With the US federal deficit running at 17% of gross domestic product (GDP), gold has become an indispensable portfolio hedge against a severe deterioration in US government finances.
Gold jumped from US$800 to $1,000 an ounce after the 2008 world financial crisis as the US deficit briefly touched 10% of GDP. With the US economy still dependent on multi-trillion dollar demand infusions, gold broke out to a new record.
The favorite in next month’s US presidential election, Joe Biden, looks at the federal budget the way a birthday boy looks at a piñata.
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