All that glitters…

Sources: Bloomberg and Wells Fargo Investment Institute. Weekly data from January 1, 2016 to September 30, 2021. TIPS = Treasury Inflation-Protected Securities. Yields represent past performance and fluctuate with market conditions. Current yields may be higher or lower than those quoted above. Past performance is no guarantee of future results. The commodities markets are considered speculative, carry substantial risks, and have experienced periods of extreme volatility. Investing in physical commodities, such as gold, exposes a portfolio to other risk considerations such as potentially severe price fluctuations over short periods of time and storage costs that exceed the custodial and/or brokerage costs associated with a portfolio’s other holdings.

Key Takeaways

  • Through 2019 and most of 2020, gold prices were driven higher by falling real interest rates and excessive global money printing.
  • Gold prices began stalling in August 2020, however, as real interest rates stopped falling.
  • We believe that gold prices will begin trending higher again in 2021 and 2022 as investors recognize that real interest rates should remain negative and as global money printing continues unabated.