Why gold has lost its status as a haven from inflation and market chaos – by Gabriel Friedman (Financial Post – September 20, 2022)


Even the largest gold producers are looking to diversify

Gold bugs should be having a moment. Inflation appears out of control for the first time in decades. Stock markets have been pummelled. The shadow of a recession is looming amid rapidly rising interest rates. Russia’s ongoing assault on the Ukraine has unleashed chaos on global food supplies, trade and the political order.

All these factors traditionally drive investors to buy gold, a safe store of value for centuries. Yet the price of gold, along with equities of gold miners, are in free fall.

Case in point: Last week, gold fell three per cent to US$1,665 per ounce after the release of data that showed that U.S. inflation hit 8.3 per cent in August, the opposite of what you would have expected given fresh evidence of intense upward price pressure. Gold has now sunk some 20 per cent since hitting US$2,087 per ounce in March.

Meanwhile, since April, the VanEck Gold Miners ETF and the Van Eck Junior Gold Miners ETF, two exchange-traded funds indexed to the largest gold producers and explorers, respectively, are down 42 per cent and 40 per cent.

For the rest of this article: https://financialpost.com/commodities/mining/why-gold-has-lost-its-status-as-a-haven-from-inflation-and-market-chaos