## Gold Soars in 2024: Is it Time to Sell Bonds and Buy Gold?
As geopolitical tensions escalate and the Federal Reserve prepares to shift gears on interest rates, 2024 is shaping up to be gold’s most prosperous year in over four decades. Investor demand for the precious metal has surged, propelling gold prices to their highest levels in years. The SPDR Gold Trust (GLD), a popular gold ETF, has seen a remarkable 33% increase year-to-date, setting the stage for its strongest performance since 1979. In stark contrast, long-term U.S. Treasury bonds are struggling. The iShares 20+ Year Treasury Bond ETF (TLT) has shed 6.7% in 2024, marking its fourth consecutive year of losses and a staggering 48% decline since its 2020 peak.
### Sell Bonds, Buy Gold? The Case for Precious Metals
Veteran Wall Street investor Ed Yardeni, president of Yardeni Research, has been advocating for a shift from bonds to gold since mid-August. Yardeni, citing the Fed’s initial optimistic outlook on rate cuts, believes that bond investors may be expecting too many interest-rate reductions too soon. He predicts a rebound in yields as stronger economic data emerges, suggesting a potential sell-off in the bond market.
His prediction has proven accurate. The 10-year Treasury yield, which sat at 3.88% in mid-August, has climbed to 4.18% by October 21st, a significant 56-basis-point jump. In April, Yardeni urged investors to increase their holdings in precious metals, emphasizing gold’s enduring position as a hedge against geopolitical risks and economic volatility. His argument rests on the vulnerability of bond markets to rising yields and the uncertainty surrounding Fed policy, making precious metals a safe haven for long-term investors.
### Why Is Gold Rallying in 2024?
While gold is traditionally seen as a hedge against inflation, its recent surge comes amidst moderating inflation. Yardeni points to rising geopolitical tensions, especially in the wake of Russia’s invasion of Ukraine, and heightened economic uncertainty as driving forces behind gold’s appeal. With Russia’s foreign reserves frozen and global tensions on the rise, many nations are turning to gold as a reliable store of value. This trend, often referred to as “de-dollarization,” is fueling the metal’s sharp rise as countries seek to diversify away from U.S.-denominated assets.
“Gold is now a hedge against U.S. economic sanctions,” Yardeni asserts, highlighting the moves by China and other nations to bolster their gold reserves as a safeguard against potential asset freezes. As global uncertainty persists, gold’s status as a safe haven investment continues to solidify, prompting investors to consider its role in their portfolios amidst the current market landscape.