Because federal stimulus and an improving job market are boosting consumers’ purchasing power, many economists expect an uptick in inflation in the near term. Indeed, billionaire investor Warren Buffett has warned of an inflation threat to the U.S. economy amid its economic recovery. Consequently, gold could witness a price advance in the coming months. If so, we expect gold mining stocks Kinross Gold Corporation (NYSE:KGC), Gold Fields (NYSE:GFI), B2Gold (NYSE:BTG), and Yamana Gold (NYSE:AUY) to be major beneficiaries of the yellow metal’s rebound. Read on.Investors turned to gold as a safe haven last year to protect their wealth during the COVID-19 -led economic slowdown and attendant market uncertainty. However, the precious metal has been witnessing a price correction since hitting its all-time high amid the pandemic on optimism about the effectiveness of the vaccines and the potential for a robust economic recovery. However, fiscal stimulus and an improving job market have been boosting investors’ purchasing power and creating inflationary pressures.
Legendary investor Warren Buffett recently told Berkshire Hathaway’s (BRK.A) annual shareholder meeting, “We are seeing very substantial inflation.” Buffett added, "We are raising prices. People are raising prices to us, and it's being accepted.” In fact, according to Statista, the annual rate of inflation this year is expected to be 2.26%.
Given this backdrop, gold should start witnessing strong demand because it tends to perform well in an inflationary environment.