“Gold and gold mining companies on the stock market have their place in a portfolio today!”

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Gold and gold mining companies, currently undervalued on the stock market, allow a good diversification of a portfolio. Already, 3 years ago, when the American stock market collapsed, gold mining companies had done well on the stock market.

The 15 December 2021, Jerome Powell explained that the objective of the American central bank was “to prevent high inflation from taking root” while “the economy no longer needs a policy of increasing support”. Growth being “above its potential” and “inflation above the target” defined, “a rate increase should therefore occur sooner”. During his confirmation hearing in the Senate on 09 January 2022, he tried to reassure the markets by specifying that “perhaps later this year, we will start to reduce the size of the balance sheet”.

US interest rates at 09 years which evolve around 1,75% while growth and inflation are at +5% send a very clear message: their upside potential is limited because the debts and deficits that have widened have a massive power of constraint on economic growth. As proof of this, the last growth cycle (between 2009 and 2018 ) which only generated a meager average rate of 2% despite ultra-accommodating monetary policies. How could it be otherwise today when financial imbalances have increased?

The Fed wants to shorten the timetables du tapering (reduction in the pace of asset purchases, editor’s note), the rise in rates as well as the reduction in the balance sheet size as the economy and inflation decelerate. The immediate impact of such a policy is the depreciation of the American currency, the dollar.