Salient to Investors:

Nouriel Roubini writes:

  1. Gold spikes in times of serious economic, financial and geopolitical risks, but that does not make it such a safe investment – cf sharp falls in gold prices during crisis periods of 2008 and 2009.
  2. Gold performs best in times of high inflationary risks as it is seen a hedge against inflation, but global inflation is low and dropping and commodity prices are adjusted downwards.
  3. Gold generates no income. The global economy is recovering and other assets are providing higher returns – gold has vastly underperformed stocks since early 2009.
  4. Real interest rates will rise on the expectation that the Fed and other central banks will end QE. The time to own gold is when real returns on cash and bonds are negative, and falling, and that is not now.
  5. Highly indebted governments are not pushing investors towards gold and away from their bonds. Many of these governments have high stocks of gold, which they may dump to cut debt, e.g. Italy.
  6. US conservatives have hyped gold so much that it’s become counterproductive. For the far-right, gold is the only hedge against the government’s conspiracy to expropriate wealth.

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