Gold's best year since 1979

Five charts to start your day

In case you missed it, gold surpassed $4,000 per troy ounce last week. This psychological barrier seemed untouchable just months ago. I even published a data visualisation on it.

Crossing $4,000 an ounce tells us something specific about investor psychology right now. At these prices, gold buyers aren’t seeking returns. They’re seeking refuge from multiple uncertainties converging at once.

What are these converging uncertainties? Firstly, while tech stocks boom and investors bet on AI, there’s growing anxiety that we’re in a bubble. When bubbles look most convincing is precisely when smart money starts hedging with gold. Secondly, defence stocks are rising because global instability is escalating. If you live in Europe, you feel this firsthand with Russia’s invasion of Ukraine. Geopolitical uncertainty has always sent investors rushing to gold’s perceived safety. Finally, bitcoin’s rise alongside gold reveals something deeper: waning trust in traditional currencies. When both digital and physical alternatives to fiat money surge together, it signals that investors want out of the system entirely.

CHART 1 • Gold’s best year since 1979

Gold has smashed records. And this year is on course to be the strongest year for bullion since modern records began. The rally is unusually broad. Geopolitical tension and policy uncertainty have revived safe-haven demand, while central banks in Poland, China, Turkey and elsewhere keep buying steadily. ETF flows have turned positive after years of outflows.

Two numbers capture the scale. Spot prices are up about 48 per cent this year after a 27 per cent gain in 2024, a remarkable two-year surge that has outpaced most major assets. On 6 October, gold hit $3,960 intraday before briefly breaking $4,000 a day later.

Lower real yields and a softer dollar have helped, but the breadth of buying is striking. Retail investors are snapping up coins and bars, miners are finding support and macro funds are back to using gold as portfolio ballast. The key risk is a sharp reversal in interest rates, but that moment has not yet arrived.

Source: Leverage Shares EU

It’s the oldest store of wealth in the world, so no wonder markets have taken keen interest in gold’s ascent. Where this rally will end is difficult to say. Perhaps it has some time to run before reaching a peak. For now, we should probably view gold as a signal that the macroeconomic outlook is darkening.

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