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You Can’t Just Print More Gold (Advisor Perspectives, 4 min read) A bullish thesis for gold. M2 growth, which historically is positively correlated with gold prices, has now shot up to 23% YoY in the US (the highest since 1981). Negative rates benefit gold, and the UK recently auctioned bonds at negative yields, which may be followed by other countries like the US. Finally, big investors, including Paul Tudor Jones, Paul Singer and Crispin Odey, are also in the long gold camp.
Are stock investors too complacent about a full-scale blowup between China and the US? Here’s what Wall Street experts say (MarketWatch, 7 min read) The consensus is that markets are not pricing in the Sino-American escalations, which could be detrimental for the US recovery and make markets volatile as we come closer to the US elections. Currently, markets are rejoicing at the re-opening of the economy and the possibility of a vaccine for the virus.
Low Bond Returns Are Nothing New (A Wealth of Common Sense, 3 min read) The most significant risk for fixed income portfolio is inflation, not duration risk (rising interest rate). Total real returns across the spectrum of different maturity between the 1940s to 1980s was negative despite very high nominal returns. The era between 1980 and 2019 generated low nominal returns but outperformed since the 1920s in terms of real returns. Current low nominal returns are not something unusual.