You may have heard and read these comments, and others like it, numerous times over the course of the recent “everything selloff.” This is staggeringly shortsighted to me. Gold is down only around 9.5% for the year, despite surging bond yields, and despite the U.S. dollar being at its strongest level ever relative to other major currencies.
And that"s gold priced in the U.S. dollar. When we price it in other world currencies, gold has done even better since many currencies have declined significantly in value relative to the greenback. This week, the British pound sterling fell to an all-time low against the dollar, as did the Chinese renminbi.
Many Turks Favor Gold, According to Survey Perhaps 2022"s best gold performance has occurred in Turkey, where the lira has fallen some 52% on jaw-dropping annual inflation of 80%. Gold has doubled in price since the start of the year, helping foresighted investors protect their wealth against runaway consumer prices. Turks have traditionally invested in the precious metal, and many still prefer it as a store of value, according to a May survey by Areda Survey.
To be clear, I don"t believe this depreciation will be as severe as it was during the 2007-2008 housing crisis. Banks are not nearly as speculative as they were then, meaning they"re generally not lending to borrowers with poor credit quality. The delinquency rate on single-family mortgages is currently below 2%, which we haven"t seen since 2006, just before the crisis.
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