Why a Recession May Never Come... and Why Gold Still Wins

Persistent U.S. fiscal deficits of 6% to 7% create an implicit cap on Treasury yields, as higher rates would render the federal budget insolvent. Portfolio Manager Andrew Sarna identifies this fiscal reality, coupled with an AI-driven economic overhang, as the primary driver for a necessary shift toward real assets. While massive government spending sustains current economic growth, underlying indicators like rising delinquency rates and a K-shaped recovery reveal significant structural fragility. Traditional bond holdings no longer function as reliable core positions in this environment. Instead, portfolios require exposure to energy and precious metals to hedge against long-term currency devaluation and geopolitical instability. As the AI investment bubble shows signs of cooling, investors must pivot toward sectors that provide protection against the inevitable fracturing of the global financial order and the structural inability of G7 nations to balance their books.