The following sentence leads off a recent Bloomberg story on gold prices:
“Gold futures slumped below $1,600 an ounce for the first time since August as signals on the US economy spurred optimism, eroding demand for the precious metal as a store of value.”
Public service announcement: If something can “slump,” it is not a “store of value.”
That’s true of gold. Because of its historical role as a currency backer, many investors see gold as an inflation hedge or stable investment when stocks are falling. In reality though, it’s neither—it’s just a commodity, and like all commodities, it’s volatile. It doesn’t always rise or hold value when inflation’s high, and there’s no historical correlation between gold and equity price movement—sometimes they rise at the same time, sometimes they fall at the same time, sometimes they move in opposite directions.
So if you’re thinking about gold, don’t be fooled by those common tropes.