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The drivers of this in my view are: 1) flight from USD assets given views that one cannot depend on US assets as safe havens 2) central banks increasing gold

by m101 1y ago

The drivers of this in my view are: 1) flight from USD assets given views that one cannot depend on US assets as safe havens 2) central banks increasing gold holdings 3) purchases by Chinese investors as they have few places to invest their money 4) concern around debt levels deficits and democratic process ability to fix this 5) concerns around central bank independence, and hence inflation targeting, being undermined for political motivations I have personally bought a lot of gold after having been a long term US equities investor because of its risk-off and zero duration nature. In a world of stock bubbles, high valuations, and general economic uncertainty, leaning risk-off has been where I currently feel comfortable. In a world of inflation being in zero duration is a sensible place to be.

xhrpost 1y ago
>flight from USD assets given views that one cannot depend on US assets as safe havens I keep seeing this but then I also keep seeing the opposite: https://finance.yahoo.com/news/foreigners-buying-us-stocks-record-093000606.html https://finance.yahoo.com/news/foreigners-buying-us-stocks-r...
- thanhhaimai 1y ago
  I think you're conflating between 2 different things: the USD and US stocks from US companies. - The USD is definitely losing value. That also means stocks from US companies would be cheaper from a foreigner's point of view. - That means it represents good investment opportunity as long as the fundamentals of those companies are not affected too much (e.g. AI companies not directly affected by workers' raid, or pay tarrifs). Nothing is contradictory here.
  - xhrpost 1y ago
    I understand what you're saying but I don't think I'm conflating. OP specifically said "USD assets", which I took to mean things like stocks.
  - ajross 1y ago
    > - The USD is definitely losing value. That also means stocks from US companies would be cheaper from a foreigner's point of view. That's actually not quite right. You can only buy securities on US markets with US dollars. You'd have to buy dollars on the money market to make that trade. So to the extent that "cheaper dollars" are driving investment in dollar-valued securities, they're increasing the value of the dollar on the global market by the same amount. All markets seek toward efficiency. The situation you posit would be subject to a money-printing arbitrage loop if it actually existed.
- rajnathani 1y ago
  41% [1] of S&P500 companies' (~Top 500 US stocks index which for example doesn't include TSMC, as it's only for US-listed companies) revenue comes from outside of the US. So really, people are buying into global companies when they're buying the S&P500. [1] https://www.apolloacademy.com/wp-content/uploads/2025/01/011225-Chart_v2.pdf https://www.apolloacademy.com/wp-content/uploads/2025/01/011...
GeekyBear 1y ago
We've also had four big rounds of Quantitative Easing from the Fed since the financial crisis, with the most recent coming right after the pandemic. https://www.wikipedia.org/wiki/Quantitative_easing https://www.wikipedia.org/wiki/Quantitative_easing
- ambicapter 1y ago
  This really feels like the original sin to me (I am not remotely an economist). Perhaps it can just be fixed with taxes to take money out of circulation.
  - FuriouslyAdrift 1y ago
    Smartest thing to do but politically radioactive...
  - m101 1y ago
    Central bank money printing is morally bad given it's largely used to bail out either irresponsible government spending, or irresponsible private sector actors. Central banks could reduce their balance sheets significantly more (and until recently the pace was pretty quick), but given where things are today it will undoubtedly be pretty politically unpalatable to do so (bond markets puking, making deficits even worse in the face of an inability to cut spending).
  - d1sxeyes 1y ago
    “We’re going to increase taxes!” “To spend on better public services?” “Nah, we’re just gonna burn it” Easier said than done, I think.
    - eadmund 1y ago
      Is it possible that a fair amount of government expenditures are just a fancy way of burning money? E.g. cowboy poetry festivals.
      - 1y ago
grafmax 1y ago
> and democratic process ability to fix this Actually we’ve shifted into authoritarianism and confidence has only worsened.
- m101 1y ago
  I assume you are labelling trump the authoritarian. He has very little ability to impact on the majority of US spending, whilst a true authoritarian should be able to. The system has been corrupted to such an extent that it is basically impossible to change.
  - grafmax 1y ago
    Maybe you are conflating authoritarianism with dictatorship but that is only one kind. We live in an oligarchy and have for many years. Trump is the latest intensification of that trend. It’s backwards to blame the faults of oligarchy on democracy. The reverse would be true. However you are quite right that political system we are living under seems incapable of righting itself. The upper class is like a parasite that doesn’t know or care if it’s killing its host.

by m101 1y ago

xhrpost 1y ago

>flight from USD assets given views that one cannot depend on US assets as safe havens I keep seeing this but then I also keep seeing the opposite: https://finance.yahoo.com/news/foreigners-buying-us-stocks-record-093000606.html https://finance.yahoo.com/news/foreigners-buying-us-stocks-r...

thanhhaimai 1y ago
I think you're conflating between 2 different things: the USD and US stocks from US companies. - The USD is definitely losing value. That also means stocks from US companies would be cheaper from a foreigner's point of view. - That means it represents good investment opportunity as long as the fundamentals of those companies are not affected too much (e.g. AI companies not directly affected by workers' raid, or pay tarrifs). Nothing is contradictory here.
- xhrpost 1y ago
  I understand what you're saying but I don't think I'm conflating. OP specifically said "USD assets", which I took to mean things like stocks.
- ajross 1y ago
  > - The USD is definitely losing value. That also means stocks from US companies would be cheaper from a foreigner's point of view. That's actually not quite right. You can only buy securities on US markets with US dollars. You'd have to buy dollars on the money market to make that trade. So to the extent that "cheaper dollars" are driving investment in dollar-valued securities, they're increasing the value of the dollar on the global market by the same amount. All markets seek toward efficiency. The situation you posit would be subject to a money-printing arbitrage loop if it actually existed.
rajnathani 1y ago
41% [1] of S&P500 companies' (~Top 500 US stocks index which for example doesn't include TSMC, as it's only for US-listed companies) revenue comes from outside of the US. So really, people are buying into global companies when they're buying the S&P500. [1] https://www.apolloacademy.com/wp-content/uploads/2025/01/011225-Chart_v2.pdf https://www.apolloacademy.com/wp-content/uploads/2025/01/011...

GeekyBear 1y ago

We've also had four big rounds of Quantitative Easing from the Fed since the financial crisis, with the most recent coming right after the pandemic. https://www.wikipedia.org/wiki/Quantitative_easing https://www.wikipedia.org/wiki/Quantitative_easing

ambicapter 1y ago
This really feels like the original sin to me (I am not remotely an economist). Perhaps it can just be fixed with taxes to take money out of circulation.
- FuriouslyAdrift 1y ago
  Smartest thing to do but politically radioactive...
- m101 1y ago
  Central bank money printing is morally bad given it's largely used to bail out either irresponsible government spending, or irresponsible private sector actors. Central banks could reduce their balance sheets significantly more (and until recently the pace was pretty quick), but given where things are today it will undoubtedly be pretty politically unpalatable to do so (bond markets puking, making deficits even worse in the face of an inability to cut spending).
- d1sxeyes 1y ago
  “We’re going to increase taxes!” “To spend on better public services?” “Nah, we’re just gonna burn it” Easier said than done, I think.
  - eadmund 1y ago
    Is it possible that a fair amount of government expenditures are just a fancy way of burning money? E.g. cowboy poetry festivals.
    - 1y ago

grafmax 1y ago

> and democratic process ability to fix this Actually we’ve shifted into authoritarianism and confidence has only worsened.

m101 1y ago
I assume you are labelling trump the authoritarian. He has very little ability to impact on the majority of US spending, whilst a true authoritarian should be able to. The system has been corrupted to such an extent that it is basically impossible to change.
- grafmax 1y ago
  Maybe you are conflating authoritarianism with dictatorship but that is only one kind. We live in an oligarchy and have for many years. Trump is the latest intensification of that trend. It’s backwards to blame the faults of oligarchy on democracy. The reverse would be true. However you are quite right that political system we are living under seems incapable of righting itself. The upper class is like a parasite that doesn’t know or care if it’s killing its host.