Growing demand for gold in Europe
In light of the current geopolitical tensions, gold is returning to its long-term stable value, while its price in euro is growing parabolically.
Inflation in Europe is speeding up, as could be expected. The producer price index published back in February showed the direction for the months ahead.
In Germany, the inflation rate is now even higher than in the 1970s: as it has reached 7.9% a year with zero interest rates, the European Central Bank risks triggering a continent-wide social crisis. The gap between the interest rate and the inflation rate has never been so large — in fact, in Germany inflation now is at a 60-year high.
As the producer price index keeps increasing and as manufacturing prices generally lag behind consumer prices, we have to admit that inflation in Germany is unlikely to decrease in the short term. According to the latest data, the index has grown by 33.5% year-on-year — the highest value since 1949!
The inflation in Europe will be much higher than the ECB's five latest forecasts. These failed predictions will be remembered as a serious error in the continent's money management.
This situation forces many central banks to boost their gold reserves. In the very heart of Europe, we are now witnessing a real hype around gold.
The new chairman of the Czech central bank Ales Michl has announced that the country's gold reserves will be boosted from 11 tons to over 100 tons as soon as he steps in. After Poland and Hungary, Czechia is the third Central European country to decide to increase its reserves of the yellow metal.
It's not surprising that gold is returning to its stable monetary value as the geopolitical context is becoming more and more tense. The issue of energy supplies to Europe looms large, and the risk of stagflation is the highest it's been since WWII.
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