“You see Mr. Powers, I love gooold!” - Goldmember, and probably every investor in the world in 2024.

Gold has been on fire recently and today we are going to talk about why.

We will be using The Wall Street Journal article titled: “Gold Is Rallying. It Isn’t About Inflation This Time” for our 3 minute case study.

Let’s get into it!

Case study

Summary

• Gold’s recent surge to over $2,100 an ounce is getting everybody’s attention in the investment community.

• This rally is unique because it's not primarily driven by inflation fears, which traditionally boost gold prices.

• Instead, it's more about the metal serving as a hedge against broader uncertainties – a reflection of the times we're living in.

• Gold's relationship with the stock market and inflation has always been complex.

• While it has lagged behind stocks over the long term, it has had its moments of outshining them, particularly during the 1970’s and early 2000’s

• This suggests that gold can be an effective hedge, but not just against inflation – it seems to be more about hedging against fear and uncertainty.

• The 2000s saw a significant rise in gold prices, attributed to fears of loose monetary policy and other global concerns, rather than just inflation.

• This trend is apparent today as well, with ongoing geopolitical tensions and uncertainties fuelling gold's appeal as a safe-haven asset.

Key takeaway: Gold is a multi-purpose safety net for your investments. It's not only useful for times when prices are going up, but it's also great for protecting your money during big global issues or uncertain times around the world.

Insight Breakdown:

1. Gold as a hedge against fear: Think of gold as a safe spot to put your money when things in the world are uncertain or scary. It's like a safety net when there’s worry about things like wars or big economic problems.

2. Gold’s Ups and Downs: The value of gold has had its highs and lows over the years. It’s not always about doing better than stocks or keeping up with rising prices in the economy. Sometimes, it's just about being a steady, reliable choice when other things are shaky.

3. Gold vs. Stocks and Bonds: Stocks are pieces of companies, and they can grow as the companies grow. Gold is different. It doesn't grow or produce anything, but it's valuable because people all over the world agree it's worth something. It's not tied to any one country’s rules or money.

4. A World of Uncertainties: Nowadays, there's a lot of uncertainty, like conflicts between countries, disagreements in politics, and concerns about the economy. This makes gold look like a good option because it's considered a safe place in tough times.

5. Banks Buying Gold: Big banks in different countries, including China, are buying lots of gold, more than they have in a long time. This might be because they want to protect themselves against possible troubles with money values or to be safe in case of economic penalties between countries.

Simplifying Jargon:

• Gold Rally: When the price of gold significantly increases.

• Hedge: An investment that is made to reduce the risk of adverse price movements in another asset.

• Safe-Haven Asset: An investment that is expected to retain or increase in value during times of market turbulence.

• Central Banks: The institutions responsible for overseeing the monetary system for a nation (or group of nations), often involved in gold purchases.

Bullet News

• Evaluating ChatGPT's Stock Picking for Day Trading: While ChatGPT can generate buy and sell signals for stocks, its effectiveness in day trading based on market moods and tweets is uncertain, with results appearing somewhat random and mixed.

• Indonesia Increases Nickel Output: Despite low prices, Indonesia is boosting nickel production to support affordable electric vehicle batteries, staying the world's top producer.

• Trump's IPO Success: Donald Trump's net worth soared by $4.6 billion following Truth Social's parent company's public listing, despite its limited financial success.

• Rapid Gasoline Price Increase: Severe weather and global geopolitical disruptions are causing unusually fast rises in U.S. gasoline prices this year.

• Tesla's Q1 Performance Below Expectations: Analysts predict a significant year-over-year decline in Tesla's Q1 deliveries, potentially marking the first drop in sales since 2020.

Quotes of the day

“Gold is money. Everything else is credit.” - J.P Morgan

“I love gold! The look of it! The smell of it! The taste of it! The texture! I love gold so much that I lost my genitalia in an unfortunate smelting accident. Hence the name… Goldmember” - Goldmember

That’s it for today. Happy Easter to you all and thanks for learning with me today!