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The global economy is facing a major threat and gold is the only safe haven worth holding

The global economy is battling a crushing range of blows and is under heavy threat as a result of runaway inflation, unfavourable monetary policy and the enormous human and economic cost of Russia’s war in Ukraine. This makes gold the only safe haven asset to hold, according to the asset management firm Schroders. In a statement issued on Wednesday, the firm’s fund manager James Luke painted a dismal picture, with markets worldwide being battered by an onslaught of challenges.

This volatility is set to persist, with debts mounting, tough sanctions being rolled out and traditional asset classes being devalued as gold trailblazes a path to record highs.

Luke said, “Besides looking for a store of value in times of heightened market stress, we believe many investors see the coming rate hiking cycle as extremely risky given the abnormal macroeconomic backdrop. Apart from being highly indebted, developed economies have become reliant on massive monetary and fiscal stimulus. The potential for negative feedback loops (a reaction that causes a decrease in function in response to a stimulus) into the real economy and financial markets as stimulus is removed and interest rates rise, is elevated.”

Luke added that gold is the only sensible hedge against this volatility, and the only asset that is worth holding, describing the precious metal as TINA – or “there is no alternative” – with real yields declining and inflation running off the chart. He said, “It is difficult to argue that traditional hedging instruments, such as government bonds, are as appealing as they’ve been in the past, not least because economies are highly indebted, yields are still close to historical lows, and inflation could well be structurally higher.”

In the UK, the Bank of England has already forewarned of a substantial increase in inflation, saying it could park above 7% during the course of 2022, while in the USA it’s already at its highest point in forty years at 7.5%.

Gold is the only logical investment in the current global economic environment. Buy now.

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