The Next 30 Years for Gold
In May, the World Gold Council published a report titled “Gold 2048: The next 30 years for gold.” The publication starts with the George Magnus’s overview of global economic trends between now and 2048.
The first big trend will be the further growth of developing countries and the rise of the emerging-market middle class. In particular, China’s GDP growth will shift to global average levels, as its economy evolves and matures, while India has the potential to become the fastest-growing economy in the world over the next three decades.
The second trend will be demographics: the China’s age structure will deteriorate, while Africa will gain two billion people of the working age, more than the increase in the rest of the world combined.
The author also predicts more redistributive policies as a response to automation and expects periods of macroeconomic instability and geopolitical turmoil, as “a multilateral world order from which the US is retreating as a benign hegemon, and in which China, Russia, Iran and Turkey want to assert their presence, is a recipe for disorder.” His conclusions are as follows:
Add in rising geopolitical tensions, climate change and unwanted migration flows and the world could be a volatile place. In such an environment, gold may prove an effective investment for the coming decades
Fair enough. It’s true that gold should shine during periods of easy fiscal policy, macroeconomic instability and geopolitical crisis. However, the article looks more like a wish list, or a list of potential risks, than a true analysis. The article says nothing about timing, which is key in (precious metals) investing. And investors should remember that gold’s reaction to geopolitical events is limited.
The Investment Market in 2048
Rick Lacaille makes his own forecast. He believes that equities should continue to outperform, subject to market cycles, but returns may be lower. With lower returns and technology that facilitates access to more asset classes and strategies, Lacaille expects that alternative asset classes, including gold, will be more widely used. Well, it may sense that more people will have access to gold investment. Good news for the gold market, indeed.
