Wall Street is in the throes of a gold rush, as investors drive the price of the precious metal to new heights.
Several factors giving investors reason to hedge their bets with gold. They are:
- anxious about the pandemic’s ultimate impact on the economy,
- worried over resurgent tensions between the U.S. and China,
- fearful of runaway inflation as spending to cushion the economic fallout swells the federal budget deficit,
- uncertain about the outcome of the elections in November and
- concerned about the market’s sharp rebound from its lows in March that is making stocks look expensive relative to earnings.
…In addition, many investors:
- see gold as a way to protect against a falling U.S. dollar.
- the USD is at its lowest level against the Swiss franc in more than five years
- and against the U.S. Dollar Index (which measures its value against the Swiss franc and five other major currencies) in more than two years and
- see a weaker dollar making gold cheaper when buying it in other currencies, because it’s priced in U.S. dollars;
- see gold as attractive compared to Treasury bonds which are paying close to the lowest amount of interest in history – just a 0.58% yield with a 10-year Treasury note;
- see the surging federal budget deficit – which has ballooned as spending on programs to combat COVID-19 have exploded while millions of job losses have cut into tax revenues – heightening the risk of inflation and, historically, gold has been seen as a way to protect against inflation.
Editor’s Note: The original article from InvestmentExecutive.com has been edited ([ ]) and abridged (…) above for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.
A Few Last Words:
- Click the “Like” button at the top of the page if you found this article a worthwhile read as this will help us build a bigger audience.
- Comment below if you want to share your opinion or perspective with other readers and possibly exchange views with them.
- Register to receive our free Market Intelligence Report newsletter (sample here) in the top right hand corner of this page.
- Join us on Facebook to be automatically advised of the latest articles posted and to comment on any of them.