Legendary investor Byron Wien calls for gold to surge 20% this year, as inflation and market volatility drive a hunt for safe havens

• Legendary investor Byron Wien said gold will rally 20% in 2022 in his closely watched "surprises" newsletter.
• He predicted investors will turn to gold for safety, as the S&P 500 wobbles and inflation stays hot.

Legendary investor Byron Wien has predicted that gold could make a surprise 20% surge this year as investors flock to the yellow metal for protection against inflation and market volatility.

The vice chair of investment giant Blackstone's private wealth solutions group said he thinks gold may well reclaim its title as a safe-haven asset, writing in his closely watched annual Ten Surprises newsletter.

The letter, published by Wien and Blackstone colleague Joe Zidle on Monday, lists 10 events that the average investor sees as having a less than one-in-three chance of happening, but that Wien believes have a more-than-50% likelihood.

To support his call, Wien said new billionaires are likely to invest in gold, despite cryptocurrencies such as bitcoin becoming increasingly seen as an alternative store of value.

Many investors have long touted gold as a hedge against inflation. They argue the commodity holds its value over the medium to long term, even as price rises erode the value of other assets.

Yet the precious metal fell around 4% in 2021, despite the US consumer price index rocketing to its highest level in 39 years.

Wien, who was chief US investment strategist at Morgan Stanley for two decades, said this downtrend should come to an end in 2022.

His prediction for a 20% rise would take gold to a record high of more than $2,160 an ounce.

"Despite strong growth in the US, investors seek the perceived safety and inflation hedge of gold amidst rising prices and volatility," Wien said.

"Gold reclaims its title as a haven for newly minted billionaires, even as cryptocurrencies continue to gain market share."

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Economists are divided on the exact direction of US inflation in 2022. But almost all expect it to remain well above the Federal Reserve's 2% target, after it soared to 6.8% in November.

Meanwhile, analysts have said stock markets are likely to become more volatile, as central banks gradually withdraw their pandemic-era support.

In the 10 surprises newsletter, Wien and Zidle said they expect the S&P 500 to make no progress in 2022 after logging a rise of more than 25% in 2021.

They also expect inflation to average 4.5% in 2021, as wages and rents continue to rise.

To rally in 2022, gold would have to fight off competition from cryptocurrencies such as bitcoin, which are also scarce and which many investors think can be good hedges against inflation.

Last year, JPMorgan said the autumn rally in bitcoin was in large part driven by investors turning to crypto assets as inflation climbed. Others argue that bitcoin is a bad inflation hedge because its price is hugely volatile.

Among the "also-rans" on the list was a prediction for Jamie Dimon to reverse his stance on the crypto sector and for JP Morgan to become a leader in the space. "Also rans" are events that were considered as surprises, but were rejected for the basic lineup because they were not as relevant or probable.