Close Menu
Invest Intellect
    Facebook X (Twitter) Instagram
    Invest Intellect
    Facebook X (Twitter) Instagram Pinterest
    • Home
    • Commodities
    • Cryptocurrency
    • Fintech
    • Investments
    • Precious Metal
    • Property
    • Stock Market
    Invest Intellect
    Home»Investments»Is gold safer than U.S. Treasury bonds as debt keeps soaring?
    Investments

    Is gold safer than U.S. Treasury bonds as debt keeps soaring?

    October 19, 20243 Mins Read


    Backed by the full faith and credit of the federal government, U.S. Treasuries bonds have long been viewed as the gold standard in safe investments.

    In times of uncertainty, economic downturns, or full-blown crises, investors have flocked to Treasuries as a haven. But what if actual gold is the new gold standard for a safe investment?

    Analysts at Bank of America asked that question in a note on Wednesday, explaining that the outlook for U.S. debt is bullish for the precious metal.

    With debt as a share of GDP set to break record highs in the coming years, the Treasury Department has to sell more and more bonds to investors, who may demand higher yields. And when yields rise, the price of bonds on the secondary market falls.

    That has helped weaken the historic correlation between bond yields and gold prices. While lower rates are still bullish for gold, which doesn’t pay interest or dividends, higher rates don’t necessarily put pressure on bullion anymore, BofA said, maintaining a gold price target of $3,000 per ounce.

    “Indeed, with lingering concerns over US funding needs and their impact on the US Treasury market, the yellow metal may become the ultimate perceived safe haven asset,” analysts wrote.

    Gold has been on a tear recently, with prices up more than 30% so far this year, topping $2,700 per ounce for the first time ever this past week.

    That’s even as bond yields have rebounded since the Federal Reserve’s first rate cut last month, while fresh budget data showed that the deficit was $1.8 trillion for the fiscal year that ended on Sept. 30. Meanwhile, the interest expense alone on U.S. debt was $950 billion, more than defense spending and up 35% from the prior due mostly to higher rates.

    There is no relief in sight as the deficit will expand under either Donald Trump or Kamala Harris, though less so under the Democrat, according to the Penn Wharton Budget Model and the Committee for a Responsible Federal Budget.

    “Indeed, rising funding needs, debt servicing costs and concerns over the sustainability of fiscal policy may well mean that gold prices could increase, if rates move up,” BofA said.

    With the supply of U.S. debt poised to continue surging, concerns have grown about demand and whether investors will keep absorbing more Treasury bonds.

    That provides a strong incentive to central banks around the world keep diversifying their reserves away from U.S. debt and toward gold, BofA added.

    To be sure, the U.S. isn’t the only country overflowing with red ink. But its soaring debt and deficits have been notable as they come during a strong economy and not while fighting a world war or some other calamity like a pandemic.

    Meanwhile, spending will likely go up as climate change, older demographics, and military needs add more pressure on budgets.

    So is gold a safer investment than Treasuries?

    “Ultimately, something has to give: if markets become reluctant to absorb all the debt and volatility increases, gold may be the last perceived safe haven asset standing,” BofA said.



    Source link

    Share. Facebook Twitter Pinterest LinkedIn Tumblr Email

    Related Posts

    Property118 | London climbs to top spot in Collier’s residential investment rankings

    Investments

    Largest sovereign wealth fund in the world to review investments in Israel

    Investments

    World News Live Updates: WhatsApp Removes Over 6.8 Million Accounts in Global Anti-Scam Operation

    Investments

    Using your IRA to pay for Healthcare expenses in retirement

    Investments

    George Russell comes clean on retirement plan and private conversation with Novak Djokovic

    Investments

    The NEW retirement hotspots revealed through experts’ meticulous research. These nine sunny countries offer generous incentives, a high standard of living and English is widely spoken… move over Spain and France!

    Investments
    Leave A Reply Cancel Reply

    Top Picks
    Property

    Florida insurance execs’ pay of $50M raises worry about firms failing

    All For Metal unleash video for new single “Year of The Dragon”

    Property

    Parking Space Can Add £73,000 to Property Value

    Editors Picks

    Charting India’s agricultural future: Budget 2025

    January 17, 2025

    How To Buy Pi Coin (Pi Network Cryptocurrency): A Quick Guide

    February 12, 2025

    State announces $332K in Grow Ohio Grants to support agricultural education opportunities

    August 11, 2024

    Netherlands Proposes Crypto Tax Compliance To Align With EU Standards

    October 26, 2024
    What's Hot

    la NBA va “explorer” la création d’une ligue en Europe annonce Adam Silver

    March 27, 2025

    How much tax do I pay on investments?

    April 22, 2025

    Silver Forecast Today 15/10: Noisy Trading Session (Video)

    October 14, 2024
    Our Picks

    Gold prices fall further as traders assess tariff turmoil

    April 6, 2025

    Cryptocurrency Cosmos Hub’s Price Increased More Than 4% Within 24 hours

    August 8, 2024

    Davis Commodities Limited Announces Extraordinary General Meeting to Consider Key Proposals

    June 11, 2025
    Weekly Top

    After 10 years, there’s a functioning Metal Gear Solid 5 co-op mod so you and a friend can be played like a damn fiddle together

    August 5, 2025

    Largest sovereign wealth fund in the world to review investments in Israel

    August 5, 2025

    Global race for digital money dominance: Who will set rules for this new era?

    August 5, 2025
    Editor's Pick

    What is Britcoin and why is the Bank of England so keen on it?

    February 7, 2023

    Louisiana Utility Regulators Pass Rule to Keep Electric Vehicle Charging Competitive

    August 17, 2024

    Cardano, Solana, Coldware – 3 Major Cryptocurrencies Set to Skyrocket 1,200% In April

    April 16, 2025
    © 2025 Invest Intellect
    • Contact us
    • Privacy Policy
    • Terms and Conditions

    Type above and press Enter to search. Press Esc to cancel.