Inflation was low. The U.S. dollar is the premier reserve currency. Gold is just a shiny metal to look at in your vault.
It has been hard to convince Wall Street to acquire gold. Well, it looks like institutional investors are placing all bets on the 5,000-year-old metal and sounding like students of the Mises Institute.
Case in point, Goldman Sachs.
Goldman Sachs wrote in a research note that debasement concerns could threaten the dollar’s reserve currency status. This would send traders into gold. Goldman strategists including Jeffrey Currie say there are “real concerns around the longevity of the U.S. dollar as a reserve currency.”
Where do you turn to? Gold!
“Gold is the currency of last resort, particularly in an environment like the current one where governments are debasing their fiat currencies and pushing real interest rates to all-time lows,” Goldman wrote.
“The resulting expanded balance sheets and vast money creation spurs debasement fears. This creates a greater likelihood that at some time in the future, after economic activity has normalized, there will be incentives for central banks and governments to allow inflation to drift higher to reduce the accumulated debt burden.”
At the time of this writing, gold soared to another record high of just under $1,950. Silver prices have taken a bit of a breather, slipping to $24.30 per ounce.
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