Gold is often seen as a fear trade, but that does not tell the whole story.
You can analyse the price of gold from three aspects. The first reflects the long-term level of historic inflation. Gold is a store of value and compensates for currency debasement over time. The second is the expected level of real interest rates, which explains why the price of gold hugs long-dated inflation-linked bonds. The third is the premium-to-fair value which reflects the market hype. Going for gold: Multi-asset managers look beyond 'core assets' ahead of 'volatile' Q4 The latter points are the ones we will explore. Over the past year, we have seen US 20-year real rates...
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