Inflation and commodities

Studies by Goldman Sachs show that commodities have the potential to serve as a hedge against inflation.

For an Independence Day feast this year, you had to fork out around five percent more than last year. If you compare this year’s prices with those of five years ago, the price increase is a massive 30 percent. This was calculated by the American Farm Bureau Federation. These price increases are now having an impact on commodities. As Goldman Sachs shows, an increase in inflation of one percent in the past has led to a real increase in returns of seven percentage points for commodities. This is because tangible assets such as silver, gold and oil hold up better than paper assets in times of rising prices.

Silver, gold and oil performed excellently in the first half of 2024. The price of silver rose by around 22% during this period. This is also the fourth year in which silver has been in deficit. The Silver Institute has also forecast a record high silver consumption of 1.2 billion ounces of silver for this year. That would be one percent more than last year. The main reason for this is the photovoltaic sector, which is booming. In addition, industrial applications of silver are increasing in many sectors. This year, the silver deficit could reach an estimated 215.3 million ounces. This should drive up the silver price.

Gold has also shone so far in terms of its price performance in 2024. High interest rates and a strong US dollar have had no impact on this development. There are many reasons for the strength of the gold price. Just think of the existing geopolitical crises, strong Asian demand, stability in consumer demand and the central banks‘ buying spree. Goldman Sachs predicts a gold price of USD 2,700 per ounce by the end of the year. Gold and silver company stocks should therefore not be missing from your portfolio.

In the silver sector, MAG Silver’s – participation in the producing Juanicipio mine in Mexico and other projects is convincing.

With gold, you could also think of a royalty company such as Gold Royalty -. The company is active in North and South America and has a good portfolio of streams and royalties in the gold sector.

Current company information and press releases from Gold Royalty (- -) and MAG Silver (- -).

In accordance with §34 WpHG I would like to point out that partners, authors and employees may hold shares in the respective companies addressed and thus a possible conflict of interest exists. No guarantee for the translation into English. Only the German version of this news is valid.

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Jörg Schulte
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