Why Gold Matters
Throughout history, gold has served as a store of value during times of global transition. As emerging markets such as China capture a rising share of global GDP, we believe the world is shifting away from a U.S. unipolar world and toward one of great power competition. During this time, U.S. rivals will likely seek to diversify their central bank reserves away from U.S. dollars and toward currencies of friendly governments. We think gold may serve as an option for many central banks and can benefit from a long period of U.S. dollar weakness.
Key Takeaways
- A long period of U.S. dollar weakness may usher in a gold bull market
- Competition for central bank reserves appears to be heating up between the dollar and yuan
- Russian sanctions may serve as a wake-up call to other countries over their own dollar-based reserves
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