Will the second wave of inflation arrive next summer?
For months, we have been observing a significant decline in inflation rates in both Europe and the USA. However, those who wish to infer a ‘all clear’ signal from this might face a sobering surprise as early as next summer: According to some analysts, a second wave of inflation could then sweep over us.
Rising real wages mean growing inflation rates
Prices always rise when demand grows faster than supply. According to financial analyst Clemens Schmale, this is particularly the case when real wages rise. Inflation follows wage growth with a lag of about 18 months. Consequently, inflation would rise again starting next spring—provided we do not slide into a recession beforehand. In such a case, many people hold back their wages, so that they do not benefit the economy and the price level stagnates or falls.
Second wave more destructive than the first?
Financial advisor Simon Hunt also warns of a second wave of inflation. According to him, we can learn from the 1970s that secondary inflations are often more destructive than the first wave. He believes Germany is already in a technical recession. According to his prediction, stock markets would collapse by 30% to 35% in the autumn, followed by the expected second wave of inflation. This would then be so severe that even central banks would no longer be able to stop it with their interventions.
BRICS nations are not relying on gold without reason
The BRICS nations have already positioned themselves with their gold-backed currency (as we reported). This is because gold retains its value in times of currency devaluation, but can also “overwinter” during a recession. It is therefore a safe investment, regardless of whether the second wave of inflation comes or not. This also applies to metals that are indispensable for a country’s core industries. Neither the healthcare sector, the energy transition, nor the defense sector can simply pause during an economic downturn. Technology metals and rare earths continue to be in high demand by these industries and are therefore also crisis-proof metals. Furthermore, they offer the opportunity for attractive returns alongside tax-free purchasing and tax-free profits after a one-year holding period.