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BloombergOpinion/Brian Chappatta/8-12-2020
“Precise levels aside, I’m skeptical that a tandem selloff in gold and Treasuries will gain much momentum. While I’d argue that the Fed is comfortable with Tuesday’s increase in long-term U.S. yields to the extent that it reflects the better-than-expected producer price data, it seems likely that if rates continue to climb, at some point either financial markets will revolt, as they did in early June, or the central bank will step in and buy. While gold is a more fickle investment and has more room to tumble after its recent surge, sub-zero real yields should provide something of a floor and keep pensions and private-wealth managers open to owning it.”
USAGOLD note: One can take heed of myriad signs and signals that might motivate gold’s price direction in the short term, but ultimately the longer-term fundamentals are what really matter to professional money managers. In that respect, the stars have aligned in gold’s favor and that is not likely to change anytime soon for reasons Chappatta covers in this highly recommended Bloomberg opinion piece. “If America’s dalliance with helicopter money,” he concludes, “causes persistent price growth to take hold and the dollar to weaken, then gold should set records.”