Gold has Become More than Just a Hedge

Jan 29, 2024 | Finconomics 101, No Bull Economics

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Gold’s role in an evolving financial world order has become apparent post-2016.   


  • We have spent a considerable amount of time documenting the increasing challenge to the US$ represented by an over-leveraged Federal government which is aggravating its problems with a rapid increase in deficit spending.
  • According to a recent post contributor: “The deficit has been over a trillion dollars a year for the last 4 years and is increasing every year. Do you think any politician on either side (besides Rand Paul) would vote to peg the dollar to gold? Where would they get the money? How would they get reelected? It would be impossible to raise taxes enough to cover the shortfall. In less than 5 years, it is projected that they will be borrowing (printing) more than the value of all personal income taxes collected. They already print 4x more than corporate taxes each year.” 
  • However, would anyone invest in physical gold if the US$ was on sound footing?
  • Gold has served as a good historic hedge against stocks, with an obvious negative correlation with the S&P 500 until around 2016.
  • After 2016, both stocks & gold have moved in tandem as investors seem to have promoted gold from a hedge to the same class as blue-chip stocks. This is especially true among an increasing number of foreign governments & their populace.        

Gold vs. S&P 500 Graph
  • Notably, this analysis is not intended to represent investment advice but rather to help provide insight into gold’s evolving role in a changing financial world order.    

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