Gold is back — and it has a message for us – by Rana Foroohar (Financial Times – April 16, 2024)

The precious metal’s surge may herald a whole new world

It’s easy to mock gold bugs, but their moment may finally have come. The precious metal has been breaking out recently amid higher-than-expected inflation in the United States, and general anxiety over everything from geopolitics to the November presidential elections to where monetary policy and markets go from here.

All these things are predictable reasons for gold to surge. But there are deeper, longer-term messages in this rise that investors should pay very close attention to.

Let’s start with inflation. Whatever happens over the next few quarters, I’ve long thought that we were in for a period of higher-for-longer inflation. Aside from the possibility of a technology-driven productivity miracle, it’s hard to think of a macro trend at the moment that isn’t inflationary.

The economy is running hot — from fiscal stimulus in the U.S. to more supply chain redundancy as countries de-risk, to all the capital investment required for the clean energy transition and re-industrialization in rich countries. Even aging U.S. baby boomers are likely to be an inflationary force since they have health, time and plenty of money to spend.

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