Editorial - April 2024


Temps de lecture : min

Gold, a conundrum?

It is an asset that is soaring in 2024 but that nobody is talking about. Artificial Intelligence and oil have more recently been of greater interest to financial columnists. Potential cuts to short-term rate cuts, their start date, the speed of the cuts and the ECB and the Fed’s relative room for manoeuvre are currently driving movements in long-term interest rates and, to a lesser extent, equities.

Yet this asset is currently outperforming the European and US indices and the emerging indices even more so. 

« I am talking about gold. »


In trying to understand this movement, we cling to the past and what is considered to drive the performance of this asset. Over the long term, gold’s performance is very poor compared to that of the Standard & Poor’s (S&P) index. Gold has risen 360% since the 1980s, while the US index has gained 5,200%. However, this underperformance is not linear: While the bubbles of the 1980s and 1990s were damaging to gold, the bursting of the bubble in the 2000s and, to an even greater extent, the 2008-2009 crisis allowed it to regain some ground, before falling again as a result of persistent disinflation and monetary policies that favoured risky assets. 

So why is its price currently increasing? 

It can be argued that, although short-term rates remain high, the future trend in rates will be downward, making the return offered by gold more attractive. Is such an increase justified at a time when the Fed is constrained in the rate cuts it is able to make by persistent inflation and an economy that is creating jobs? 

Gold offers protection against uncertainty. It should be noted that it peaked at around $1,900 in September 2011 after S&P downgraded the US’s credit rating.

Gold belongs to no one and that is its greatest asset. The supply of gold follows physical (and speculative) laws but does not depend on the goodwill of an economic power, as is the case with the dollar. At a time when markets are at their peak and political tensions are increasing, investing in gold may seem to offer protection against fear.

The central banks in a number of emerging countries are not mistaken. By accumulating gold in their foreign exchange reserves, they can distance themselves from the bipolarisation of the world and its economic and political consequences. A form of dedollarisation...

Written by

Director of the International Actions division

April 15, 2024

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