By Joe Foster February 11, 2021

There has been a lot of talk in the press ofinflation since the democrats have taken control of Washington. We find thismisplaced, as there is a difference between reflation, which is stimulating theeconomy to get back to normal growth, and excessive inflation, which is a risein wages and prices.

U.S. Market Inflation Expectations (5Years Ahead)

Source: Bloomberg, VanEck. Data as of December 2020.


This chart shows that inflation expectationshave simply returned to normal levels of around two percent, where they havebeen for decades. It also shows how inflation expectations cratered with thedeflationary shocks of the financial crisis in 2008 and the COVID crisis in2020. In both crisis, inflation expectation rebounded to historic norms. Goldis not reacting to inflationary pressures because there is not yet any evidenceof excessive inflation.

MVIS Global Junior Gold Miners Index vs. Gold Price

01/31/2020-01/31/2021


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Source: MV Index Solutions GmbH. All values are rebased to 1000. Data as of 31 January 2021.

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.


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