January 2022

Gold: A Case of Excessive Pessimism

The rise in inflation is the principal financial event of the year and has affected different markets in various ways. The stock market continued its remarkable persistence in setting records, which must end someday – though which day that is remains to be seen. In the bond market, the change in the yield curve has been the primary effect. Expectations that the Fed will raise interest rates in response to inflation have caused short-term rates to rise more than longer ones, rather sharply in fact. Chart 1 compares 2-year vs. 10-year Treasury yields during 2021

John R. Gilbert

Senior Research Consultant