by Michael Maloney
August 3, 2011
A recent white paper released by the World Gold Council confirms to a large extent what we at WealthCycles.com have been saying all along—that in just about any imaginable economic scenario, gold stands to outperform all other assets.
The report, The Impact of Inflation and Deflation on the Case for Gold, prepared for the Council by Oxford Economics, differs from our own analysis primarily in degree—we don’t think it puts nearly enough emphasis on the “perfect storm” of global economic and monetary factors brewing on the not-so-distant horizon—conditions we believe are converging to produce the greatest wealth transfer in history.
The study examines gold and its past performance under certain conditions such as high oil prices, positive or negative real interest rates, the strength of the dollar, inflation or deflation. Based on the historic analysis of gold’s performance, the study creates formulas with which to forecast gold’s future performance. As WealthCycles.com did in its own article, The Road Ahead, the study then postulates how gold will do under four potential future scenarios. The only scenario under which, according to the study, gold does not shine is its “Baseline scenario”:
Steady economic recovery in major economies supported by strong emerging market growth
Easing of financial stress and repair of banking
Read the entire article HERE.