How physical bullion has performed against major indices as central banks reposition for the next cycle.
It has not been a year for the orthodoxies. Despite higher policy rates than the developed world has seen in two decades, gold has comfortably outperformed both the FTSE 100 and the S&P 500 in sterling terms across the trailing twelve months.
The simplest explanation is the most accurate one: gold is no longer competing only with cash. It is competing with sovereign credit, and sovereign credit is being repriced. As fiscal deficits widen and central banks stand permanently behind their own bond markets, the optionality embedded in a non-issuer-dependent asset reasserts itself.
“The simplest explanation is the most accurate one: gold is no longer competing only with cash.”
We are wary of strong claims about the next twelve months. But the structural argument — that gold's correlation with equities falls sharply when real yields stop functioning as a discount rate — looks robust through the next rate cycle.
For new clients building a position from zero, our standard recommendation remains a phased entry over six to twelve months in 1oz Britannias and Sovereigns. Lump-sum buying near cyclical highs has rarely been the right play.
