the market NZZ/Mark Dittli interview of Louis-Vincent Gavekal/12-23-2022

“It sure looks like a good environment. For me, gold is a derivative on emerging markets. Most of the physical demand comes from India, China, Russia, the Middle East. People there buy gold partly because they don’t trust their financial system, partly for traditional reasons. So when people get richer in India or in China, gold goes up. If I’m right that the coming year should see a boom for emerging markets, then gold tends to ride along. Gold is a low beta way to play EM. You get the same trend, with less volatility.”

USAGOLD note: Gavekal is the widely followed founder of Hong Kong-based research group bearing his name. “I think we have seen peak hawkishness,” he says,” but we haven’t seen peak inflation. We don’t have a lot of modern examples of inflation in the industrialised world, and nobody who is still active in markets really remembers the Seventies”