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Gold: Why Institutions Own 0% While Central Banks Buy Records

Philipp 10:31 Episode 6 of Asset Classes

Gold: Why Institutions Own 0% While Central Banks Buy Records

Central banks are buying gold at record levels while most institutional portfolios hold none. Both can be right — here is why.

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Gold Is Not an Inflation Hedge — Here Is What It Actually Is

Gold is not an inflation hedge — in 2022, US inflation peaked at 9.1% and gold finished the year flat. What gold actually tracks is the real interest rate: when a safe bond pays you a positive return after inflation, holding an asset that yields nothing is expensive, and gold suffers. It is not a return engine but an insurance policy against the financial system having a very bad day, and like all insurance it has a running cost. The correct question is therefore never 'will gold go up'. It is 'what am I insuring against, and is this premium worth paying'.

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