Bonds AwayGov't bonds aren't the safe haven they once were - BlackRock | Kitco News My Comment: I have thought for a long time that at some point investors would demand higher rates on sovereign debt to compensate for the risk of the debt not being paid (or being paid with inflated currencies).. With a looming recession, sovereign debt will explode higher. I'm expecting the US national debt to reach $40Trillion by 2026. Just how is that debt going to get reduced or even stop expanding exponentially? It is a primary reason to own gold.
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They noted that bonds as a safe-haven play are "obsolete" as they expect yields to continue to rise.
"First, central banks are hiking rates to try to tame inflation, causing recessions. Second, we don't see them cutting rates like they typically do in recessions due to persistent inflation. Third, we expect investors to demand more compensation for the risk of holding government bonds amid high debt loads," the strategists said in the report.
"Exploratory analysis shows that gold has proven to be one of the best-performing assets during U.S. recessions, especially when they have coincided with high inflation," the analysts said in the report.