Looking back to GFC, at the height the crisis (Lehman) it was a rush to USD. As the meltdown in equity played out in March 2009 USD fell. This time around March fall could be the March 2008 Bear Stern collapse? I see parallel to GFC except it isn't the retail mortgage MBS but commercial ones. We have 2 camps; post lock down business comes online and consumers rush out with pent up demand or consumers slowly built up courage to spend. How about risk of reinfection as we see in Singapore? I know in Singapore it was the guest worker dormitories and not the mainstream population but the lock down as a preventative measure.
Publicly I only know of Russia/China CBs actively or passively buying . US has a lot of economic problems of liquidity and possibly insolvencies among the SME/large corporations, how does Feds buying gold help their economy to recover? This will be like lending to entities that are insolvent because consumers are not buying their products. Take Boeing for instance, if there is not much air travels do you reckon providing cheap credit will help them make money to build planes no one is investing in?
So I don't know how Feds buying gold can help their economy recover. Forget looking at their balance sheet using gold as an asset to neutralise their liabilities. Reserve currency uses other forms of mitigation chiefly a strong military, bully tactics and economic/politic coercion to set the unwavering back to their fold.
We are in a low IR condition and you only have to see that post GFC there weren't may asset class to chase. EVEN Gov Lowe has more than hinted yesterday that ultra low IR is here to stay for YEARS by the conditions that will change his policy. Gold will do well from an opportunity cost perspective and for the time being it will be a strong USD, which normally is not gold friendly. The commentary about USD debasement, dilution of purchasing power or hyper inflation is just a textbook theory. It didn't come true for the past 12 years.
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