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    Bank of America: gold is the “last refuge” in a context of growing American debt

    Mars Posted on

    In a harsh assessment of the current economic landscape, Bank of America has issued a warning that gold could be the last safe haven for investors as the United States grapples with an ever-growing national debt. The statement comes as the precious metal continues to set new records, reflecting growing concerns about the stability of traditional safe-haven assets like U.S. Treasuries.

    The looming debt crisis

    Bank of America analysts paint a worrying picture of the US budget situation. The national debt, which recently topped $35.7 trillion, is expected to reach unprecedented levels over the next three years. This trajectory has altered the traditional relationship between gold and macroeconomic factors such as interest rates, making the metal increasingly attractive to investors seeking stability.

    Gold versus US Treasuries

    In a significant change, Bank of America suggests that gold has become a safer investment option than US Treasuries. The change is attributed to growing risks associated with what the bank describes as a “looming debt crisis.” As the United States continues to accumulate debt at an alarming rate, the perceived safety of government bonds is being called into question.

    Political inaction and economic consequences

    The bank’s analysis highlights a worrying lack of fiscal discipline in the political sphere. None of the current US presidential candidates appear ready to meaningfully address the debt issue. In fact, their economic plans are expected to make the problem even worse, potentially pushing the national debt to even higher levels.

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    Central banks diversify their reserves

    As global economic uncertainties persist, Bank of America expects demand for gold to increase, particularly from central banks looking to diversify their foreign exchange reserves. Over the past decade, central banks’ gold holdings have already seen a significant jump, from 3% to 10% of their reserves. This trend is expected to continue, further strengthening gold’s position in the global financial system.

    Gold’s record performance

    The appeal of metal is evident in his recent performances. Gold has been hitting record prices since December 2023, recently approaching the $2,700 mark. This rise represents a new record, surpassing the previous high of $2,696 set in October. Analysts at Bank of America believe that this upward trend will continue and predict that the price of gold will eventually reach $3,000 per ounce.

    Gold as the last safe haven (credit: PR)

    A global shift towards gold

    The implications of Bank of America’s warning extend beyond the United States. As concerns over debt levels and economic stability rise around the world, gold is increasingly seen as a global safe haven. The bank suggests this could lead to a significant reallocation of assets, with individual investors and institutions looking to increase their exposure to gold.

    In conclusion, Bank of America’s warning highlights a crucial shift in the perception of safe-haven assets. As the U.S. national debt continues its upward spiral and traditional safe havens face unprecedented challenges, gold stands out as a beacon of stability in an increasingly uncertain economic landscape. Investors and policymakers will closely monitor this trend in the months and years to come.

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    This article is for informational purposes only. The opinions and analyzes presented here are those of the author and do not constitute financial advice. The Jerusalem Post (JPost.com) does not endorse or recommend any investment based on this information. Investors should consider their financial situation, investment objectives and risk tolerance before making a decision. It is recommended to consult a qualified financial advisor. JPost.com is not responsible for any investment losses resulting from the use of this information. The information provided is for educational purposes only and should not be considered trading or investment advice.




    Mars
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