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The inverse relationship between bond prices and interest rates complicates this further. When interest rates rise, bond prices typically fall. If bonds decline simultaneously with stocks, the supposed diversification benefit erodes.
Moreover, a global trend dubbed "Sell America" is gaining traction, where foreign investors reduce their holdings of US Treasuries and equities, opting instead for assets like gold. Data indicates that for the first time since 1996, central banks globally now hold more gold reserves than US Treasuries—highlighting a shift in perceived safe-haven assets.
New Recommendations from Leading Financial Experts
Given these developments, many professionals advocate for a reconfiguration of traditional portfolios.