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06/13 18:51

Why gold could be the smart choice amid rising US

Why gold could be the smart choice amid rising US debt

As the U.S. government prepares to issue over $1 trillion in new debt, bonds may give way to commodities as a safer investment, according to Larry McDonald, founder of The Bear Traps Report.

He predicts that between September this year and February next year, about $1.5 trillion worth of new government bonds will be issued, a significant increase compared to last year.

This massive inflow of bonds, combined with the ongoing federal deficit, could put severe pressure on an already volatile bond market. McDonald envisions a huge shift: A shift of $4 to $6 trillion from “ paper ” financial assets (stocks, bonds) to “hard assets.”

What are these hard assets? Think precious metals like gold, silver, and platinum, which have already performed well this year. Agricultural commodities are also in his sights. McDonald suggests a radical shift from the traditional 60/40 (stocks/bonds) portfolio to a “30/30/30/10” allocation, with a much larger share (30%) in commodities and 10% in cash.

For ordinary investors, investing directly in commodities can be difficult. However, ETFs like the Invesco DB Agriculture Fund (DBA) and SPDR Gold Shares (GLD) offer affordable ways to invest. While McDonald doesn't predict an immediate crash in the bond market, the sheer volume of debt expected makes a strong case for bolstering portfolios with tangible assets.Gold-vs-silver-768x432.webp

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