By Jeff Clark, Senior Analyst, GoldSilver, and Adviser for Strategic Wealth Preservation
The debt ceiling gets a lot of attention right now — but either outcome is bullish for gold. While unthinkable, if the U.S. government defaults it would be a blow to the US economy and the dollar. Raising the debt ceiling would lead be more borrowing but not addressing the underlying causes could lead to a crisis—higher inflation and higher interest rates for starters.
Is the banking crisis over? Numerous banks remain vulnerable. Recall the gold price soared when the SVB closure was announced.
Fed pivot? A full Fed pivot means a shift from raising interest rates to lowering them. Historically, a dovish Fed is bullish for gold.
De-dollarization has become almost a household word. Worldwide efforts here make this a when question, not if.
A U.S. recession is likely already here. Gold has risen in all recessions since the 1970s except two, both of which were single-digit declines.
US Treasuries have lost their touch to offset stock losses: the S&P500 fell 19.4% last year, but the 10-year Treasury lost 16.7%!
Alaska is the most recent state to pass a bill allowing gold and silver to be used as legal tender. More than 10 states have passed similar bills.
Central banks bought more gold last year than any year since records have been kept. And in January and February, central banks bought 125 tonnes, the highest amount YTD since 2010. What do they see that we don’t?
jeff_clark@att.net
Jeff Clark
Senior Precious Metals Analyst
This article was originally posted in the Strategic Wealth Preservation Blog and copied here with the permission of the author.