Despite gold’s record-breaking rally and widespread optimism about its outlook, one legendary bond investor has issued a warning for those seeking to own the metal amid concerns over US regional banks.
In a post on X last Friday, PIMCO co-founder Bill Gross wrote that gold has become a “momentum/meme” asset. “If you want to own it, wait awhile,” he added, even if gold’s safe-haven appeal has never been stronger.
Regional bank “cockroaches” may continue to affect stocks AND bonds. 10 year Treasury has no business below 4% though 4.5% more like it — too much supply/deficits despite slowing, soon-to-be 1% growth economy.
Gold has become a momentum/meme asset. If you want to own it, wait…
Surging debt levels across major developed economies have shaken confidence in global currencies, in particular traditional safe havens like the US dollar. This has spurred a “debasement trade,” where investors flock to assets such as gold as opposed to depreciating fiat currencies to preserve their wealth.
Gold has responded with a spectacular rally, climbing more than 60% this year and setting record highs nearly 50 times. Trading at approximately $4,350 per ounce, the metal has essentially doubled since the beginning of last year.
Market veteran Ed Yardeni recently said that, at the current pace, gold could skyrocket to $10,000 per ounce by the end of the decade.
Yields higher
However, Gross believes that gold’s rally may have overextended, as yields should be shooting higher given the fresh debt the US government must issue to cover budget shortfalls. This, in turn, could cap gold’s appeal based on historic performances.
According to Gross, the 10-year Treasury yield “has no business below 4%” and should be around 4.5% — with the US facing too much supply/deficits despite a “slowing, soon-to-be 1% growth economy.”
One factor behind the yield movement, says the now-retired fund manager, is the pressure facing US regional banks after some of them had flagged bad loan and fraud issues. These banks, which Gross referred to as “cockroaches”, may continue to affect stocks and bonds, but the recent yield drop below 4% was overblown, he said.
Some analysts do not regard these issues at regional lenders as becoming a systemic problem in the US banking system. Those at Deutsche Bank and Jefferies, for example, characterized the loan loss issues, including those at Zions Bancorp and Western Alliance, as specific and unconnected events.
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Despite gold’s record-breaking rally and widespread optimism about its outlook, one legendary bond investor has issued a warning for those seeking to own the metal amid concerns over US regional banks.
In a post on X last Friday, PIMCO co-founder Bill Gross wrote that gold has become a “momentum/meme” asset. “If you want to own it, wait awhile,” he added, even if gold’s safe-haven appeal has never been stronger.
Surging debt levels across major developed economies have shaken confidence in global currencies, in particular traditional safe havens like the US dollar. This has spurred a “debasement trade,” where investors flock to assets such as gold as opposed to depreciating fiat currencies to preserve their wealth.
Gold has responded with a spectacular rally, climbing more than 60% this year and setting record highs nearly 50 times. Trading at approximately $4,350 per ounce, the metal has essentially doubled since the beginning of last year.
Market veteran Ed Yardeni recently said that, at the current pace, gold could skyrocket to $10,000 per ounce by the end of the decade.
Yields higher
However, Gross believes that gold’s rally may have overextended, as yields should be shooting higher given the fresh debt the US government must issue to cover budget shortfalls. This, in turn, could cap gold’s appeal based on historic performances.
According to Gross, the 10-year Treasury yield “has no business below 4%” and should be around 4.5% — with the US facing too much supply/deficits despite a “slowing, soon-to-be 1% growth economy.”
One factor behind the yield movement, says the now-retired fund manager, is the pressure facing US regional banks after some of them had flagged bad loan and fraud issues. These banks, which Gross referred to as “cockroaches”, may continue to affect stocks and bonds, but the recent yield drop below 4% was overblown, he said.
Some analysts do not regard these issues at regional lenders as becoming a systemic problem in the US banking system. Those at Deutsche Bank and Jefferies, for example, characterized the loan loss issues, including those at Zions Bancorp and Western Alliance, as specific and unconnected events.
Sponsored: Secure your wealth today — buy gold bullion directly through our trusted partner, Sprott Money.