Gold, The 'Everything' Hedge Revisited
Correlations and Gold
Now that the media, some banks and other youtube "analysts" are beginning to talk about broken correlations as to why Gold is a buy (we said this $400 ago), the following might be important to address in the coming months as they start beating the “Buy-gold, correlations-dont-matter“ drums a year after we noted it here. 1
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Gold vs The Dollar
We like to say here that correlations are broken and "Gold doesn’t care about correlations"
Which is true when they want the gold. Which everyone does now and will for the foreseeable future
But here is the truth, and its not bad news at all:
Correlations haven't broken between the dollar and gold.
They are however irrelevant at this point in history, a point of change.
Gold’s Alpha-like quality is increasing, its beta is decreasing is actually what is happening
When correlations matter again it will be a sign of stability globally as well as monetarily
That stability may not return for years
Correlations are the "signal" in financialized (centralized dollar dominated) markets when no bigger issue is at hand. Correlations, however, are noise when the world is rethinking stuff...
And we all know the world is rethinking stuff.
Not inflation, Gold…
