In a recent note, Bank of America warned that gold is the final safe haven in the United States amid risks related to rising national debt. Indeed, they argued that the metal has become more attractive than US Treasury bonds due to the risks of an impending debt crisis.
The bank noted that the US national debt is predicted to continue reaching record levels over the next three years. Therefore, economic pressure on the country has shifted how gold reacts to macroeconomic developments such as lowered interest rates. Ultimately, the dynamic makes gold “an attractive asset,” the bank says, as it predicted it to eventually reach $3,000.
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Bank of America Says Gold Could be Only Safe Haven Amid Impending US Debt Crisis
Throughout 2024, gold has been a premiere asset. The metal has continually set all-time high prices since December of last year. Currently, it is nearing $2,700, which would surpass the $2,696 record high it has already set in October. For many, the asset is proving to be the superior investment.
That has been echoed by Bank of America, which recently said gold could be the last safe haven amid rising US national debt. The bank says the metal has become safer than US Treasuries because of its risks. Specifically, those risks that are tied to what could be an impending debt crisis for the country.
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The US debt has long been a concern, but one that has been disregarded by policymakers. Moreover, Bank of America notes that the two US presidential candidates don’t appear keen to address the issue. Indeed, their economic plans would only help to increase the record debt figure that surpassed $35.7 trillion this year.
This could lead to increased gold demand on a global basis. “Central banks in particular could further diversify their currency reserves,” the bank warns. Over the past decade, gold holdings from central banks have increased from 3% to 10% currently. The interest should see the asset’s value only increase, setting even more record highs before the year is through.
