Why gold is a good place to hide after a crisis

Gold is back below $3000 as everything is being sold in a race to the most-liquid assets.

TD is out with a note looking at gold performance after economic shocks. The takeaway is that it outperforms the S&P 500 across all time frames.

They looked at the LTCM crisis, Japan VaR shock in 2003, Bear Stearns, Lehman Bros, the European sovereign crisis and covid and there was gold outperformance after three months after all but the Japanese episode and the aggregate outperformance is meaningful.

TD writes:

Gold has historically outperformed in periods following an economic shock, serving as a relative safe haven for investors. In contrast, gold equities have typically seen a near-term sell-off alongside broader market volatility, with outperformance historically seen beyond a three-month time horizon. Looking at three-month performance following an economic shock, we highlight past outperformance of gold equities vs. the S&P 500, including the COVID-19 period (+16% vs. SPX), Bear Stearns collapse (+22%), and the LTCM crisis (+24%).

Given that this crisis is one that undermines the foundations of the dollar and the monetary system, I would argue this effect should be supercharged.

TD also argues that gold remains under-owned based on ETF flows.