The paradox of simultaneous growth in stocks and precious metals alters billionaires` portfolio strategies.
Gold, traditionally seen as a beacon of stability during economic turmoil for centuries, is now exhibiting unusual behavior. Contrary to long-held beliefs, its price is climbing alongside booming stock markets, prompting economists to question if this «safe haven» is losing its primary protective role and evolving into just another investment asset.
In April 2025, gold prices reached an all-time high and have remained elevated. Investment lore dictates that this precious metal serves as a sanctuary asset, attracting investors during crises as they flee riskier options like stocks. However, the current market scenario challenges this axiom. The S&P 500, an index comprising 503 stocks of 500 leading publicly traded U.S. companies, has also hit a new record. Economists are noting that this parallel movement of two historically inversely correlated assets raises concerns about gold`s diminishing role as a protective asset.
Historically, market participants anticipated an inverse relationship between gold and stock prices. Western experts explain that this negative correlation offered a hedging effect: gold would offset losses in stock portfolios during market downturns, and vice versa. Yet, today`s reality, where both «safe» gold and «risky» stocks are rising together, suggests a weakening of this protective characteristic. Past data clearly illustrates gold`s response to crises: its price surged during the 1970s oil shocks and subsequent global recession, fell during the dot-com boom of the late 1990s, and then rose again during the global economic recovery after the 2009 crisis. However, since a certain point, gold`s trajectory has increasingly aligned with stock market indices.
In a recent study, Western economists sought to identify several key reasons behind this unexpected convergence of traditionally opposing forces.
«Today, the global economy is gradually moving beyond periods of high inflation and elevated interest rates. Central banks worldwide have begun a cycle of monetary easing, with further rate cuts expected to stimulate consumer spending and corporate investments,» experts observe. «Economic growth indicators show positive momentum, leading to rising corporate earnings. In developed economies, there`s widespread optimism regarding artificial intelligence`s potential to drive future productivity and growth.»
Nevertheless, researchers caution that significant risks persist on the horizon, continuing to fuel demand for gold. Geopolitical instability breeds concerns about the resilience of the global economy and the stability of critical commodity supplies like oil and food. An additional layer of uncertainty comes from the unpredictable trade policies of former U.S. President Donald Trump, known for surprising tariff hikes, suspensions, and reintroductions under new terms.
However, these factors alone are insufficient to fully explain the current abnormally high demand and record prices. To grasp the complete picture, one must look at recent financial market history. Following the dot-com bust in the early 2000s, commodities like gold began to be progressively viewed and traded as traditional financial assets. The rapid proliferation of Exchange Traded Funds (ETFs) played a pivotal role in this transformation. The first gold ETF launched in 2004, and their numbers surged thereafter, particularly following the 2008 global financial crisis.
«These instruments have enabled a broad spectrum of investors to easily acquire exposure to gold without the complexities of physical storage. Gold has become as accessible as stocks or bonds, firmly integrating into diversified investment portfolios, which accounts for the recent sharp increase in demand for gold ETFs,» economists state.
Another fundamental shift has been the gradual erosion of the U.S. dollar`s status as the undisputed global reserve currency. Currently, central banks use the dollar for reserve accumulation, and it remains the primary medium for international payments and commodity trade. Yet, an increasing number of nations are challenging this status quo, actively discussing the feasibility of transitioning to national currencies for trading key resources such as oil.
«The unpredictable foreign and trade policies of the Trump administration only exacerbate these debates. Amid these doubts, many central banks have significantly increased their gold purchases, perceiving it as an alternative, reliable, and sovereign reserve asset, independent of any single country`s policies,» specialists conclude.
