Leigh Goehring, managing partner of Rozencwajg Associates, an independent research institution in the United States, said that the era of inflation has arrived, and future price increases may become more intense, triggering a wave of gold purchases; in the next two years, oil prices may soar to $160.
Goering said that we have already experienced a year-on-year inflation of 5%. It’s safe to say that 5% inflation will continue over the next six to 12 months. Then we may see a black swan event, where prices rise sharply, like what happened in the 1970s.
It is impossible for governments around the world to recklessly print money as they did during the epidemic. Goering pointed out that the negative impact of inflation will begin to appear as early as next year.
Inflation expectations
Göring said that inflation and serious inflation psychology They all exist together. For example, the Arab oil embargo in 1973 caused oil prices to soar, which really prompted this inflationary psychology and expectations.
Currently, there is only inflation and no inflation expectations. However, this situation may start to change in 2022.
In the future, some events may occur in the world that trigger inflationary expectations. For example, oil prices could soar to $200 or global food prices could skyrocket due to weather problems.
No matter what, inflation will become a problem that everyone will face in the next ten years. Goering said that as we progress over the next 10 years, all those ideas that creating large amounts of money over the years are harmless will disappear.
Goering pointed out that rising oil prices may be a black swan event that triggers inflationary psychology. Several recent major events in the global oil industry will produce unexpected results.
Demand is strong
Two big things to watch out for in the oil sector are , OPEC members will gain more pricing power, while oil supply from non-OPEC countries will continue to slow.
Goering said that the biggest competitors of OPEC oil are non-OPEC oil countries. When non-OPEC supply slows, OPEC will gain more market share and pricing power. Iran, for example, is likely to take advantage of its newfound pricing influence.
Goering does not believe that electric cars will curb oil demand. He expects demand for oil to be stronger in the future and said that by the end of the fourth quarter of 2022, we will produce more than 100 million barrels of oil per day, which is already close to the historical peak. This means that even if OPEC is fully producing oil, total global oil demand may exceed total global oil production. If oil demand continues to expand, oil prices could surge again.
At the same time, he said that he would not be surprised if oil prices return to above $100 at some point in 2021. Oil prices could rise significantly by 2022, rising to between $120 and $160.
With the advent of inflation, investors have to seek safer assets. Gold has become their only choice because gold can protect against inflation. This will trigger a gold buying wave. Such events may occur in 2023-2025. </p
