Gold’s Stealthy Bull Market

Gold prices are surging, hitting a record $2,449.89 per ounce in May 2024.

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Historically, one thing has been true about gold: 1) gold price spikes coinciding with periods of economic weakness.

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But the U.S. economy is doing pretty well by many measures (besides *cough* inflation). GDP is up, unemployment is down, S&P 500 is up. 

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Many retail investors are buying gold following the lead of foreign governments, who have turned to gold due to its ability to store value at a time when geopolitical tensions have increased the risk of government-sanctioned asset freezes:

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1. Russia invaded Ukraine
2. The U.S. and its allies froze $300Bn in Russian assets, the majority of which is held by European banks
3. This spooked China, which holds $775Bn worth of U.S. treasuries, and other governments into selling dollars for physical gold
4. Retail investors, especially the Chinese, are following the activity of central banks

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Could it last? Central banks gold-buying momentum continued into 2024.