We expect the same drivers that propelled gold in 2020 to continue in 2021. Later in the year, the world will become a very different place once the U.S. and other nations achieve herd immunity. Here we try to identify the remaining risks that might drive gold once the virus has been tamed:

  • Negative Rates & Asset Bubbles—Foremost is the risk from the distorting influence negative nominal rates, negative real rates and zero rate policies have on the markets. 
  • Debt—A second risk is the huge debt load carried by governments and corporations. 
  • New Administration—Expected policies of the incoming Biden Administration are a third risk. Campaign promises 
  • Inflation—Inflation is another risk that may take many investors by surprise.  
  • Weakening U.S. Dollar—The DXY fell 6.8% in 2020.

MVIS Global Junior Gold Miners Index vs. Gold Price


Source: MV Index Solutions GmbH.  All values are rebased to 1000. Data as of 31 December 2020.

About the Author:

Joe Foster has been Portfolio Manager for the VanEck International Investors Gold Fund since 1998 and the VanEck – Global Gold UCITS Fund since 2012. Mr. Foster, an acknowledged authority on gold, has over 10 years of dedicated experience in geology and mining including as a gold geologist in Nevada. He has appeared in The Wall Street Journal, Financial Times, Barron's, and on Reuters, CNBC and Bloomberg TV. Mr. Foster has also published articles in a number of mining journals, including Mining Engineering and Geological Society of Nevada.

The article above is an opinion of the author and does not necessarily reflect the opinion of MV Index Solutions or its affiliates.