Safe harbor: Gold rises as stocks sink

It’s another golden age for goldbugs, said Jack Ryan in Bloomberg. The price of the glittery metal “passed $3,000 an ounce for the first time ever” last week and is up nearly 14 percent this year, outperforming other assets, including Bitcoin. Though not quite at early-1980s levels—when soaring inflation pushed gold up to an inflation-adjusted peak of $3,800 an ounce—crossing the $3,000 threshold “drives home gold’s centuries-old role as a store of value in turbulent times.” Jumps in its price tend to “track broader economic and political stress” as investors look for safer havens for their money. Russia’s invasion of Ukraine in 2022 also triggered a surge in bullion buying by central banks such as China’s and India’s seeking to diversify their reserves. But gold has performed remarkably well now for a long time. In the last quarter-century, its “price has risen 10-fold, outperforming even the S&P 500, which quadrupled over the same period.”

Small investors are increasingly gold-curious, said Polina Devitt in Reuters. “The number of people buying gold for the first time on BullionVault’s online market jumped in February to the highest since May 2021.” Holdings of gold exchange-traded funds, which track the price of gold without the need for investors to hold the physical metal, have “climbed 68.1 tons, a gain of 4.3 percent” in the U.S. this year.

Meanwhile, professional traders are in a frenzy over the “biggest trans-Atlantic movement of physical bars in years,” said Joe Wallace in The Wall Street Journal. Gold, for the moment, is “worth substantially more in Manhattan than in the U.K.” because of a stunning burst of U.S. demand. Traders at major banks have begun “yanking gold from vaults deep below London’s medieval streets,” where bullion has been stored for centuries, and shipping it across the ocean, sometimes even in “cargo holds of commercial planes.” Interest has been so intense that the Bank of England “has struggled to bring groaning pallets of gold up from its vaults fast enough to meet the demand.”

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Compare this with what’s happened to Bitcoin, said Ian Salisbury in Barron’s. Since its inception, Bitcoin has gotten a lot of comparisons to the most precious of metals. “Both straddle the line between assets and currencies,” and both have a “finite supply” not controlled by governments that “appeals to investors seeking protection against inflation.” But investors have a centuries-old understanding of gold. Turns out that in a time of unease, gold is living up to its reputation as a safe haven—while Bitcoin is looking more like a “growth stock” that goes up and down in sync with the markets.