One of the curious things of the stock market wobbles of the past month is how precious metals such as gold and silver have fallen in tandem with equities - questioning their role as portfolio hedges and a worry for investors who already assume Fed-cosseted Treasury bonds will not perform that role either. Silver prices, for example, are down more 25% in little over 6 weeks as the pandemic resurges, partial lockdowns increase and fresh monetary or fiscal supports are slow in coming. Although a rebound of the dollar has been a factor, it only tells part of the story and gold priced in euros is also down sharply. More likely is that gold is primarily an inflation hedge rather than an equity hedge and inflation assumptions are on the wane again, as seen in market-based expectations.
Chart by Ritvik Carvalho and commentary by Mike Dolan.
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