Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
There is a ’’silent rally’’ you are not paying enough attention to.
The World Gold Council recently released its annual survey where they ask official institutions (read: mostly Central Banks) about their asset allocation preferences for the next 5 years.
The chart below shows a key trend.
Since 2022, the share of foreign Central Banks that plan to allocate more towards Gold has been steadily increasing.
As per today, 76% of foreign official institutions believe that the percentage of Gold they own as a share of FX reserves will be higher.
In 2022, this number was only 50%.
Gold is staging a multi-year silent and inexorable rally, as evidenced by 3 key aspects:
1) This year, the SPX total return measured in Gold sits at -19%. Yes, -19%.
2) Since 2022, the SPX total return in Gold has been a cumulative -29%.
3) Yet, euphoria signals in option markets or Google Trends spikes have been largely absent as the bid is institutional rather than retail-driven
Gold is also acting as an excellent portfolio diversifier, and it’s a good candidate to take over this role from bonds and the US Dollar if inflation remains sticky.
Do you think it makes sense to own Gold in a balanced portfolio?
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