Gold and the U.S. Dollar

Sam Stovall, CFRAResearch.com, New York

Four factors likely contributed to the price of gold rising from less than $1,500 per ounce late in 2019 to more than $2,000 per ounce today.

Investors’ flight to safety to this historic store of value was in response to (1) Covid-19 concerns, (2) the message being sent by the plunge in the 10-year Treasury yield that currently trades around ½ of 1%, (3) the 6% erosion in the value of the U.S. dollar in the past four months, (4) the rising worries over the mounting U.S. debt and deficit as a result of the recent stimulus packages. 

With the financial media now focusing on the decline in the U.S. dollar, investors are asking which equity groups historically benefited the most, and the least, when rates and the dollar dropped? In other words, which were like Ginger Rogers, who did everything Fred Astaire did, only backwards?