Gold mining equities are showing remarkable strength, with August gains surpassing anything the chip sector achieved during its peak performance years. The MSCI World Gold Miners Index has climbed 43% this month, putting it on track for the largest single-month advance ever recorded. Even at the height of this year's semiconductor frenzy, chip stocks fell short of such returns: the MSCI World Semiconductor Index and the Philadelphia Semiconductor Index posted their best monthly performances in April, rising 27% and 38%, respectively.
Before this surge took off, the U.S. Treasury earlier this month unexpectedly unveiled an expanded bond buyback program aimed at lowering borrowing costs. That move reignited the so-called currency debasement trade, a strategy betting on continued depreciation of fiat currencies like the dollar, which drives investors toward alternative assets such as gold to preserve value.
"From an equity perspective, gold is one of our largest overweight positions," said Tomasz Godziek, head of equity at Bank J. Safra Sarasin. He is bullish on the dollar depreciation theme and views gold as a strategic asset that central banks can use to diversify their reserves.
So far this month, gold prices have risen 13%, with the metal now trading above $4,500 per ounce.
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