It appears that the story of gold is the story of the dollar. I don't know if the inflation narrative for gold still applies, or if it does, under what specific conditions. It's not anything I want to place an implicit, unquestioned bet on any longer.
Today, as inflation and interest rates slowly creep upwards, non-US investors flock to the "least dirty shirt and least low-yielding sort-of safe haven (for now) US Dollar". The rising US Dollar kills gold, all other metals, and oil (why I lost my job here in Texas in March. Yes, that got my attention). So
gold and anti-gold can and have been falling simultaneously now... since February 1.
The mechanism of non-correlated trajectories that cancel out is broken for a while. When it comes back.. who knows?
LC475 wrote:
Regarding "doom and gloom about gold and bonds": gold is gold, and long-term dollar bonds are in some very important and real ways the anti-gold. It stands to reason gold and anti-gold are not always going to be synchronized. Gold will do well in inflation, and bonds will do well in deflation. If one were really convinced that interest rates were going to go significantly up for many years to come, up to 5, then 10, then 15 percent, that would eventually be very good for gold. Ditching gold would be the last thing one would want to do. Sum up: if one has a certain predictive view about what the inflation rate is going to be in the future, it would make sense to sell off one of these two assets, either gold or long bonds: gold if you think rates will fall, bonds if you think rates will rise. It doesn't really make sense (to me, personally) to sell off both.