Why gold, bonds and the dollar are underwhelming investors | The Economist

Ajouté : 2026-05-15

[00:00:00]Looking at what's going on in the world, you might think investors would be flocking to their safe havens, but actually, it's been a brilliant few weeks for stock markets in a lot of the world there at all time highs or close to it, and it's been a great time if you're invested in shares lately.

[00:00:15]So, Josh, that's despite the Iran war causing one of the biggest oil shocks in history.

[00:00:22]What's going on?

[00:00:23]Yeah, it really does seem quite surprising on the face of it, because we've talked a lot about how bad this shot could be, how it's constricting the world's energy supply, how markets really aren't really prepared for it, and how economies are going to take quite a bit of damage from from the shock.

[00:00:39]And yet you've got all of this optimism in equity markets now.

[00:00:44]It's quite hard to second guess investors who have all the facts that their fingertips and kind of millions of dollars at stake, in some cases, billions of dollars at stake.

[00:00:54]And journalists are often accused of having predicted, you know, like nine out of the past four stock market crashes.

[00:01:00]So I don't want to lean too far in that direction.

[00:01:02]We're it could well be that right now investors are right.

[00:01:06]And the benefits from, for example, economic growth, the artificial intelligence revolution are just going to outweigh this Iran shock.

[00:01:13]That's certainly how they're acting.

[00:01:14]And is that where the optimism of these investors comes from?

[00:01:17]I think that's where some of it comes from.

[00:01:19]And there are other events that have happened recently that kind of support that the global economy and markets have proved to be a lot more resilient over the past few years than really anyone might have predicted before.

[00:01:32]We've had shock aftershock, whether it's Covid or Russia or Ukraine or the bank crisis we had in the US a few years ago.

[00:01:40]Each time it seemed like they might send share prices over a precipice, but each time share prices have plunged.

[00:01:46]It's been very short term.

[00:01:47]They've recovered incredibly quickly, and investors who've sold out when things seemed really bad actually just ended up missing out on the rebound.

[00:01:55]So perhaps this time with the Iran war, we're seeing some of the muscle memory of that come back.

[00:02:00]Investors not wanting to make the mistakes that they've made over the past few years be overly negative and then miss out on future gains.

[00:02:07]And is that warranted?

[00:02:09]I mean, we've talked again and again about how big a crisis this Yeah.

[00:02:13]So I do worry that this one time, that muscle memory, as well as it would have served you for several previous shocks, it doesn't seem to be the right response to this one, because we are looking at a at a permanent destruction of oil output.

[00:02:31]You know, the oil that already has not left the Strait of Hormuz is not going to suddenly be replaced.

[00:02:37]Even if it's reopened.

[00:02:38]There are going to be lots of knock on effects even once the war is over.

[00:02:42]And the end of that is not really in sight just yet.

[00:02:45]So it does seem like this time is different and could be a lot worse.

[00:02:49]But you know, that's not how shareholders are thinking at the And if possibly when investors do get spooked, where are the safe havens now?

[00:02:57]Now this is another really interesting feature of this moment, which is that investors usual safe havens don't look so safe.

[00:03:05]So let's take the classic example.

[00:03:08]Gold is the oldest safe haven out there.

[00:03:10]For literally thousands of years, investors have flocked to Gold's, a store of wealth, as a hedge against inflation, as a hedge against all sorts of chaos, So you might think that people were flocking to gold now, and in a sense they are.

[00:03:23]But actually they've been flocking to gold for the past five years or so.

[00:03:26]Gold price has rocketed. Since the pandemic.

[00:03:29]There have been all sorts of buyers, from central banks to average retail investors.

[00:03:33]The weird result that you've had from that is that gold price has gone up so far already, that at the onset of the war, it fell along with stocks.

[00:03:42]It started to behave a little bit like a speculative asset.

[00:03:45]It's very unusual for gold to behave in this way, for gold to effectively behave like a risky assets similar to shares, rather than a safe asset that moves in the opposite direction to them.

[00:03:55]And even though gold investors are sitting on years of gains now, it might make them feel less like it's a haven and more like a bet.

[00:04:04]What about something slightly more modern, the dollar?

[00:04:07]Yeah.

[00:04:07]So the dollar is, you know, the currency version of gold.

[00:04:10]It's the currency that investors around the world flock to when times are really recently.

[00:04:15]We had a severe test of that.

[00:04:17]And the test was the so-called Liberation Day tariffs that President Trump introduced last year.

[00:04:22]Around that time, there was a stock market panic.

[00:04:25]There was a panic in the bond market.

[00:04:27]But whereas in a time like that, you would usually expect the dollar to appreciate, actually the dollar fell along with everything else.

[00:04:33]Investors started to judge not just that the chaos had come to America, but there was this kind of cocktail of factors that meant the dollar wouldn't be a safe haven.

[00:04:41]this meant that the dollar fell along with everything else.

[00:04:44]It didn't behave like a safe haven, and the dollar has stabilized since then.

[00:04:49]It's not still falling in value.

[00:04:51]But now, when you get crisis moments like the onset of this war, if it gains, it doesn't gain very much.

[00:04:57]And generally it's just been a bit flat.

[00:05:00]So again, this seems like less of a safe haven than it than it used What about the supposed safest of safe havens, government bonds.

[00:05:07]Now again, you would expect those to benefit at a time like this, just from this kind of flight to safety effect.

[00:05:13]If everything else is threatened, where do you put your money?

[00:05:16]It can't be in dollars. It can't be in gold.

[00:05:17]You know, there aren't infinite options.

[00:05:19]Government bonds is something you flock to.

[00:05:21]And the other thing that helps you with government bonds is that in very bad times during a recession, interest rates tend to fall.

[00:05:29]Government bond prices move inversely to interest rates.

[00:05:32]So when things get really bad, the bottom line is government bonds tend to shoot up while everything else Again, there are some peculiar features of this crisis that make government bonds look less safe.

[00:05:43]The main one is that you would expect a rise in the price, and a rise in all sorts of other energy costs.

[00:05:49]You would expect that to push up inflation, and inflation eats away at the value of government bonds.

[00:05:54]we expect inflation to rise as a result of these events.

[00:05:57]The other thing that's kept government bonds down in value is that the war and it's not on affects protecting citizens from the knock on effects is going to cost governments money.

[00:06:10]And governments are already borrowing vast sums each year across the rich world.

[00:06:15]So as well as the worries about inflation, there's a worry that rich world governments in particular fiscally, are on an unsustainable path and that that will hurt the value of their government bonds in the future.

[00:06:27]So those two together make even government bonds seem like less of a haven now.

[00:06:32]So where does that leave investors?

[00:06:35]Are they should they just flock to buying stocks?

[00:06:37]that is what a lot of investors say.

[00:06:39]You go around in these sober minded people.

[00:06:42]They look at all of the alternatives and say, well, hey, stocks is really the only option.

[00:06:47]If there's going to be this inflationary problem, then stocks aren't a bad place to have your money because if the value of money goes down, you would expect corporate profits to rise along with inflation, and stocks should at least kind of outpace the loss of value you might get if you stuffed your cash under the mattress or kept it in a bank account or government bonds or whatever.

[00:07:09]The problem with that reasoning is, I didn't at any point there say companies are going to make ballooning profits and therefore share prices are worth more.

[00:07:19]That's what would actually make you think share prices were worth more.

[00:07:22]Not just that people are going to flock out and buy them.

[00:07:25]And when you have people buying shares because it seems like there isn't an alternative, because it seems like the safe havens are gone, not because they're really happy about corporate profit growth, then you've got the potential for building up a bubble in a crash.

[00:07:39]Josh, thank you very much. Thank you Rosie.