BIG NUMBER | 103% | Gold Rush

Core Insights - Gold has increased by 103% since the end of 2023, outperforming the S&P 500's 43% return and U.S. investment grade bonds' 8.6% return [1][2] Economic and Political Factors - Economic and political uncertainties are driving both investors and central banks to increase their gold holdings, contributing to the surge in gold prices [2] - Concerns regarding inflation, tariffs, and national debt are leading investors to seek gold and other non-traditional assets as a hedge against potential declines in stocks and bonds [2] Market Dynamics - Despite positive real yields on bonds, such as the 10-year U.S. Treasury real yield at 1.75%, gold has continued to rise, indicating a complex relationship between gold and bond yields [4] - Gold is characterized by low correlation with stocks, often rising when stock prices fall, making it a potential diversification tool in investment portfolios [5] Volatility and Investment Characteristics - Gold is not as stable as commonly perceived, with an average daily volatility of around 17% since 2005, comparable to the 19% volatility of stocks [5] - Unlike stocks, gold does not generate earnings or cash flows, and its price is primarily influenced by changes in real yields, the dollar, and investor sentiment [5]