The last pandemic (Spanish flu) as lethal—in fact, much more so than COVID-19—broke out over a century ago, erupting soon after the end of World War I. It is, arguably, the only pandemic we have for true comparison.
The spending on that war can probably be roughly equated to that spent on fighting COVID-19 and its variants. Inflation at the time surged to 18% in 1918, 14.6% in 1919 and 15.6% in 1920. While we don’t expect double digit inflation in this post-pandemic cycle, if inflation simply remains elevated for several years, the financial system will not be able to return to normal for an extended period. This could be shaping up to be an environment where gold and gold stocks are able to shine.
MVIS Global Junior Gold Miners Index
31/01/2021-31/01/2022
Source: MV Index Solutions. All values are rebased to 1,000. Data as of 31 January 2022.
About the Author:
Joe Foster has been Portfolio Manager for the VanEck International Investors Gold Fund since 1998 and the VanEck – Global Gold UCITS Fund since 2012. Mr. Foster, an acknowledged authority on gold, has over 10 years of dedicated experience in geology and mining including as a gold geologist in Nevada. He has appeared in The Wall Street Journal, Financial Times, Barron's, and on Reuters, CNBC and Bloomberg TV. Mr. Foster has also published articles in a number of mining journals, including Mining Engineering and Geological Society of Nevada.
The article above is an opinion of the author and does not necessarily reflect the opinion of MV Index Solutions or its affiliates.