Hard Asset Trade Surges Amid Dollar Weakness and Central Bank Buying

The hard-asset trade is gaining momentum as several key factors converge to create an attractive environment for investors. U.S. fiscal deterioration and the weakening dollar are contributing to the revival of the debasement trade, which favors precious metals such as Gold.

Central banks are also accumulating Gold at a record pace, while Chinese citizens are pouring billions into Gold-backed funds. The People's Bank of China added 20 tonnes of Gold in July, taking reported reserves to a record-breaking 2,366 tonnes and extending its buying streak to 21 consecutive months.

Lars Hansen, Head of Research at The Gold & Silver Club, notes that the combination of fiscal stress, monetary uncertainty, central-bank buying, Chinese demand, and structural commodity scarcity is creating an environment in which markets can reprice quickly. 'Markets rarely announce the beginning of a major repricing,' he says. 'They move gradually, then suddenly.'