934, it devalued the US dollar against gold by almost 70%, and in the period 1946–1951 it enforced financial repression in cooperation with the Federal Reserve, which capped interest rates at a low level. Both times, this massive intervention resulted in significantly higher inflation rates in the years that followed. Currently, the velocity of money is at even lower levels than in 1933 or 1946. We expect history to repeat itself and central banks to seek their salvation in financial repression.

Piling on record historical global debts and holding rates down at 5,000-year lows is likely to stoke inflation like we haven’t seen in a long time. And given the latest inflation numbers, it’s clear that it’s already started.

Recent Posts


Hi Gwen,

Thank you so much for this excellent Maven letter. Your market analysis and logic is again exceptional. Your insights, knowledge and feel have given me a wonderful couple of hours. I am now planning my activity. I look forward to seeing you tonight on the Virtual Metals forum, I am pleased that you start first as I am a morning not a night person.

I hope you and your family stay well.

Best Regards,


-CLB (May 14, 2020)

I appreciate the value of your experience and the information that you provide...there really is no one better. IMO

-TR (May 2022)