Evy Hambro, Global Head of Thematic and Sector Investing at the global asset management giant Blackrock, stated that as systemic issues such as ballooning debt, runaway deficits, and currency depreciation worsen,$XAU/USD (XAUUSD.CFD)$It will continue to rise.
In his latest interview, he stated that the global economy is currently grappling with a complex environment characterized by a weakening U.S. dollar, mild stagflation, and geopolitical tensions—factors that are likely to persist.
"I think that's the case," he said. "If we look at market dynamics, we can see that the bond market—especially the government bond market—has made it abundantly clear that the outlook is far from optimistic. Interest rates are rising, debt levels are extremely high, and the annual fiscal deficits that governments must finance continue to grow, placing immense pressure on the financial system."
Hambro further explained:
People often say, "Ten years ago—or even longer—one pound, one dollar, or one euro could buy far more than it can today; I don't want to take that kind of risk." That's one side of the issue.
On the other hand, some government spending projects appear unwise. There is considerable waste within the bureaucratic system, which makes investors reluctant to continue lending to governments that spend unwisely and lack a plan to repay their debts. It's somewhat like running a business: would you lend money to a company that posts losses year after year? Probably not. If that company keeps asking for loans, you might still extend credit—but at a much higher interest rate, to compensate for the risk of non‑repayment.
These governments face massive fiscal deficits and staggering levels of debt, yet they have no viable solutions—and the situation appears only to be worsening. If they want my money, they will have to pay interest rates far higher than before.
Against this backdrop, Hambro stated that physical assets such as gold are regaining favor among long-term investors.
He said, "Real assets can include infrastructure, commodities, or gold. These are time-tested stores of purchasing power. When I first entered this field more than thirty years ago, copper was trading at 60 cents per pound; today it has risen to $6. Back then, gold was $400 an ounce; now it's $4,000."
"So"$XAU/USD (XAUUSD.CFD)$"It truly is a long-term store of value. Gold's performance sometimes outpaces other assets, and at other times it underperforms; sometimes it delivers more than its expected value, and other times it falls short. But overall, over the long run, it has consistently been an excellent asset. I believe people are coming to recognize this again," he added.
Hambro further stated that in the 1990s, wealth management firms would allocate a certain proportion of gold to their clients' portfolios.
"This practice disappeared in the early 21st century," he said. "Now gold allocations are making a comeback, but at very, very low levels—far below what investors should hold. Advisors typically recommend around 10% allocation to gold, because it essentially serves as insurance. Without such coverage, an unexpected event could result in devastating losses. If you buy insurance every year and nothing happens over a decade, you might feel the premium was wasted. But when disaster strikes, that policy can help you recoup your losses."
Overall, against the backdrop of massive government debt and deficits worldwide, Hambro emphasized that Blackrock remains bullish on gold prices.
"Looking at the world today, you'll find that governments are saddled with staggering debts, and many countries are grappling with massive fiscal deficits," Hambro emphasized. "Beyond repeatedly making the same mistakes, governments seem to have no plan for addressing these issues. In my view, this means the purchasing power of fiat currencies will continue to erode."
"The result is a rise in the prices of real assets," he said, "and gold may be one of the biggest beneficiaries."
However, Hambro also stated that although Blackrock believes gold's long-term trend will remain upward, it expects prices to experience further volatility in the short term due to shifting monetary policy expectations and interest rates.
"This will cause short-term volatility," he said, "but the trend is very much in your favor."
Edited by melody