Gold’s evolution into a ‘must-have’ asset is storing up trouble
Price rise is being driven by investors adding the metal to long-term portfolios
Until recently, the rapid rise in the price of gold had more to do with opportunistic financial trading than any larger structural investment theme, let alone a drop in physical supply or an increase in industrial use.
Now, the metal is seen to offer something for everyone. That is yet another unintended result in a lengthening list of the exceptional involvement of central banks in the functioning of markets. Their expanded interventions to counteract the effects of the pandemic have pleased many now but will create problems for the central banks and the economy at large, if a sharp and lasting economic recovery continues to elude us.
Source: Mohamed El-Erian | Financial Times