We are off to a wild start in 2021.
From the development of central bank digital currencies to the volatility in debt markets, things are only getting more interesting from a macroeconomic perspective by the day.
We have had numerous people ask us what the sell-off in gold on Friday was driven by, and it was due to the rise in yields in debt markets. We believe this will be short-lived as central banks globally understand that they must keep real rates negative for a prolonged period to help service costs to keep debt manageable.
The major theme for gold this year will be major financial repression.
For our readers new to the economic world, financial repression means:
“Financial repression is a term that describes measures by which governments channel funds from the private sector to themselves as a form of debt reduction. The overall policy actions result in the government being able to borrow at extremely low interest rates, obtaining low-cost funding for government expenditures”
This is the type of economic environment we will be in for the foreseeable future. In fact, central banks are already signaling this with the testing of digital currencies. They are building the infrastructure which will enable them to seamlessly put their economies on universal basic income while financial repression helps with the deleveraging process…CLICK for complete article