International Forecaster Weekly

Gold Could Hit $2,100 This Year - Plus 10 Major Risks to 2022

Gold could test new highs of $2,100 an ounce this year, according to David Lennox at Fat Prophets.

The U.S. dollar’s weakness and rising inflation are some factors that are likely to boost prices, according to the fund management company’s analyst.

Lennox says, “We…think across the course of 2022, we will see the gold price testing at the all-time record highs…”

Gold 2022

Guest Writer | January 8, 2022

By Dave Allen for Discount Gold & Silver

Gold could test new highs of $2,100 an ounce this year, according to David Lennox at Fat Prophets.

The U.S. dollar’s weakness and rising inflation are some factors that are likely to boost prices, according to the fund management company’s analyst.

Lennox says, “We…think across the course of 2022, we will see the gold price testing at the all-time record highs…”

Gold hit an all-time high of $2,063 in August 2020 and was trading at $1,806 at Wednesday’s close in the New York spot market — before settling back to $1,789 yesterday after investors cashed in on some profits.

Lennox said that everything seems to be in place for the U.S. dollar to decline this year, though it hasn’t happened yet. If and when it weakens, he believes it would be a “boon” for gold.

Meanwhile, annual inflation is over 6% — up from around 1% before the pandemic. 

Gold is seen as a hedge against inflation, and its price generally increases as the dollar declines, but how long after inflation has risen that gold rises has been inconsistent.

But Lennox adds, “We do believe that high momentum in inflation and that lower U.S. dollar is going to drive the gold price higher in 2022.”

Geopolitical tensions between major military powers could also drive-up gold prices earlier than expected, Lennox warned.

In particular, Russia’s military troop buildup near the Ukrainian border has ratcheted up tensions with the U.S., Germany and other NATO allies.

And an invasion, even a partial one, is seen as a tipping point “where it could quickly turn to something disastrous,” he said.

“If that happen[s], then we would see…gold…reacting quite significantly and our … $2,100 an ounce [target] would probably get here sooner rather than later.”

10 Risks for 2022

As promised in this week’s American Survival newsletter…..

The leadership of the Eurasia Group argue in their annual start-of-the-year outlook that “the lack of global leadership that characterizes” what they call “our ‘G-Zero World’ is clearer than ever.”

President Ian Bremmer and board chair Cliff Kupchan write on the one hand, “the inward turn of the two most powerful nations (the U.S. and China) lowers the odds of war.”

On the other hand, they add, “it also means less global leadership and coordination to respond to the world’s challenges.” Thus, “2022 will deepen the G-Zero.”

Here are ten major risks that Bremmer and Kupchan foresee will have a big impact on the qualities of life around the globe. 

Despite (or perhaps because of) their globalist perspectives, I believe their insights are worth taking note of in a growingly volatile world (passages in “quotes” come from Bremmer/Kupchan, except as noted).

  1. Covid Isn’t Going Away. Yes, like the throngs chanted about the torrential rains at Woodstock, so be it with the pandemic (“No-o-o Covid, no-o-o Covid, no-o-o Covid…”)

Yet, as Bremmer/Kupchan observe, “It’s not yet done with us. They believe that ultimately, China’s zero-Covid policy will fail; other attempts will, too.

Unfortunately, the initial success of China’s 0-C policy and President for Life Xi Jinping’s ownership of it makes it impossible to change course.”

  1. Technopolar World. Today, nation-states are facing a new form of competition — not as much from each other as from technology companies. 

These entities “exercise a form of sovereignty over an entirely new dimension of geopolitics: digital space.” 

“Key parts of people’s daily lives, and even some essential functions of the state, increasingly exist in the digital world.”

And a future is being shaped by tech companies and blockchain projects that are neither “good at [n]or interested in governance.” States’ attempts to halt this trend will fall flat on their face, and dystopia will get stronger.

  1. 2022 U.S. Midterm Elections. Opposition parties usually win in the midterms following the election of a first-time president.

Most pundits believe (Bremmer/Kupchan do, too) that Republicans will almost certainly take back majority control of the U.S. House and possibly the Senate as well. But neither is a foregone conclusion. 

“Public trust in American political elections will take yet another hit. But more important is what the midterms mean for the 2024 presidential election.”

  1. China. “U.S./China relations won’t reach crisis levels this year, and [economic and other] domestic conditions within China won’t…derail Xi’s bid for a historic third term.”

But set against an increasingly heavy-handed Zero-Covid policy, “the charged political atmosphere leading up to the 20th Party Congress will hang over the Chinese economy.”

  1. Russia. No love is lost between the U.S. and Russia whose relationship is on shaky grounds at best. 

What started with a below-the-media radar (but not satellites) buildup of Russian troops near Ukraine last year has been transformed into broad Russian demands to the U.S. and NATO to restructure the West’s security design. 

“That, combined with ongoing concerns about election interference and cyber operations, means that Russia is on the verge of precipitating an international crisis.”

  1. Iran. What’s Plan B for the U.S. if it can’t get Iran back to the negotiating table to rejoin the 2015 nuclear deal? 

“Iran’s economy will worsen under the weight of existing sanctions, but no single [action] by the U.S. will push it over the edge.” 

And Biden will be reluctant to intensify military pressure on Iran. Israel, however, has no such reluctance, and that’s what makes the 2022 escalation most dangerous. 

“Last year was a calm one for Iran. This year, as everybody pursues their own Plan B, will be anything but.”

  1. Turkey. “President Recep Tayyip Erdogan will drag Turkey’s economy and international standing to new lows in 2022 as he tries to reverse his plunging poll numbers ahead of elections [scheduled for next year]. 

“If economic conditions deteriorate faster, Erdogan could be forced into holding early elections this year,” worsening economic and geopolitical risks for a key NATO member. 

  1. Two Steps Greener, One Step Back. Look, please don’t kill the messenger. Most nations are talking about climate change and what to do about it.

As part of that, “It’s an especially disruptive time in the global transition from fossil fuels to renewables. The result will be both higher energy prices for consumers and a near-term policy collision with climate goals.”

  1. Empty Lands. Even under Biden, “the U.S. is no longer interested in playing the role of global police [officer]. And Beijing is not about to take Washington’s place.” 

Other nations that seek geopolitical stability — like the EU, the UK, and Japan —  will try to be more influential without necessarily filling the global power vacuum. 

            “Many countries and regions will suffer the consequences.”

  1. Corporations Losing the Culture Wars. Many of the world’s largest corporations earned record profits over the past few years. “But they’re going to have a more difficult year navigating politics.” 

“Both consumers and employees…will put new demands on multinationals and the governments that regulate them.” 

In turn, those companies “will have to spend more time and money navigating environmental, cultural, social, and political minefields.”

These risks — combined with a declining U.S. dollar, rising inflation and interest rates, struggling employment levels and other economic fundamentals — should make 2022 receptive to rising gold prices.