You mean gov demand for more debt? In that case there will be no end.
Will high interest rates crash gold's price?
- Thread starter TreasureHunter
- Start date
I actually meant demand for government debt.
Legislation and Basel III recommendations make treasury bonds basically mandatory assets on the balance sheets of banks and funds.
It will only make the deficit bigger which is only a number.
The 30 Trillion Dollar man can fix it!
The 30 Trillion Dollar man can fix it!
what war might that be?
Well, whatever it is it is tanking PM's price now. Short lived imo
From a developed economy point of view
Increasing inflation -> good for gold -> the higher the inflation the better the AU / AG spot outlook
Increasing official Interest rates -> good for gold but temper your expectations we are talking 5% over a year or two -> no one is talking 18% mortgages like in the late 90s by June!
High Oil prices -> bad for gold without a shock, it only acts to dampen demand reducing inflationary pressures. Though we should all know to NEVER buy gold becuase of short term event like War!
Ukraine vs Russia -> already a nothing burger -> unless Russia turns off the oil/gas taps, nukes are used or full scale invasion of EU is on the cards. But really only oil / gas flow is factor. Russian armed forces would get wiped over a weekend by well supplied Nato member.
Increasing inflation -> good for gold -> the higher the inflation the better the AU / AG spot outlook
Increasing official Interest rates -> good for gold but temper your expectations we are talking 5% over a year or two -> no one is talking 18% mortgages like in the late 90s by June!
High Oil prices -> bad for gold without a shock, it only acts to dampen demand reducing inflationary pressures. Though we should all know to NEVER buy gold becuase of short term event like War!
Ukraine vs Russia -> already a nothing burger -> unless Russia turns off the oil/gas taps, nukes are used or full scale invasion of EU is on the cards. But really only oil / gas flow is factor. Russian armed forces would get wiped over a weekend by well supplied Nato member.
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My concern is that the AUD will tank to 70 cents and spot will rise 7% within the next fortnight.
Imagine all the YT Gold pumpers spewing out Buy Gold Now vids lol without ever mentioning FX
Not sure I follow the logic here on a few points.
But I'm unclear as to the intention of the question as well.
If gold and interest rates were on a vector raising interest rates could carry gold's value downwards as its liquidity becomes the Apex usage as a way to raise cash to pay off debts. When interest rates really bite the reverse should happen as its hedging utility becomes important.
Im allowing for the accepted thought that a 2% rise in Home mortgage rates will have a profound effect on Mortgage & rental stress, sending many to the wall over a 24month period.
Debt levels are out of control in the housing sector, but its asset inflation driven by an over supply of credit that will be addressed when interest rates start rising.
2% is a deck of cards
5% is a hurricane with over 1.3million negatively geared properties
Not a maxi but not having BTC and only gold with its dismal performance during the last 2 years is financial hedging suicide.
And the accepted conservative mantra of only have 5% of your wealth in a hedge with the current world economic environment is like saying you will be ok with the best life jacket during a shipping catastrophe in the Northern Bering Straits with no help close at hand.
Disclosure-I am a Gold bug at heart who is bitterly disappointed by his Messiah.
But I'm unclear as to the intention of the question as well.
If gold and interest rates were on a vector raising interest rates could carry gold's value downwards as its liquidity becomes the Apex usage as a way to raise cash to pay off debts. When interest rates really bite the reverse should happen as its hedging utility becomes important.
Im allowing for the accepted thought that a 2% rise in Home mortgage rates will have a profound effect on Mortgage & rental stress, sending many to the wall over a 24month period.
Debt levels are out of control in the housing sector, but its asset inflation driven by an over supply of credit that will be addressed when interest rates start rising.
2% is a deck of cards
5% is a hurricane with over 1.3million negatively geared properties
Not a maxi but not having BTC and only gold with its dismal performance during the last 2 years is financial hedging suicide.
And the accepted conservative mantra of only have 5% of your wealth in a hedge with the current world economic environment is like saying you will be ok with the best life jacket during a shipping catastrophe in the Northern Bering Straits with no help close at hand.
Disclosure-I am a Gold bug at heart who is bitterly disappointed by his Messiah.
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Ignoring the fact that mortgage rates can be set independently of the cash rate, that would mean the RBA lifts the cash rate by the standard 25 basis points at every meeting until the end of this year or every couple of months over the next 18 months or so. It would also mean that if they were to follow such a path they would have to ignore any data on the economy. That's a pretty substantial step, hence I can't see a 2% rate rise.
TreasureHunter
Well-Known Member
If Ukraine is such a hick-up for Russia, then they would be impotent against the EU. Russia can't do a thing to Europe, their tanks have rusted away.
Besides nukes and a number of hypersonic missiles, they have 1970's technology mostly. Perhaps a few aircraft at 1990's level. But way backwards than NATO overall. It seems like Russia is a lot more low-tech than we believed.
They are threatening with nukes now, because that's about the only big thing they have left to make people take them seriously.
True, never buy gold because of a short-term even, BUT: that short term event might be the trigger of a series of events (like it is happening now regarding: Swift, petrodollars, gas and oil exports etc.).
These are incredibly big events. They will shake the economies more than COVID. Potentially even more than the Panic of '08.
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AussieHODLer
Member
I’m just spit-balling, but I think it’s possible that gold will be let’s say $4-5k an oz by 2030. I think it will slowly grind up due to the inflation, elephant in the room.
On another thought, I think with the way Russia’s USD assets were blocked by the war with Ukraine, I actually think that the USD’s reserve currency status is on a slow decline. Im sure a country like China would want to slowly reduce their exposure to USD, as it’s been shown how quickly it can be ‘weaponised’ by freezing a country’s assets.
It might take 30 years but I think USD could be replaced by a gold reserve currency system for global trade. It’s been used for so long seems like an obvious choice. No idea what it would be priced at then?
On another thought, I think with the way Russia’s USD assets were blocked by the war with Ukraine, I actually think that the USD’s reserve currency status is on a slow decline. Im sure a country like China would want to slowly reduce their exposure to USD, as it’s been shown how quickly it can be ‘weaponised’ by freezing a country’s assets.
It might take 30 years but I think USD could be replaced by a gold reserve currency system for global trade. It’s been used for so long seems like an obvious choice. No idea what it would be priced at then?
There's not much that the US can do to control Eurodollars.
AussieHODLer
Member
To be honest, I’ve taken the idea of a gold reserve currency from an article recently written by Arthur Hayes. It’s an interesting & thought provoking read. Who knows if it will play out though.
https://cryptohayes.medium.com/energy-cancelled-e9f9e53a50cd
https://cryptohayes.medium.com/energy-cancelled-e9f9e53a50cd
Long lived imo (as the "war" you are referring to is only part of the real war that's been bubbling along for the last couple of decades).