The world’s central banks have been buying gold for years, and that trend could drive the price up over $2,000 next year, according to some experts. The problem is the ever-growing pile of public debt, which could be exacerbated by inflation next year.
Noble Gold founder and CEO Collin Plume told ValueWalk in an email that central banks will have to bear to brunt of “government generosity” by covering the costs of the many stimulus packages that have subsidized workers and businesses that couldn’t function during the lockdowns. However, that money will still need to be paid back, which causes three major challenges for central banks.
“They are all struggling with these issues simultaneously, and so borrowing amongst each other is not an option” Plume said. “Unemployment and bankruptcies will mean less tax revenue coming in to balance the books, and inflationary pressures are almost inevitable given the colossal figures involved. All of these realities will likely push prices for everyday household items higher (along with interest rates as well) at a time when people can least afford them – leading to recessionary fears down the line.”
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