Welcome to Kitco News’ 2022 outlook series. The new year will be filled with uncertainty as the Federal Reserve looks to pivot and tighten its monetary policies. At the same time, the inflation threat continues to grow, which means real rates will remain in low to negative territory. Stay tuned to Kitco News to learn from the experts on how to navigate turbulent financial markets in 2022.
(Kitco News) - State Street Global Advisors Head of Gold Strategy George Milling-Stanley kicked off his recent interview by saying “I think that we’re going to see better performance than we’ve seen in 2021. I think, to put 2021 in perspective, it’s important to remember that gold was coming off two banner years. The price went up 18% in 2019. It went up another 24% in 2020.”. George Milling-Stanley framed his case for a bull market in 2022.
When talking about the ETF GLD Miling-Stanley said “We’ve lost about $10 billion to redemptions from GLD in 2021 so far, but that comes after a year in 2020 when we were up $15 billion. So we’re still running pretty well if you take the two years as an average.”
The reason why Milling-Stanley is bullish on the yellow metal is that “As far as where investors see the gold in their portfolios, I think most people are still seeing it– they still believe that gold is offering them some protection against the unexpected, whether the unexpected is macroeconomic or geopolitical. There’s still plenty of potential for the unexpected to keep cropping up. We haven’t seen, perhaps, as much in 2021 as we did in the previous couple of years, which was one of the reasons why gold was a little quiet this year, but I’m still expecting to see uncertainties, especially around equity markets.”
In comparison to other assets, Milling-Stanley noted “We’ve seen equity markets closing the year by hitting new highs almost every day. That’s wonderful news, but it’s also something that makes me wake up at night, worrying about how much longer that’s going to continue. If we’re going to see more uncertainty in equity markets and we’re going to see continued low-interest rates for the foreseeable future, there’s no suggestion that the Fed is going to be in a hurry to raise rates.”
When looking at inflation he said “I think it might. I think that you know, inflation is always– it has an autumn impact on the gold market. If inflation seems to be going up, then people naturally turn to an asset like gold that has some real value and that has, in the past, offered some protection against sustained high inflation. But we’ve only had high inflation for, what, five or six months. That is not, frankly, long enough, in my time frame, to call that sustained. I would look for at least 12 months, or even longer.”
Lastly in the interview with Yahoo, he noted “Now, if we continue to see inflation figures around the 5% or 6% per year that we’ve been looking at for the past few months, especially now that those in authority have decided that it is no longer right to call that transitory, so they’re looking for more longer-term inflation, then I think that gold is going to benefit from that. But there is always the fear that investors have that, if inflation is too high or rising too fast, either one or both together, then the Fed is likely to move rapidly.”