Gold Gains Appeal as Dollar's Stranglehold Weakens
A value investor who has long been indifferent to gold is now reconsidering its place in their portfolio. The shift is not due to any change of heart about gold itself, but rather a growing concern about the US dollar's stability.
The author notes that the US dollar has held its position as the world's reserve currency since World War II, supported by three key factors: a strong economy, political stability, and military power. However, all three are now under strain.
Deficits are rising, with a 6% budget deficit in peacetime, and the author warns that this could worsen with a proposed $1.5 trillion defense budget. The interest on debt is also growing, surpassing defense spending for the first time since World War II.
The US's enemies are becoming stronger and more united, while its alliances are being eroded. The country's political stability is also under question, with corruption in the White House and a polarized society.
Despite these concerns, the author argues that gold remains a viable option as a reserve asset, particularly given the lack of alternatives to the dollar. They emphasize that their investment in gold is not a significant portion of their portfolio, taking up only one or two slots previously held by stocks or cash.