With the Russian invasion of Ukraine left behind for a week, geopolitical uncertainty has ignited a fire in the gold market and prices seem to be hovering well above $1,900. However, a British asset management firm said that whatever happens in Eastern Europe, investors have other reasons to want to add precious metals to their portfolios.
“The threat posed by changing monetary policies around the world is great”
In a comment published Wednesday, Schroders’ fund manager James Luke, which manages more than $990 billion in assets, said Russia’s war in Ukraine, which has created a major humanitarian crisis that has affected millions of people, is another major threat to the global economy due to changing monetary policies around the world. It says it’s created. The fund manager comments:
In addition to seeking a store of value during times of increased market stress, we believe many investors view the upcoming rate hike cycle as extremely risky given the abnormal macroeconomic backdrop. Developed economies, in addition to being highly indebted, have become dependent on massive monetary and fiscal incentives. As stimulus fades and interest rates rise, the potential for negative feedback loops to the real economy and financial markets increases.
James Luke states that there is a risk of creating an environment of stagflation, low growth and high inflation when central banks tighten their monetary policies. He adds that if that happens, central banks will quickly reverse course, meaning real interest rates will remain in negative territory.
According to James Luke, gold is on track to become TINA in the coming years
cryptocoin.com As we reported, on Wednesday, in his first statement before Congress, Federal Reserve Chairman Jerome Powell said the central bank is on track to raise interest rates in March. However, he added that the central bank should also be agile while evaluating the incoming economic data.
James Luke notes that gold is on track to become a “TINA” (no alternative) safe-haven asset in the coming years. In particular, bonds, a traditional hedge against market volatility and a balance against portfolio risk, are not very attractive in the current environment. James Luke explains it this way:
It’s hard to argue that traditional hedging instruments like government bonds are as attractive as they have been in the past, because economies are heavily indebted, interest rates are still near historic lows, and inflation may be structurally higher.
Contact us to be instantly informed about the last minute developments. twitter‘in, Facebookin and InstagramFollow and Telegram and YouTube join our channel!
Disclaimer: The articles and articles on Kriptokoin.com do not constitute investment advice. Cryptokoin.com does not recommend buying or selling any cryptocurrencies or digital assets, nor is Kriptokoin.com an investment advisor. For this reason, Kriptokoin.com and the authors of the articles on the site cannot be held responsible for your investment decisions. Readers should do their own research before taking any action regarding the company, asset or service in this article.
Warning: Citing the news content of Kriptokoin.com and quoting by giving a link is subject to the permission of Kriptokoin.com. No content on the site can be copied, reproduced or published on any platform without permission. Legal action will be taken against those who use the code, design, text, graphics and all other content of Kriptokoin.com in violation of intellectual property law and relevant legislation.