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BMO Equal Weight Oil & Gas Index ETF (ZEO)
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iShares Core Canadian Long Term Bond Index ETF (XLB)
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Global X Gold Producer Equity Covered Call ETF (GLCC)
Q: Is there a bond crash coming because of high government debt, particularly in the US? How do you see gold and energy markets performing in that kind of environment and are short term bonds even worth the risk? Or is this fear all over done and we just live with debt levels far beyond our ability to ever repay them?
5i Research Answer:
Some fear is always justified, but the 'debt crisis' has been a worry for more than three decades now and equity and bond markets have been generally fine. Lower rates are going to help, and economic growth can as well. That being said, we think gold remains the best 'insurance' against any type of crisis. Gold is breaking out, and tends to also do well when interest rates move lower. Energy remains tied to the global economy and in a crisis situation we would see it as far less attractive overall. A lot of focus is always on US debt levels but there are worse-off countries, and the real impact is on the US dollar, over time.