Gold is in a transition phase. In the past nine months two key developments—war and inflation—have made gold trade much stronger than how it was priced from 2006 through 2021. Both developments are likely to stick around in the coming years and will prove a tailwind for gold. Moreover, the current monetary environment is adding support to the gold market as governments and central banks risk insolvency. For the medium- and long-term I’m therefore optimistic on gold. In the short-term gold still has downside risk due to rising interest rates and the possibility of collapsing asset markets triggering a liquidation event.
One thing is certain: getting excited about interest on a pile of gov debt in the g7 which will be escalating for the foreseeable future is like buying Tesla because of a stock split. Doesn't matter what the interest rate - your share of the inflating pile of debt doesn't change. IMO g7 gov debt should only be traded to take advantage of declining rates into a crisis. For a 60/40 type portfolio use gold instead of bonds.
Cogent and convincing - thank you.
Excellent article. Thanks. I'll post it on LinkedIn
One thing is certain: getting excited about interest on a pile of gov debt in the g7 which will be escalating for the foreseeable future is like buying Tesla because of a stock split. Doesn't matter what the interest rate - your share of the inflating pile of debt doesn't change. IMO g7 gov debt should only be traded to take advantage of declining rates into a crisis. For a 60/40 type portfolio use gold instead of bonds.
Hi there! I gave you a "mention" in my post today! I am wondering how that works on your end... did you get a notification of the mention?
Here's the article:
https://finiche.substack.com/p/the-big-portfolio-refresh-202301
Happy new year!
F.
Excellent article, thank you. I will be giving you a “mention” in my January 1 post.
Couldn't the central banks just keep creating money and loan guarantees forever? Afterall they do control the money supply.