Repost from 6-15-2021
“I have received a number of emails asking where the safe assets are. Gold is an obvious candidate; it is often touted as an inflation hedge. But that is too general. Gold has one of the most stable relationships to economic fundamentals of any asset. It moves inversely to real interest rates with great regularity, especially in recent years.”
USAGOLD note: Armstrong makes a point similar to one we’ve made several times on this page: Once the inflation is shown to be entrenched rather than transitory, gold demand and the price could skyrocket based on its historically proven negative correlation to real rates. Armstrong goes a step further by saying gold could rise even if real rates were to go positive because investors would see it as a valuable hedge against general instability. As a long-time reporter at Financial Times and editor of the widely-followed Lex column on the pink pages, Armstrong’s views carry a great deal of credibility in the professional investor community. Armstrong says he is “no gold bug” but he does offer a fair interpretation of gold’s utility under the current scenario at the link above.