Market Watch: Why This Veteran Investor Sees Gold Hitting $7,000 By the End of Trump's Term
Article by Myra P. Saefong in Market Watch
For many traders, the resilience of gold’s rally can easily be explained by strength in demand from global central banks and gold exchange-traded funds.
But to one veteran investor, it’s record debt levels that really matter.
U.S. government debt stands at a “jaw-dropping $37.5 trillion, equal to roughly 124% of GDP,” said Frank Holmes, chief executive officer and chief investment officer at U.S. Global Investors Inc. When President Richard Nixon cancelled the international convertibility of the U.S. dollar to gold in 1971, he noted, U.S. debt was around $400 billion, or less than 40% of GDP.
So in just over five decades, the U.S. has gone from a system of “fiscal restraint to a free-for-all,” Holmes, who’s also executive chairman of bitcoin miner Hive Digital Technologies Ltd. wrote in a recent blog post.
Globally, government debt has “ballooned” to $324 trillion, or more than 253% of world GDP, he said, citing data from the Institute of International Finance.
U.S. margin debt — or money investors borrow from their brokers to ......