With debt-based assets at record high, gold prices are set to shine

Economic Times/Aasif Hirani/08-23-17

One of the biggest obstacles for debt-based assets is raising interest rate. We are currently at a major interest rate bottom.

This prospect of higher interest rates going forward will act as a strong wind pushing gold higher, while keeping debt-based assets such as bonds and equity markets down.

…Another concern of debt-based assets at record high was the report published by US Federal Reserve on the state of the US consumer. The US household today is in more debt than it was in 2007 (the collapse of debt bubble in form of US subprime mortgage).

According to New York Fed, “Flows of credit card balances into both early and serious delinquencies climbed for the third straight quarter— a trend not seen since 2009.” This is been happening for nine straight months. With stocks at all time high, there is bubble forming in debt based assets.

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