Every asset on the planet has been having fun since the Federal Reserve, America's central bank, made clear on Wednesday that an interest rate cut is coming as early as next month.
Share prices have surged (the US market, the S&P 500, is at a new all-time high).
Bond prices have surged too (the volume of negative-yielding sovereign debt around the world is also at an all-time high).
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But one asset that isn't quite as used to all this adulation has also been drawing a bit of attention.
Gold.
Gold hasn't been as much of a duff investment as you might think
Gold is normally my colleague Dominic Frisby's patch, but I'm sure, given all the excitement, he'll forgive me for sticking my oar in this morning.
It's easy to dismiss gold as the asset that the recovery forgot. Stocks and bonds have been terribly exciting since the post-financial crisis era kicked off.
Gold, on the other hand, peaked in 2011 at above $1,900 an ounce, eventually bottomed in late 2015 at around $1,100, and since then has done very little.
That's not the entire truth, however. It's worth remembering that since around late 2014, early 2015, the US dollar has been strong against most other global currencies. So gold's rather more bullish performance since then against many global currencies has been somewhat overlooked.
The UK is a very obvious example. With sterling taking its post-Brexit hammering, the gold price surged from around £700 per ounce to above £1,000. It hasn't quite breached the 2011 high of not far off £1,200, but we are now back close to the £1,100 mark.
But it's not just the UK. As Mark O'Byrne of GoldCore pointed out to me the other day, gold priced in Australian dollars has now broken out to a new record high it surged to above A$2,000 this week (this is great news for Aussie gold miners, by the way).
So your average Aussie gold owner probably couldn't give a hoot about what the gold price has been doing in US dollar terms. She or he is just glad that they own the stuff.
However, all of that said, gold has now done something in US dollar terms that has everyone getting very excited. Dominic has written many times this year about how the $1,360 an ounce level is a big deal in technical terms (it represents "resistance").
Well, this week, gold has just sliced through it like it wasn't there. And as far as the people who watch these things are concerned, that means it's party time for the yellow metal again.
So should you be buying?
The backdrop is looking good for gold
While I respect technical analysis you can call it hocus pocus if you want, but very few serious investors I've met dismiss it out of hand I'm not a chartist myself. So I'm not going to attempt to give you the technical picture here.
And as long-suffering readers will know, we reckon you should always have some gold in your portfolio for the purposes of diversification, and also to provide some sort of insurance against financial disaster.
(And if you really are worried about a full-on world of capital controls or restrictions on movement or some other major disruption to civil society as we know it, then gold is among the very few assets which packs a lot of value into an easily portable form you just need to make sure you can access it when you need it.)
So you won't catch me telling you to sell all your gold at any point, almost regardless of what happens (although a breakthrough in alchemy might irreparably damage the case for gold).
Also, gold bugs have endured many false dawns. The level of excitement generated by the current "breakout" (even the generally gold-sceptical Financial Times has an upbeat take on gold in its Lex column today) does make me think that this could easily be another. So I wouldn't be running out to take a great big leveraged short-term day-trading punt on it in the next hour or so.
But that said, it does also look to me as though the conditions are now ripe for gold to embark on a proper bull run. In the grander scheme of things, if the interest-rate-raising cycle is now over and it clearly is, almost regardless of what happens to economic data then the runway is a lot clearer for gold.
A change of heart by the Fed, or a slide into catastrophic deflation (gold hates it when real interest rates go up as I outlined here) are about the only things I can think of that would make life much tougher for gold, and I can't see either of them happening (and in the second case, you'd want to own gold anyway, because of the risk to the financial system).
So, in short, if you don't own gold, get some. If you do own gold, consider whether you want to increase that (in other words, if you are someone who tries to actively manage their asset allocation, now might be a time to "overweight" gold rather than "underweight" it).
And on the equities front, look at gold miners. I'd use a fund rather than trying to pick individual winners this is a sector full of potential disasters but the nice thing is that when gold miners do take off, even a fund can deliver very chunky returns in a short space of time.
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John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.
He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.
His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.
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