"Last week, amid widespread geopolitical turmoil and a weakening U.S. dollar, the price of gold hit a historic high of $4,000 an ounce. This year has so far been gold's best since 1979, a moment of instability so profound that it led to recession. Gold prices are much closer to a genuine "recession indicator" than, say, the resurgence of frozen yogurt or an uptick in Uber Eats orders. That's because, over the past 50 years, spikes in the price of gold have typically been correlated with widespread inflation and geopolitical dysfunction."
"The precious metal has long been considered a safe-haven asset, because, unlike the U.S. dollar, its inherent value isn't determined by any state government. Although it's probably not realistic for everyone to start piling into Diamond District jewelry shops and hoarding gold bars, gold remains an appealing, if old-fashioned, alternative to more contemporary investments: Its value stems from its shine and rarity, not its ability to produce a line of credit."
Rising global instability and a weakening U.S. dollar pushed gold to a historic $4,000 per ounce, marking the metal's strongest year since 1979. Historically, sharp increases in gold prices have correlated with widespread inflation, geopolitical dysfunction, and economic recessions, as in 1979, after 2008, and during post-pandemic inflation. Investors view gold as a safe-haven asset because its value is not determined by any state government. Gold serves as a portfolio diversifier and an alternative to credit-based financial instruments. Its appeal rests on physical rarity and intrinsic sheen rather than on yield or credit-creation capacity.
Read at The Atlantic
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