Economist Daniel Lacalle says investors should hold gold and other hard assets rather than sovereign bonds as Treasury yields climb. Gold futures traded at $4,217.40, up 0.9% on the session, even as the metal has slipped 4.01% over the past five days.
Daniel Lacalle, chief economist at Spanish private bank Tressis and co-fund manager of its Adriza International Opportunities Fund, argues that bonds no longer serve as the safe haven investors once counted on. He points to rising 20-year and 30-year Treasury yields as evidence that markets are repricing sovereign debt risk.
Bonds lose their appeal
Lacalle traces the shift to the sovereign-debt bubble blowup of 2021, when governments spent heavily to stimulate economies coming out of lockdowns. He adds that Federal Reserve rate hikes won't ease the current geopolitical energy shock, and will instead raise borrowing costs for households and businesses.
The numbers back up his concern. The 20-year Treasury yield has climbed to 5.624% from 4.822%, even as the S&P 500 has risen 12% this year. Lacalle says that combination shows sovereign bonds no longer deliver the real economic return investors expect during periods of uncertainty.
Gold's case in a hard-asset portfolio
As a result, Lacalle tells clients to shift the debt side of a traditional 60/40 stock-bond portfolio toward hard assets. He notes that global central banks are adding gold to reserves while trimming sovereign debt holdings, and argues smaller investors would be unwise to do the opposite.
Gold traded at $4,217.40 on the session, up 0.90%, part of a broader rally in the metal alongside a rise in crude oil. Over five days the metal is down 4.01%, though it remains up 8.54% over the past year.
Lacalle pairs that hard-asset tilt with an overweight in U.S. technology stocks tied to artificial intelligence, betting on companies exposed to growth and innovation over the next 10 to 20 years, rather than so-called defensive sectors he likens to bonds.
Source: MarketWatch.com – Top Stories
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