The unusual tandem rise of gold (a safe haven) and tech stocks (risk-on) is explained by Vanguard's Joe Davis as the market pricing in two divergent possibilities: a pessimistic, deficit-driven slump and an optimistic, AI-fueled boom, dismissing a moderate middle ground.

A 100-year chart of the S&P 500 priced in gold shows a major cyclical peak was hit in late 2021, similar to 1929 and 2000. This inflection point suggests a long-term, decade-plus trend reversal favoring hard assets like gold and Bitcoin over U.S. equities.

Unlike previous price rallies, the recent spike in gold has not prompted owners to sell their secondhand holdings. This indicates a fundamental shift in behavior: people are holding gold as a long-term store of value against currency debasement, not for short-term profit, signaling deep-seated distrust in government-issued money.

Gold's price is rising alongside risk assets and falling during stress events, a reversal of its historical role. This behavior mirrors speculative assets like Bitcoin, suggesting its recent rally is driven by momentum and bandwagon effects, not a fundamental flight from fiat currency debasement.

Facing unprecedented government debt, a cycle of money printing and currency devaluation is likely. Investors should follow the lead of central banks, which are buying gold at record rates while holding fewer Treasury bonds, signaling a clear institutional strategy to own hard assets.

Metals are uniquely positioned to perform across multiple economic regimes. They serve as a hedge against national debt and central bank irresponsibility, benefit from potential rate cuts and sticky inflation, and face a massive supply-demand shock from the AI and energy infrastructure build-out.

The recent gold rally was disconnected from institutional indicators like a falling dollar or rising break-evens. Instead, it was propelled by retail investors' fears of currency debasement, leading to meme-like behavior such as people lining up to get physical gold from vaults.

Unlike in 1971 when the U.S. unilaterally left the gold standard, today's rally is driven by foreign central banks losing confidence in the U.S. dollar. They are actively divesting from dollars into gold, indicating a systemic shift in the global monetary order, not just a U.S. policy change.

During episodes of US government dysfunction, such as shutdowns, the dollar tends to weaken against alternative reserve assets. The concurrent strength in gold and Bitcoin provides tangible market validation for the 'dollar debasement' thesis, suggesting investors are actively seeking havens from perceived fiscal mismanagement.