In 2022, central banks will have purchased the largest amount of gold in recent history. According to the World Gold Council, central bank purchases of gold have reached a level not seen since 1967. The world’s central banks bought 673 metric tons in one month, and in the third quarter, the figure reached 400 metric tons. This is interesting because the flow from central banks since 2020 had been eminently net sales.

Why are global central banks adding gold to their reserves? There may be different factors.

Most central banks’ largest percentage of reserves are US dollars, which usually come in the form of US Treasury bonds. It would make sense for some of the central banks, especially China, to decide to depend less on the dollar.

2023. Stagflation After Failed Stimulus.

After more than $20 trillion in stimulus plans since 2020, the economy is going into stagnation with elevated inflation. Global governments announced more than $12 trillion in stimulus measures in 2020 alone, and central banks bloated their balance sheet by $8 trillion.

The result was disappointing and with long-lasting negative effects. Weak recovery, record debt and elevated inflation. Of course, governments all over the world blamed the Ukraine invasion on the inexistent multiplier effect of the stimulus plans, but the excuse made no sense.

Commodity prices rose from February to June 2022 and have corrected since. Even considering the negative effect of rising commodity prices in developed economies, we must acknowledge that those are positives for emerging economies and, even with that boost, the disappointing recovery led to constant downgrades of estimates.

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In this episode, we discuss:

• How 2022 killed MMT
• Why buy gold
• The earnings recession risk
• Oil companies and the outlook for oil prices
• Banks and rising non-performing loans

If we look at the staggering decline of the cryptocurrency index in 2022, we may understand an uncomfortable truth. Cryptocurrencies were created as an alternative to the monetary insanity in the fiat currency world yet became a massive bet on the money expansion they were supposed to combat. Cryptocurrencies did not become uncorrelated assets, independent to the monetary policy cycle. Their market value was entirely dependent on monetary expansion.

The correlation between cryptocurrencies and non-profit tech stocks is enormous, but it is even clearer when we look at the impact of rate hikes and central bank balance sheet increase or contraction.

Cryptocurrencies should have benefitted from the rise in inflation and the destruction of purchasing power of currencies. However, their market value ended being a monster trade on central bank balance sheets rising.