The gold price has climbed to a two-month high of $1,825/oz. Despite the recent uptick gold is still 10% below its all-time high of summer 2020. As Myra Saefong notes in Barron’s, 2021 is set to be the metal’s first losing year since 2018. Its recent “drubbing” is perplexing, says John Authers on Bloomberg. Conditions over the last year should have boosted gold, which does best at times of high inflation (check) and monetary debasement (check). Instead, gold-mining stocks have been the worst-performing sector in the S&P 500 over the last year. Still, something might be about to shift. The ratio of US stocks to gold is running at a 16-year high, more proof, if any were needed, that American stocks are historically overpriced.
Gold bulls had been betting on widespread “revulsion” for paper currencies in the wake of massive money-printing by central banks, says Randall Forsyth in Barron’s. That revulsion has come, but it seems to have boosted cryptocurrencies (dubbed “digital gold”) rather than gold. “Fans of gold…arguably are the most contrary investors” and, at present, “perhaps the loneliest”.
Gold got carried away during the 2018-2020 bull run, says Eoin Treacy of Fuller Treacy Money. After a 75% jump it became overheated in summer last year. Still, this correction may be nearing its end after 18 months, “it is a good time to start looking at the sector again”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
What investors can expect from stocks and economies in 2025There are reasons for investors to be hopeful about 2025, with slowing interest rates and moderating oil prices. But trouble may be brewing in bond markets
-
Is Xi Jinping ready for Donald Trump's tariffs on China?The ascent of Donald Trump will bring new challenges for Xi Jinping
-
Why Wise could be worth a lot more than its share price impliesForeign-exchange transfer service Wise has the potential to become the Amazon of its sector – here's why you should consider buying this stock now
-
Can The Gym Group pump up your portfolio?Gym Group was one of the best UK small-cap stocks in 2024 and will beef up your profits this New Year
-
MoneyWeek's five predictions for investors in 2025MoneyWeek's City columnist gazes into his crystal ball and sees five unexpected events in store for investors in 2025
-
How to invest in battery metalsDespite recent weakness, battery metals that are powering electric vehicles are worth a look
-
How buy-and-build stocks deliver strong returnsBunzl, DCC and Diploma became successful through buy-and-build – rolling up dozens of unglamorous businesses. How does it work and what makes it successful?
-
Singapore Technologies Engineering shows strong growthSingapore Technologies Engineering offers diversification, improving profitability and income
-
Why undersea cables are under threat – and how to protect themUndersea cables power the internet and are vital to modern economies. They are now vulnerable
-
Warren Buffet invests in Domino’s – should you buy?What makes Domino's a compelling investment for Warren Buffet's Berkshire Hathaway, and should you buy the UK-listed takeaway pizza chain?
