We should own some Gold right now

If the Federal Reserve keeps raising rates what does this mean for Gold? Just 2 years ago, Bank of America predicted that Gold would hit $3,000/oz. Since reaching an all-time high of $2,058.40 in 2020, Gold dropped by 16.5%. Why should we keep a 5% allocation of gold as part of your portfolio when Gold does not even go up in an inflationary environment?

The conventional wisdom is that gold is simply a protection against inflation. But in reality, we should own gold in case the US government is broke. This ultimately will result in a falling dollar. Gold is a hedge against currency debasement. Gold should at least hold its purchasing power.

It’s the future purchasing power of our savings in terms of rent, energy, transportation, food and services that matters. In these terms, it’s a virtual certainty that over the long term, the value of the dollar will decline. Gold protects against this decline.

Sven Franssen