Investors are doing the equivalent of a toddler retreating from the playground to sit in their mom’s lap: buying up gold. The metal’s futures rallied past $4,000 per ounce yesterday for the first time, which analysts say reflects the market’s appetite for safe haven assets amid economic uncertainty and geopolitical risks.

The precious metal is up by more than 50% since the beginning of the year, putting it on pace for its best year since 1979.

Running on chaos

World events in recent days have exacerbated concerns about governments’ ability to ensure economic stability, boosting the luster of precious metals. That comes at the expense of currency and traditional assets like stocks and bonds:

• The US government has been shut down since Oct. 1 due to a Congressional budget fight, creating uncertain vibes that are heightened by delays in the release of crucial economic data.
• Earlier this week, France’s prime minister resigned after just 26 days on the job, hamstringing efforts to pass a debt-curbing budget and jolting the euro.
• Japanese bonds and the yen dipped this week after Sanae Takaichi, a proponent of increased government spending, emerged as the likely next prime minister, furthering concerns about the country’s debt.

Who’s buying gold?

Central banks have stockpiled bullion for months, while investors hoover up gold ETFs as a hedge against economic turmoil created by tariff wars and the geopolitical instability. Plus, declining interest rates are lowering the returns on bonds, prompting wealth holders to seek alternative avenues for growing their piggy banks.

Billionaire Ken Griffin said that the gold rush is a concerning sign that investors see it as a safer asset than the greenback. Celebrity hedge fund manager Ray Dalio recommended that investors allocate 15% of their portfolio to gold to hedge against dollar devaluation and a potential stock market downturn.

Another alternative asset that’s been soaring is bitcoin, which passed a record $125,000 this week.—SK

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