Gold Broke 4,000$
Alright, let’s get straight to the point, because the ongoing shutdown in America has started putting pressure on the markets.
Wall Street may have been at historic highs just a few days ago, but storm clouds are now gathering, with the main indices closing in the red yesterday. A clear sign that markets are beginning to “hit the brakes” amid the uncertainty created by the political climate in the U.S.
The reason? The ongoing government shutdown, now lasting more than a week and showing no sign of ending soon. And while it may seem distant to us here in Greece, it has a direct impact on global markets. Investors and analysts are holding their breath, since it’s unclear when—or if—a solution will come soon.
Many key economic data releases have already been frozen, from unemployment and inflation reports to consumer credit figures and public finance updates. And as the CIO of Edwards Asset Management aptly said: “a prolonged shutdown clouds the economic data for the next quarter, leaving the FED to make interest rate decisions… blindfolded.”
Without reliable data, the FED struggles to set the right policy, creating uncertainty among investors and potentially leading to rushed or timid moves by the markets. Nobody wants that.
If it doesn’t get resolved soon, it could deeply affect not just the markets, but also the very direction of U.S. economic policy. Rumors are even circulating that Trump may use this opportunity to permanently lay off federal employees, “streamlining” the state. Should that happen, the FED is expected to turn even more dovish—that is, supporting markets further with potential new rate cuts.
GOLD SURGE
And all this uncertainty… guess what it does?
It pushes people into GOLD.
Yes, you heard right. On Tuesday, gold broke every previous record and reached, for the first time in history, $4,000 per ounce. A historic milestone for the precious metal.
Why?
The weakening dollar, ongoing geopolitical tensions, persistent inflation, and FED rate cuts. All of these factors push investors to look for a safe haven. And, traditionally, they find it in gold. As always in times of crisis, gold returns to the spotlight of investor attention.
In fact, the People’s Bank of China and many other countries are buying gold in bulk, shifting away from U.S. Treasuries after the sanctions on Russia. Retail investors are doing the same, seeing gold as a hedge against inflation and monetary uncertainty.
Ray Dalio himself, founder of Bridgewater Associates, said: “15% of your portfolio should ideally be in gold.” He views gold as the only asset that performs well when other parts of the portfolio are falling.
On the other hand, Bank of America warns: “the rally may have reached its limits and we could see a correction in Q4.” Some already speak of “exhaustion of the upward trend,” with possible signs of overheating.
INVESTMENT VIEW
Gold doesn’t produce anything. It doesn’t pay dividends. It doesn’t give you equity in a company. It doesn’t offer any of the features I usually look for in an asset. It is more of a safe store of value in uncertain times—
but not necessarily a tool for wealth creation.
Or is it?
Posted Using INLEO
Impressive rallye! ✊🏻
Ind
That's something how I stretch my mind about gold. It's more like saving for a rainy day than as an investment. Ray Dalio's 15% in gold sounds about right from that perspective. Who knows, maybe the government shutdown is a way to find more reasons to cut rates :)
Yes diversification is key when investing!
Gold proves itself once again as a great hedge financial instrument. And I feel it will do better in the future as well, wouldn't be surprised for it to reach $5,000 at some point in the "near" future.
My target is 5000$ and then a big correction