If you’re looking for macroeconomic insights that can help you make money, few analysts can match the prescience of Dr. Stephen Leeb, a colleague I’ve worked with since 1990. Over the decades, his predictions have demonstrated uncanny accuracy.

Dr. Leeb (pictured) is chief investment strategist of Real World Investing and The Complete Investor, two premium trading services operated under the Investing Daily banner.

With a new president in the White House and a world still grappling with a deadly pandemic, now’s a good time to tap Steve’s storehouse of knowledge. My questions are in bold.

Do you anticipate a return to robust economic growth in 2021? Projections for U.S. and global growth are increasingly optimistic. How bullish are you?

Globally we should see GDP growth of at least 5%. I expect the Eastern part of the world, led by China, to lead the world out of recession. That points to continued support for commodities due to the nature of developing economies’ growth profiles.

However, economic growth this year doesn’t necessarily mean that the stock market will have another big positive year like the last two. The market already reflects expectations of economic recovery. High commodity prices, especially oil, could be a major roadblock this year.

Read This Story: The Rise of The Commodities “Super-Cycle”

Investors should be cautious with high P/E stocks this year. During high inflationary periods, valuation ratios tend to fall. That said, barring a failure to contain COVID-19 or something unwise like the Federal Reserve suddenly deciding to tighten, I think pullbacks this year will likely be normal corrections rather than any serious breakdowns.

China seems poised to lead the way. What’s your prognosis for the world’s second-largest economy?

Months ago I expected China to lead the world out of the pandemic economically, and I haven’t seen any reason to change my mind. The Chinese economy continued its recovery in the fourth quarter of 2020, returning to a level of growth roughly equal to pre-pandemic growth rates. Take a look at the following chart.

One issue that I am worried about is China’s ambitions against Taiwan. If China somehow lost its mind and really acted militarily against the island, that would have serious implications.

Read This Story: For Outsized Gains in 2021, Go East

I’m also concerned that we (the U.S.) might inadvertently or purposely do something in that part of the world to give China an excuse to step up its aggression. However, with a more orthodox president in office now, I think the odds of this have gone down. The easing of the trade war under President Biden is another tailwind for the East and the global economy.

Prices for raw materials have been soaring and they’ll continue to rise as economic growth accelerates this year. You’re our resident expert on commodities. What are some of the best ways to play the coming commodities boom?

Historically, during periods of commodity strength, gold has outperformed. Although this time around, gold has actually lagged recently, I think sooner or later, gold will catch up. Gold is a monetary metal, a store of value for as long as humans have recorded history.

There’s a finite amount of gold in the world and the “yellow metal” can’t be created out of thin air like fiat currencies. In a world of strong commodities and resource scarcity, which I believe we will experience in the upcoming years, I think gold serves as a much more reliable de facto currency than paper money.

One school of thought says we’ll see only modest inflation, which is desirable because it signals a mending economy. But others warn that massive fiscal and monetary stimulus will overheat the economy and cause worrisome levels of inflation. Where do you stand on this debate?

Some inflation indicates economic growth and is good. This is why the Federal Reserve has set a 2% inflation target.

Watch This Video: (Don’t Fear) The Inflation Reaper

But when inflation heats up, especially when it’s commodity-led, it’s a big problem. Commodities are the foundation of production input, which means higher commodity costs go down the supply chain and affect the prices of pretty much everything. In turn, that dynamic reduces spending power for households and businesses alike, which is contractionary.

Which specific assets make effective inflation hedges right now?

As I mentioned earlier, my favorite inflation hedge is gold. To a lesser extent, silver works too, but it’s more volatile and it has industrial uses so it’s not a pure currency play like gold. I’ve made the argument before that gold could go up to $20,000 per ounce or more if things break right (or break wrong, depending on your perspective).

My argument is centered around the tremendous growth of developing countries and the impact that will have on the rest of the world. I also see China as a threat to the dollar’s status as a global reserve currency.

I am seeing signs that things are playing out as I fear. The critical point may not be reached for a few more years, but I just believe gold is an essential portfolio stalwart for everyone. For anyone interested in why I think gold is a must-own for investors, I lay out the case in detail in my recent book China’s Rise and a New Age of Gold.

What’s a good way for income investors to compensate for low bond yields? Can you recommend high-yielding alternatives?

Although they’ve made big runs and probably will undergo corrections along the way, I like yieldcos. They are usually entities spun off from parent companies specifically to own renewable energy assets, such as solar farms and wind farms. They typically have long-term power purchase agreements that lock in revenue for years to come, and they typically have high dividend yields.

Provided we return to normality soon, I still like real estate as an inflation hedge. Unlike physical properties, real estate investment trusts (REITs) can be purchased easily by individuals.

Editor’s Note: As the world economy resumes growth and infrastructure spending explodes, so will demand for commodities, especially copper. The “red metal” is vital for a wide variety of products and manufacturing processes. After months of painstaking research, Dr. Leeb his pinpointed his favorite copper play. For details, click here now.

John Persinos is the editorial director of Investing Daily. Send your questions or comments to mailbag@investingdaily.com. To subscribe to John’s video channel, follow this link.