EDITOR NOTE: As incoming Treasury Secretary Janet Yellen re-affirms Biden’s stance to “act big” on spending, gold continues to hover about support at $1,768 per ounce. Investors seem to be caught at a speculative crossroad between hedging a sinking dollar and further wagering on the likelihood that the massive fiscal response will boost both the economy and stock market, even at the latter’s dangerously high valuations. Just because the market may be bubbling doesn’t mean that it can’t get any bigger, especially when artificial means are used to fuel growth. But all bubbles eventually pop. The practical thing for any person at the crossroads to do would be to simply rebalance. If you have stock positions, now’s the time to hedge some of your cash in non-CUSIP gold and silver. Or, is it time to activate a “Permanent Portfolio” type of model--one that would split your funds evenly at 25% across stocks, bonds, cash, and gold?
Gold was little changed as investors assessed a decline in the dollar against bets that the incoming U.S. administration will use its legislative firepower to boost economic growth.
U.S. Treasury Secretary nominee Janet Yellen said in a Senate confirmation hearing that help for the unemployed and small businesses would provide the "biggest bang for the buck," and urged lawmakers to "act big" in efforts to rescue an economy battered by the coronavirus. U.S. equities pushed toward all-time highs and U.S. Treasury yields advanced, eroding demand for gold, which doesn't offer interest.
Read More on Bloomberg