I am I'm going to stick to my scenario which is we're entering a
period of very slow growth or no growth at all and that means lower
rates, that means a lower US currency to trigger the next phase of
expansion.
And for that to happen.
In the meantime, we'll have a higher price of gold.
The price of gold has Consolidated over the last three months because
of two things.
First?
Deceleration in inflation expectations.
I know everybody's talking about inflation and the last Epi was was
horrible, but the reality is that the markets are have been
anticipating lower inflation, down the road.
And
Whether we're talking about the to 5 or 10-year Horizon and at the
same time, the FED has kept the momentum of tightening, so higher
nominal rates and lower inflation expectations lead to higher real
interest rates.
And at the same time, the US dollar didn't help us and it did affect
the price of gold on the downside.
I think that the war in Ukraine was
Another element that really put some headwinds to Boulevard for gold.
What really happened?
Is that remember what the FED needed was already talking about
tapering?
The Fed was already talking about potentially after tapering
increasing interest rates.
So so gold once.
A path for a consolidation.
This was meant to happen.
The war in Ukraine.
Heightened be the risk of inflation higher, the risk of Supply chains,
high-end, the risk of demand dropping and this has just only
exacerbated what was what was really in the making.
So Ukraine has only exacerbated what what I think was our scenario
which
Was well despite despite they bring and despite the willingness to
increase rates.
The central bank's wouldn't be able to achieve that that, that
objective actually.
It's, this is exactly what happened.
So remember, I just mentioned a few minutes ago that we have reached
Peak inflation, we have reached Peak.
Nominal rates and we have reached the big US currency.
Let's let's get back to those three Matrix.
Yes, the first one pick inflation.
Why do we think that we have reached Peak inflation?
We have reached Peak inflation because we are heading towards maybe a
recession and we cannot qualify the severity of
Potential, very potential risk of recession.
And if it's up to recession, it might be stagflation.
And if it's not stagflation, it might be stagnation.
But the reality is that the numbers are showing it.
If you look at the statistics that are published by the FED of
Cleveland or the FED of Atlanta, or if you look at the break, even
Rates on 25 and 10 years.
The reality is those numbers are telling you that we have reached Peak
inflation, the expectations for inflation down the road from 2 to 5,
to 10 years are going down and have been going down since the month of
March.
So remember this inflation even though everybody's talking about
inflation, everybody is talking about hyperinflation everybody.
Stocking was talking about inflation on the good side.
And now everybody is talking about inflation on the services side.
And this whole thing makes it like it has become the main the main
danger for for the, the economy and the central banks that they have
to fight.
And this is another subject but the reality is that inflation has been
decelerating for the last three months.
Well, number one, okay, number one, number one, all right.
When when we enter the slow down on of an economy, demand slows down,
if demand comes down while you will definitely have less pressure on
prices and this is exactly what we have been observing and to validate
this point.
If you look at the first quarter, GDP that the US
Had to to to to to publish.
It was - - by more than one percent and if you look at what's going to
happen in the second quarter for the US economy, it's also going to
contract because the latest statistics show that most probably the
second quarter will be down another 1.5%.
This is again based on the latest statistics of the Federal Reserve or
thread clienti.
So,
we are we whether we are
Came to ration, it recession or not.
I'm not going to discuss this, but the reality is that, if we are in a
recession, we most probably have already to - quarters.
That's number one, if you have a recession,
you have less pressure on prices.
This is obvious and this is exactly what has been happening.
The markets have been telling us for the last three years that we are
entering a dangerous contraction in the economy and that will lead to
less pressure on prices and this is why the final point is, you will
have.
So not only we have reached the peak inflation but also we have
reached
Peak US dollar and I will get to that.
But in a recession, remember there has never been a recession with
higher nominal rates rates.
Normal rates, go down in a recession.
Nominal rates don't go up.
So that's why I'm saying Peak nominal rate.
That's why I'm saying Peak inflation and the logic of those two
companies.
pants is a lower currency because the only way the only way to help an
economy grow is to have a weaker currency today the United States and
I will let you ask me more questions a bit but today the United States
need a strong dollar to fight inflation but
The more that inflation risk is going to weaken.
The more treasury or are the fat will be inclined to allow the US
dollar to weaken again in order to get the economy back on its feet.
The main, the main risk for us today is the recession.
This is this is obviously something we have to deal with maybe maybe
or not.
It was orchestrated.
Can discuss it by the central banks.
But the fact is that central banks today have one enemy in mind and
its inflation, rightfully, or wrongfully.
This is not, this is not the subject but they have this enemy and and
they are fighting it by increasing rates and they are going to
continue increasing rates but
Or talking about fat found rates, were not talking about what the
markets are telling us.
And the markets are telling us is that the 3.8% nominal fed fund rate
for 2023 will not be achievable.
So is there, a will there be another Supply shock?
Maybe but but frankly don't you think that we've had all the major
nightmare scenarios that have already lined up against us?
So we just have stronger covid variant Island.
That's what we need is so for a newcomer area to come back.
You know what it's not because it's funny when you are at the bottom
of the of the whole you think that it you can go lower but actually
you cannot go lower.
That's the
Bottom and and this is, I think what we have, what we have reached, I
I'm I'm going to stick to my scenario which is we're entering a period
of very slow growth or no growth at all and that means lower rates,
that means a lower US currency to trigger the next phase of expansion.
And for that to happen.
In the meantime, we'll have a higher
Price of gold.