Once upon a time, miners carried canaries into the depths of coal shafts. The birds, more sensitive to noxious gases than humans, provided a crude but effective warning system: if the canary keeled over, it was time to get out.
The metaphor has long since migrated. Today, the bird in question may be fluttering not underground but in bullion markets.
Gold has been climbing steadily for nearly two decades. It has broken through record highs and, unusually, it has continued to rally even as traditional valuation drivers like interest rates, inflation and the dollar have lost their predictive power.
In recent years, the metal has risen both when the dollar was strengthening and, more recently, as the greenback has softened. Investors, it seems, have grown less interested in gold’s conventional role as an inflation hedge and more in its function as insurance against America itself. This is an important change in the dynamics of gold investing which we think investors need to pay attention to.
Why is gold investing different this time?
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