Is it?

There’s an old saying in the market that says the four most expensive words are “this time is different”. But sometimes, they are, and it’s costly too. In the chart below you have 3 safe havens that have worked to protect capital over the last 25 years: gold, the U.S. dollar and U.S. Treasuries. In the latest market episode a few weeks back, the only one that really worked to offset the market downturn was gold. The geopolitical shock that the U.S.-China trade rebalancing has been so strong and directed to the core of the global system, that it’s not clear whether the reserve currency will keep its hegemony, and the debt levels and the deficit are weighting on Treasuries, questioning its behavior as “risk free rate”. We might be at a profound turning point, but it’s not clear yet where/what we may turn into. Very few investors understand or like gold as an investment, that’s why it’s under owned. And yet it seems to be the one wrench in our tool box that works for the job of lowering volatility when bears show up.

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