Gold should not be seen as a standalone asset. On its own, it has no intrinsic value—and naysayers have been banging on this point for years, saying it doesn’t produce cashflow and therefore can’t be valued.

Gold’s value is driven by a myriad of factors. The earliest is that it’s perceived as a store of value—and that perception has lasted until today. In other words, gold has value as long as society believes it has value. Otherwise, we could have used anything.

Here’s what matters more: gold’s value is relative to alternative stores of value. And in today’s context, the US Dollar is the single most important currency—a store of value and a medium of exchange. That’s why gold prices tend to have an inverse relationship with the USD. If the USD weakens, gold rises. And vice versa.

To me, that’s the best way to analyze gold. It is fundamentally a macro-level investment. You need to understand the economic situation and the direction of the USD to determine whether gold is worth investing in—or hedging with, whichever purpose it serves for you.!!