Faced with a combination of exceptional phenomena, the price of precious metals, although clearly consolidating at the time of writing, has been gracing us with historic events for several weeks now. The most notable of these was the crossing, admittedly temporary but nonetheless unprecedented, of the EUR 60.00 per gram mark for fine gold.

The inflationary shock

Several dynamics combined to support this major fundamental movement. This impressive rise in prices also highlights the inflationary shock underway.

Among these dynamics, the background is of course the continuation of the accommodating monetary policies of central banks. Despite the latest increase in the Fed's key rates (which were largely symbolic in reality), precious metal prices have not been affected in any way.

In addition to this basic movement linked to monetary policy, there is the problem of an unresolved health crisis.

The periodic emergence of new variants, despite widespread vaccination coverage, has led some countries, including China, to maintain strict restriction and containment policies. This permanent "stop and go" generates major disruptions in production and logistics flows on an international scale.

Finally, and this is the major issue of the moment, the conflict in Ukraine, which reveals much deeper tensions between the West and the Sino-Russian bloc, is generating major energy problems via the explosion in the price of hydrocarbons. This geopolitical divide has also generated a potential movement of de-globalisation, which is particularly costly given that Western companies have delegated their productive apparatus to Asia.

Outlook

Faced with this sudden and potentially lasting rise in prices, the logical course of action for central banks should be to raise key rates just as massively. However, such actions seem totally illusory given the stratospheric levels of debt that have been reached. And the conflict with Russia now justifies the lack of resolute action by central banks.

So, in the short term, a possible ceasefire agreement between the Russian and Ukrainian authorities would naturally be a downward factor for the gold price.

However, in the longer term, it is clear that the depreciation of fiat currencies is likely to continue and even accelerate. In this context, maintaining a major part of one's savings in Euros is becoming an increasingly perilous exercise. The transformation into stable tangible assets, such as gold, will become crucial.