The $52 trillion case to buy gold

8.1.23 - The $52 trillion case to buy gold

Gold last traded at $1,950 an ounce. Silver at $24.39 an ounce.

The $52 trillion case to buy gold and SPDR Gold Trust ETF(GLD) - Invezz

Gold price has moved sideways in the past few days as investors assess the impact of last week's Federal Reserve decision and the falling US consumer inflation. The precious metal was trading at $1,957 on Monday, ~6% below the highest level this year. Similarly, the SPDR Gold Trust ETF (GLD) is hovering below its all-time high.

Gold is the most precious metal in the world. It is held by many developed and emerging market central banks like the United States, UK, Turkey, and China. Unlike other metals like copper, iron ore, and lithium, gold does not have a major industrial purpose.

Instead, gold is seen as both a currency or an insurance against risks. It is also seen as an alternative to the US dollar and a hedge against inflation. And in this regard, gold has outperformed the dollar. While gold price has jumped by 60% in the past five years, the dollar index has risen by less than 10%.

The most bullish case for gold is the soaring US public debt. Data compiled by the Peterson Institute shows that America’s public debt stands at $32.6 trillion, which is equivalent to $97.6 per person.

Debt has been in a strong upward trend over the years. Data compiled by the Federal Reserve shows that the US had $5.5 trillion in 2000 and $3 trillion in 2000. Sadly, the debt has regained momentum recently and the situation will only get worse.