Gold’s Moves Don’t Align With Conventional ‘wisdom’ 

Earlier this week, golden surpassed $4,000 per ounce for nan first time. While immoderate golden bugs are cheering, others are little enthusiastic, arguing nan milestone signals heightened marketplace risks and a broader move distant from nan US dollar. We uncertainty it. Over time, gold’s moves don’t align pinch immoderate of nan accepted “wisdom” astir it, which tells you spiking golden isn’t inherently bearish aliases a motion of thing ahead. Rather, each nan chatter astir its alleged foreboding illustrates lingering investor skepticism, suggesting this bull marketplace apt isn’t astatine a euphoric top.

The bearish communicative goes for illustration this: Supposedly, golden reaching caller highs signals investors and cardinal banks’ preferring nan shiny metallic complete nan US dollar and Treasurys arsenic a safe haven. Also, citing nan greenback’s depreciation against different awesome currencies this year, immoderate reason investors are losing religion successful nan dollar tied to governmental and legislative risks. In concert, they propose these trends bespeak nascent problem for different US assets, for illustration stocks. Fun pundits person dubbed it, nan “debasement trade.”

Oddly, immoderate opportunity gold’s emergence signals problem for each awesome currencies, seemingly forgetting they waste and acquisition successful pairs and can’t each weaken simultaneously. This illogic is your first evident awesome this is simply a mendacious fear.

Yet plentifulness much reasons abound. For one, location conscionable isn’t beardown grounds group are abandoning nan dollar and dollar-based assets nan measurement galore claim. Historically speaking, nan dollar isn’t that weak. Nor are US Treasury yields entity high, which galore subordinate pinch rising risk. Exhibits 1 and 2 show this, charting nan US dollar’s worth versus wide and “major” trade-weighted rate baskets and semipermanent Treasury yields since 1975.

Exhibit 1: US Dollar’s Minor Weakening

Source: FactSet, arsenic of 10/8/2025. Nominal trade-weighted US dollar scale (broad and major), monthly, 12/31/1974 – 9/30/2025.

Exhibit 2: Treasury Yields Aren’t Sky-High

Source: FactSet, arsenic of 10/8/2025. 30-Year and 10-Year Treasury yield, changeless maturity, daily, 12/31/1974 – 10/7/2025. Note: The US authorities reintroduced 30-year bonds successful 1977, truthful location is nary information from 1975 – 1976.

Yes, nan dollar is down this year. But it has been strengthening since this past July’s low, to small aliases nary applause. And it is still up nicely this century, floating adjacent its 2015 and 2024 levels—two periods successful which “strong dollar” fears painted headlines. Treasury yields, connected nan different hand, are down twelvemonth to day and good beneath levels seen successful nan 1970s and 1980s. This doesn’t shriek “major exodus” to us. In reality, it is nan opposite—as we covered last month, Treasury request remains live and good stateside and abroad.

Meanwhile, US stocks are up 16.0% twelvemonth to date.[i] And lest you deliberation that is conscionable nan alleged Magnificent 7—US mini caps are up 12.6% while nan equal-weighted S&P 500 is up 10.6%.[ii] Generally speaking, if location is simply a wide formation from a country’s markets, you don’t get affirmative returns.

Nor is it apt golden knows thing stocks don’t, which is nan halfway statement astatine hand. All likewise liquid assets digest accusation much aliases little simultaneously, successful our experience, truthful golden is exceedingly improbable to awesome a formation to value stocks someway forgot to register. Markets conscionable don’t activity for illustration that.

It besides isn’t really truthful uncommon for stocks and golden to emergence together … arsenic they mostly person since 2022. (This isn’t new, folks.) If nan claims rising golden signals punishment for stocks were true, nan 2 should person a beardown antagonistic correlation, pinch golden continuing to emergence arsenic stocks yet registry those alleged problems. In statistical terms, this implies a -1.00 relationship coefficient. The opposite, a 1.00, implies a beardown affirmative relationship (the 2 emergence successful lockstep). Exhibit 3 explores this relationship, charting nan rolling 52-week relationship betwixt US stocks and golden prices. This tells you really beardown nan narration was complete nan preceding year.

Exhibit 3: Gold and Stocks’ Non-Relationship

Source: FactSet, arsenic of 10/8/2025. Rolling 52-week relationship betwixt play value changes successful golden and S&P 500, 12/31/1999 – 10/7/2025.

As you tin see, their relationship bounced astir betwixt -0.40 and 0.40 complete nan past 25 years. That intends sometimes, golden and stocks had a weak-but-positive correlation, moving together. Other times, they moved successful other directions. Regardless, nan trends were truthful short-lived arsenic to beryllium almost meaningless, pinch points of beardown antagonistic (and positive) relationship fewer and acold betwixt and occurring during banal bull and carnivore markets.

Longer term, this nets retired to a 0.04 relationship complete this full stretch.[iii] Functionally, that intends nary relationship. Gold can’t some awesome thing fundamentally important for stocks and person nary narration pinch their returns. Arguing different is simply illogical.

All that aside, these worries smell for illustration lingering skepticism to us. Interestingly, they travel arsenic pundits ramp up talk astir euphoric sentiment and a imaginable marketplace bubble. Things for illustration AI’s domiciled successful economical growth, precocious banal valuations and different expected “toppy” signs person immoderate concerned a rerun of nan 2000s dot-com clang is coming.

We aren’t convinced, mind you, and we deliberation today’s skepticism illuminates 1 logic why. Euphoria and marketplace bubbles hap erstwhile sentiment runs truthful basking group place underlying economical weakness. Like successful nan Tech bubble, erstwhile skyrocketing valuations diverted eyeballs from deteriorating institution fundamentals. Conversely, bubbles don’t hap erstwhile folks broadly latch onto bearish narratives pinch nary actual basis—as is nan lawsuit today. That is much what you classically spot successful a bull marketplace wall of worry, which tells america this 1 has room to run.