2021 was a disappointing year for gold investors, especially as inflation rates rose sharply during the year, rising in the US from 1.4% in January to 7.0% year-on-year in December, the highest 12-month growth. However, in many currencies, gold struggled throughout the year. And in those currencies in which the value of gold rose, the increase was small compared to the sharp rise in inflation.
The fall and record low real interest rates should also have had a positive effect on the price of gold. In November 2021, the real federal funds rate even fell below the 1975 low of -5%. However, the gold price did not follow this historic decline in real interest rates, despite the strong negative correlation between the gold price and yields, but simply moved sideways.
However, this sideways movement is not a sign of gold's decline, but of its fundamental strength. If you listen to the nervous "experts" in the gold community, you might think the price of the precious metal has collapsed by 50% or more. However, if we broaden the perspective, gold's price performance over the past few months, which has fluctuated between $1,700 and $1,900 dollars, appears to be a temporary respite rather than the start of a bear market.
And there are many reasons why 2022 will be a golden year for gold.
Inflation will remain high
In the end, it was a predictable capitulation when Jerome Powell admitted that the elevated inflation rate was not temporary. And Christine Lagarde will have to abandon her stubborn position that inflation is only transitory, as she predicted in early December 2022. In the short term, inflationary pressures will remain significant.
Inflationary pressures will also remain elevated in the medium and even long term as several fundamental changes - economic, political, psychological and demographic - are taking place.
Of course, this does not mean that the inflation rate will continue to rise, but that the inflation rate will remain elevated, that is, (much) above central banks' inflation targets.
Record increases in producer prices around the world support our view. Producer prices in the US rose 9.6% year-on-year, in China by 12.9%, and in the eurozone by a staggering 21.9%. Contrary to popular belief, inflation is not limited to energy prices, as more than 80% of CPI components recorded inflation at 2.5% or more.
Monetary policy remains very accommodative
Central banks are unlikely to significantly tighten monetary policy. One reason for this is elevated levels of debt in all three sectors of the economy - government, non-financial corporations and private households. This is because the higher the debt level, the greater the impact of an increase in interest rates on the debtor's ability to pay.
According to the International Monetary Fund, global debt increased by 28% to 256% of global GDP in 2022. While public debt recorded the strongest growth, increasing by 19% to 99% of gross domestic product, private debt, consisting of households and companies, also increased significantly, by 14% to 178% of gross domestic product.
Data for 2022 is not yet available. In the US, for example, the Congressional Budget Office (CBO) estimates that even with a moderate increase in yields, interest payments would rise from the current 1.4% of GDP to an unfunded 8.6% in 2051. In the future scenario considered by the CBO, the interest rate could reach 15.8%.
In the best case scenario, central banks will be able to tighten their monetary policy from super-loose to accommodative as central banks will abandon the normalization process when the inevitable consequences of even a small tightening of monetary policy begin to show up in financial markets as well as in the real economy. We are quite confident that this will be the shortest and shallowest rate hike in the history of the Federal Reserve.
Combination of women's watches with the concept of the image
A stylish person should be able to choose a model that matches the concept of the image, then not a single envious person will dare accuse you of bad taste or being behind fashion.
When choosing a watch, stylists recommend following three basic rules.
- Stick to the Basic Style
The color scheme of your outfit should consist of three shades - this applies to any look. In other words, when you are going to an event, be sure to consider the colors that will be included in your wardrobe.
The basis of the outfit is the predominant color, and additional shades should highlight your individuality. For example, a monochromatic suit or dress will go well with original colored accessories that harmonize with a pendant, a stone in a ring or a bracelet.
The color scheme of the watch must be 100% consistent with the range of all other accessories. If you are deciding what to combine with a women’s gold watch, then you can easily wear jewelry made of yellow metal, white jewelry goes with ceramic models, and silver harmonizes with mother-of-pearl pearls or transparent crystals.
- Remember the event format
The main thing you need to pay attention to is the combination of watches, jewelry and other accessories with the format of the event. For business and official events, as well as on weekdays, it is recommended to wear discreet accessories that emphasize style.
The palette should be restrained, excluding sharp contrasts. The ideal option is when wristwatches and jewelry are a tone darker or lighter than the dominant color.
When meeting with friends, visiting a café, or going for daily walks, you can wear wristwatches and jewelry in a discreet urban style.
- Wear an accessory that matches the look
The last rule is this: people who lead an active lifestyle and play sports should not overuse jewelry.
Please note: athletes, tourists and people whose professions involve risk to life most often refuse “jewelry”.
They wear only multifunctional, practical wristwatches and occasionally a thin bracelet and/or one ring. This is understandable: a large number of hanging and dangling elements increases the risk of injury during work duties or playing sports.
By the way, women's wristwatches can also be not only a stylish sports accessory, but also an original decoration. They harmonize perfectly with light dresses and light suits. Models with metal, or even better, ceramic bracelets or on a thin light-colored strap are best suited for this.
Real interest rates will remain negative
To bet against gold at this stage is to bet that central banks will actually be able to pursue less accommodative monetary policy and stay the course when, in response to interest rate cuts and hikes, markets crash, interest rates rise, and the economy will cool.
We believe central banks will fail this test. As a result, real interest rates will remain in negative territory for much longer than even pessimists think. In other words: financial repression is here to stay. And as the following chart makes clear, negative real yields are the basis for any bull market in gold.
Combination of women's watches and bracelets
There are only two main rules: the more bracelets, the better, and accessories must be worn on one hand.
Models with leather straps go well with metal chains. Vintage watches are best combined with stylish and elegant chains or beaded bracelets. An accessory on a thin strap looks very good when paired with bracelets made of pearls or beads, and on a thick strap – with decorations made of thorns or thorns. In addition, it is now fashionable to wear a watch and several bracelets on one hand.
We have already said that an evening dress and a watch are incompatible things. But if you can’t imagine your life without this accessory, then it’s better to use the following advice. A gold-plated watch paired with elegant gold bracelets or a watch with a multi-chain bracelet will go perfectly with any evening outfit.
Inflation of 4% or more is a headwind for stock markets
Stock markets around the world are highly inflated, with the latest drivers being excessive money supply growth and government support programs. Only 2% of the time in history the CAPE (cyclically adjusted price to earnings ratio) multiple was at today's level of 40x or higher, and breadth also lagged, which is rarely an encouraging sign. When this bubble begins to burst, i.e. When the ever-inflating stock market loses its artificially enhanced attractiveness, gold will be in the black.
As the following chart shows, inflation tailwinds turn into headwinds when inflation rates rise above the 4% mark.
Let's look at the performance of the S&P 500 during key periods with inflation below 4% (white areas on the chart). The results for these six periods were as follows:
- 01.1961-05.1968: +59,7%
- 10.1971-02.1973: + 18,5%
- 12.1982-12.1983: +17,3%
- 12.1984-07.1984: +90,5%
- 08.1991-10.2007 (including 5 months with an inflation rate slightly above 4.0%): +291.8%
- 10.2008-03.2021: +310,1%
On the other hand, during the four phases of high inflation, when inflation rates were 4% or more, the stock market performed significantly worse.
- 06/1968-09/1971: In nominal terms, the S&P 500 was almost at the same level at the end of the high inflation phase as at the beginning; in real terms it lost almost 17% due to the loss of purchasing power of the US dollar caused by inflation.
- 03/1973-11/1982: Although the S&P 500 was up 24.2% over 9+ years, in real terms it was nearly 50% lower at the end of nearly a decade of high inflation than at the beginning.
- 08/1987-07/1991: The S&P 500 gained 17.6% in nominal terms, but lost 2.5% in real terms.
- 01/2007-09/2007: In nominal terms, the S&P 500 lost 21.4%; in real terms, the losses were even more significant and amounted to 24.2%.
Gold's portfolio profile as an excellent hedge against stock market corrections is supported by the fact that gold averaged a modest 0.2% gain over the S&P 500's 20 weakest weeks since 2000. Other asset classes such as HUI (-0.8%), silver (-0.8%), commodities (-0.9%), crude oil (-1.0%), MSCI World (-2. 9%) and the S&P 500 (-3.3%), however, were in negative territory.
Combination of women's watches and jewelry
Quite often, ladies, standing in front of the mirror, are tormented by doubts: “What should I combine with a women’s watch? Maybe remove them altogether? And the ring? Wouldn't it be superfluous? Not a single stylist has yet managed to come up with a rule that would suit all occasions. So, you just have to trust your taste.
At first glance, the classic models, whose dial is framed by a gold case, do not require any addition. However, these are the watches that best harmonize with jewelry. The main thing is not to overdo it and choose accessories of the same style. If you put one gold ring on each hand, it will be more than enough.
Silver watches with a large multi-level dial require a special approach. Models without stones in the body harmonize best with discreet silver jewelry. A stylish look can be created with one or two cubic zirconia rings and a bracelet with an intricate clasp.
Modern fashion dictates its own rules on how and with what to combine women's watches. One of them is to combine different materials, so you can wear, for example, a ceramic ring with a model on a leather strap. Silver watches with a light dial and unusual display go well with unique jewelry. Such combinations will suit any look. Moreover, it will always look original and impressive.
A watch with an unusual dial and a bright strap looks harmonious with a pair of rings of a different design. It will look like this: on one hand - a watch and a classic silver ring, and on the other - an extravagant massive ring. Silver will harmonize with the case inlaid with cubic zirconia, and the second decoration will continue the theme set by the bright colors of the strap.
BallNL3082D-LLJ-BE More details
Bvlgari102730 More details
Zenith32.9001.670/78.R590 More details
What to combine with a gold-colored women's watch? Such models harmonize perfectly with warm-toned stones, while silver ones, on the contrary, look good in combination with cool shades. However, the rule that the color of the watch case and jewelry must match is increasingly not taken into account. Even jewelers are not averse to breaking it and experimenting, combining different shades of gold and silver in one piece of jewelry. You also have the right to bypass generally accepted rules, but only in everyday life or when going to informal events. If you have a business meeting or an official reception, then it is wiser to follow traditions.
Gold is cheap in relative terms
After two years of well above average gains of 18.9% and 24.6%, including a new all-time high in August 2022, gold had to take a deep breath. Moreover, gold's huge 80% rally from the August 2022 lows to the August 2022 high correctly signaled a surge in the 2022 CPI.
And in 2022, gold has done exactly what it should do in a diversified portfolio. Gold has been an excellent hedge against the multi-layered shocks that have hit the global economy due to the outbreak of the Covid-19 pandemic, as it has acted as a hedge against recession, stock market turbulence, rising inflation and Black Swan events. The precious metal has confirmed that it is the Virgil van Dyck of assets: always at hand when things get really bad.
However, the potential of gold lies not only in protection against unforeseen events. Gold also has a real investment case because compared to the all-time highs of 1980 and 2011, gold still appears cheap in relative terms:
Therefore, in light of these macroeconomic and market indicators, it is difficult to imagine that we are currently at the tail end of a gold bull market.
How to choose stud earrings
Studs can be bought to match a specific outfit or just to suit your mood. The purchase depends on the woman’s style and taste preferences. The selection criteria do not end there; it is recommended to take into account the following important points:
- Material. Jewelry made from high-quality gold is almost eternal; low-grade material may lose its appearance over time. Silver needs to be cleaned regularly, and polymer materials lose their original shine over time, and the integrity of the coating is damaged under the influence of external factors.
- Design. Prints, patterns, decorative elements, abstract designs are chosen to suit everyone.
- Manufacturer. It is better to trust trusted brands that produce quality products. It may not be possible to buy studs cheaply, but if you buy quality ones, there is a chance to maintain their presentable appearance for many years.
- Price. Everyone has their own budget and preferences: sometimes it is more profitable to buy high-quality jewelry than jewelry made of poor quality gold. If you follow the promotions of manufacturers, you can purchase jewelry at reasonable prices.
