Gold! Every time I mention it, someone loses their mind. Hold onto your sanity. Gold!
Modern humans are every bit as fascinated with gold as those who lived centuries and millennia ago. That, in turn, is fascinating to me. It says a lot about our species, none of it good.
Gold’s intrinsically worthless. Mostly. That’s not really debatable, although some of you are always keen to debate it. Vociferously. When you do, try to be self-aware: Does it make any sense to get worked up because some guy on the internet said something you don’t agree with about the pet rock you keep locked in your Home Depot safe? That’s a rhetorical question. Life’s too short.
I bring up gold on Friday not to stir up debate, but rather to highlight what looked like the single-largest one-week inflow to gold funds on record, a near $5 billion haul.
The figure on the right, above, gives you some context for this last week’s influx. The chart on the left offers a clue as to the impetus, or at least it does if you ask BofA’s Michael Hartnett who, according to BofA’s Michael Hartnett, has the whole world figured out. (See what I did there?)
“We said a big bear market in government trust equals a big bull market in gold,” he wrote, in a (literal) compendium of “I told you sos.” He went on to note that incumbents were voted out of office “in 27 out of 33 global elections since January of 2024.” Then he quoted Herbert Hoover. Because of course he did.
Meanwhile, crypto funds saw their biggest outflow on record, a $2.6 billion exodus.
I’ve said this I don’t know how many times in recent years, but it bears repeating: Bitcoin may be “digital gold” in a lot of respects, but crypto as an “asset class” will generally trade with risk sentiment.
Put differently: If you’re holding crypto as a hedge on the assumption it’s uncorrelated to, for example, your equity exposure, you’re in for a rude awakening during acute bouts of de-risking.
Oh, and I should probably note that both kinds of gold — “new” and “old” — were on track for their worst weeks of 2025.
I guess that move in the dollar yesterday didn’t help but it’s interesting that gold had such a bad week while rates were falling and the world stayed on trend for getting weirder and less functional. Seemed like gold traded with the risk off energy in stocks which surprised me, though I guess you could argue it was overbought. Who knows. I’m curious to see how it behaves on the dip.
With Trump & Co suddenly fixated on gold and Fort Knox, anything’s possible and not ruling out some sort of front-running/positioning in advance of his upcoming inspection. I mentioned this in a previous post and (hopefully) it’s worth repeating here, but the most plausible speculation I’ve read about Trump’s interest in Fort Knox has to do with engineering a one-time budget surplus by marking the US gold reserves to market. This is again from Kelton, host-permitting, and I swear I’m neither an employee nor an acolyte, just piqued.
https://stephaniekelton.substack.com/p/the-real-reason-trump-and-musk-are
Thanks for the link, which includes a link to Ken Garbade’s paper. I’ve been wondering if Bessent & Navarro would try to engineer a similar stunt by issuing gold-backed securities of some sort. I doubt they’d try to sell the gold outright since that would enrage a good-sized section of the base, but ya never know with them!
My Grandfather died in a gold mine collapse. Three days before he died, another miner was killed in the same mine. At the time the miner’s lives, almost all were Dust Bowl refugees from Oklahoma, were valued at next to nothing. Of course, it’s still that way in many parts of the world, but it wasn’t so long ago that it was that way in the US too. The mindset that values money, or gold, over lives or principles of any kind is ascendant again.