Five reasons why high yield investors need gold
Seeking Alpha/Samuel Smith-HighYieldInvestor
“At the same time as gold is facing demand tailwinds and supply headwinds, its primary safe-haven competitor – U.S. Dollars – are increasing in supply at a rapid rate with no end in sight thanks to massive and rapid multi-trillion dollar quantitative easing by the Fed and stimulus deficit spending from the U.S. government.
The Fed is taking this drastic action to try to prop up the economy by increasing liquidity and keeping interest rates low. It is also helping to fund the U.S. Government’s massive new debt issuance to fund the bailout packages Congress has been passing.
As a result, U.S. Treasuries are in a Fed-fueled bubble as interest rates are being kept low only by massive purchases by the Federal Reserve. In March – in order to smooth out chaotic trading patterns – the Fed was purchasing a whopping $75 billion of government bonds every day.”
USAGOLD note: This article caught my attention because gold’s biggest competitor among sophisticated investors is the bond market. The higher the net yield after inflation and taxes the stronger the competition. To have an advisor who specializes in high yield instruments proclaim a need for gold is something worthy of our attention. In the end, his argument boils down to gold as a safe-haven store of value. “[G]iven current macro forces and the prices offered in the marketplace,” he says, “gold is shining more brightly than ever, especially for high yield investors.”
Repost from 1-7-2021