Here are the major takeaways, with a link to the video below -
In 2020, investors chose Treasury bonds as their risk-off asset of choice. They couldn't get enough Treasuries, which were yielding less than a percent, in their portfolios. Mass accumulation of Treasuries to hedge economic and political uncertainty was the most popular narrative and trade. However, five years later, it proved to be the worst trade imaginable. In fact, although they intended to hedge risk, they were actually running into a burning house. We suspect the 2025 gold rally will eventually suffer the same fate.
- If it makes sense to buy gold because we don’t trust Treasuries or sovereign debt, why are global bonds having a pretty good year?
- If we are buying gold because the dollar is worthless, why has the US dollar index been moving higher against other currencies this month while failing to make a new low?
- If it is a fiat currency devaluation, why is inflation only 3%ish for developed nations?
- If we are buying gold because the economy is in danger, why are stocks at an all-time high?
- If we are buying gold because of the government shutdown, why did gold move a mere $100 or less in either direction (once down, twice up) on the last two occasions? Is this shutdown more consequential than the others (early and late 2018 under Trump and in 2013 under Obama)?