Gold Shifts into New Role as Alternative to Bonds

Gold's role as an alternative to government bonds and the US dollar has seen a significant shift, according to Sprott managing partner John Hathaway and Incrementum partner Ronald-Peter Stöferle. Speaking at the Precious Metals Summit in Beaver Creek, Colorado, on September 22, they argued that this change could be a structural shift rather than just another cyclical bull market.

The pair pointed to central bank buying, de-dollarization, and gold's ability to rise even as bond yields climbed since 2022. Stöferle suggested that the key question for investors is whether gold is in a normal cycle or a broader 'remonetization cycle,' with evidence increasingly supporting the latter.

Hathaway noted that the changing relationship between gold and bonds reflects weakening confidence in fixed income as a safe haven. He also highlighted that institutional and retail participation in gold remains remarkably low, leaving significant room for capital to move into bullion and mining shares if traditional portfolios begin shifting away from bonds.