Ask its bulls why they are evangelically in Au of gold, and you will never be short of reasons for being long. They point to it being a class insurance against dollar weakness; identifying too its lucrative luxury status in the eyes of burgeoning and conspicuous consumerist EM classes. Also pointed to is gold’s safe-haven status in the face of rising geo-political risk, and a highly sought-after store and transfer of wealth, flying as it does so low under DM tax and regulatory radars. Add to all this comparatively inelastic supply, and surely the argument for gold is compelling?

Well, I don’t buy it. Don’t get me wrong, I recognise gold is a real investable asset; unlike cryptos and NFTs. This accepted, I see gold as warranting only a fractional allocation of any sensible portfolio. For one, I am not in Au of it being anywhere close to the best fiduciary dollar hedge; its role in this regard being ever more reduced as currencies and sovereign debt of new wealth economies become more liquid; offering both yield and appreciation (most notably RMB, Aud and Cad, all three rich in Aurum).

Another reason for my cynicism is gold’s sedentary quality. Compare it to copper (whose conductivity means it will power along with China), uranium (go nuclear) or lithium (charge ahead with battery production), and you see a lazy metal, ‘unyielding’ in vaults and idle around necks and wrists; for less we forget, glistening diamonds can boast industrial uses. As for golds attractiveness due to its restrained supply, I would argue markets for industrial metals will prove tighter as China corners consumption and hoards mining capacity. Ironically too, as China invests sovereignly across EMs to get hold of their valued industrial and agricultural resources, it will literally power nations to extract gold more cheaply; think here SA, Ghana, DRC, and even Sudan, et al. Also, less we forget, China has its own awesome Aurum potential. We mustn’t too ignore Russia and its allegiants extracting even more gold for their hard currency good. As for new wealth within China et al, it will indeed thirst for Gold Watch; for the finest aged oaked single malt Scotch.

The reality is that whilst the dollar price of gold will move ever higher, it will generally fail to outpace dollar prices associated with copper, uranium, lithium, tantalum, et al. So, and to repeat, there are better places to lay-off a dollar whose global role rolls down from its all too lofty highs. And better places too to extract beta from rising EM wealth.

I am convinced that soon there will be a large realignment of exchange rates as the vast vat of savings globally react to ham-fisted monetary policy in the west by adjusting saving and pricing paradigm’s; the dollar giving way for other fiats to increase their weightings and become properly recognised reserves.

So yes, gold bulls will enjoy seeing its dollar price go ever higher. However, those Au struck measuring their wealth beyond dollar’s, run the real risk of it being debased. Only time will tell if this is Au bulls&*^.