Sustained market turmoil demands investment in big, dependable haven assets, such as the yen and government debt.
Nothing, however, shines brighter than gold and as other commodities flounder, the yellow metal has already gained 16 per cent this year, with buying having accelerated during February.
“Gold is the new black,” according to Bank of America Merrill Lynch analysts, pointing out that three-week inflows into the metal from investors are running at their highest since the middle of 2009.
Another 1 per cent rise on Monday set gold on course for its best monthly performance since January 2012, suggesting declining market faith in the ability of G20 policymakers who gathered in Shanghai at the weekend, to kick-start the global economy.
Market expectations of what the US Federal Reserve can do are moderating, says BNY Mellon market strategist Simon Derrick, while the European Central Bank and the Bank of Japan are engaged in a race to the bottom via negative rate policies.
“If you’re sceptical about where central bank policy is going, you buy gold,” says Mr Derrick.
John Brady, managing director at RJ O’Brien, is most certainly a sceptic. Far from acting collegiately to tackle their collective problems of low growth and deflation, G20 members are showing all the signs of “intensifying” their self-interests.
Mr Brady predicts that “as the credibility of global central banking is more frequently challenged . . . and as economies such as China act in their own self-interest, gold should lead the trade along with Treasuries”.
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