In July, even before US steel tariffs had sparked the sharp sell-off in Turkish lira that then spread its tremors across emerging markets (EMs) and risk assets from commodities to equities, strategists at Bank of America Merrill Lynch (BAML) were pondering potential winners from rising political populism.
They suggested that the inability of monetary and fiscal policy, global synchronized recovery and record corporate profits to create sustained wage growth means investors must discount more protectionism, redistribution and ultimately debt monetization via central banks in coming years, trends that a recession would dramatically accelerate.
And where should we put our money, then?
“Gold is the secular beneficiary of the war on inequality,” suggest the BAML strategists, noting it would be one big winner from the ultimate act of political populism – at least as it impacts financial markets – namely ending central-bank independence.
The topic of investing in gold has always evoked unusually strong emotions and strident views both among promoters and sceptics.
Gold price (USD)
Source: World Gold Council
Gold performed strongly in 2008, rising 4.3%
