Before the explosion of the coronavirus disease 2019 (Covid-19) pandemic, it was my assessment that a global debt crisis could be a risk 10 years ahead. Whether that risk develops into a real global economic crisis was neither my primary scenario, nor what it is today. However, the enormous expansion of government debt, that the Covid-19 pandemic has caused, primarily in Western countries, combined with the central banks’ purchases of government debt, causes me to adjust the risk picture.
Consequently, I have long argued that investors will simply preserve money in stocks in global companies, and this will be the preferred alternative to, for example, government bonds. However, my assessment of the increase in the risk of a global government debt crisis has also shifted so much, that I, for the first time in more than 30 years, consider whether gold should be included in a low-risk investment portfolio.
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