Guggenheim’s Minerd likes gold – “accumulation of gold … a responsible policy response”

Scott Minerd is chief investment officer at Guggenheim Investments. This via his latest note on what to expect from the Federal Reserve, his “Fed Roadmap”:

  • With the Fed going all-in on financing the government deficit, the U.S. dollar could be at risk to negative speculation of its status as the dominant global reserve currency. 
  • Investing in gold may help offset this trend.
  • The accumulation of gold as a reserve asset historically has been seen as a responsible policy response in periods of crisis. 
  • This may very well become the policy option of choice in the future.

Break the Glass: As long as we are looking at the possible roadmap for the Fed, we cannot avoid discussing one other tool. Central banks around the world, including the Fed, hold almost 35 thousand tonnes of gold reserves. A central bank owns gold to buttress its reserves with an asset that becomes increasingly valuable in a severe crisis. There are no signs the world is questioning the value of the U.S. dollar, but it is clear that it has been slowly losing market share as the world’s reserve currency. With the Fed going all-in on financing the government deficit, the U.S. dollar could be at risk to negative speculation of its status as the dominant global reserve currency. Investing in gold may help offset this trend. The accumulation of gold as a reserve asset historically has been seen as a responsible policy response in periods of crisis. This may very well become the policy option of choice in the future.

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