Gold is priced in dollars but most often held in euros: for a European holder, the return combines the metal’s move in dollars and the euro’s move against the dollar. Currency is a second layer, neither neutral nor always visible.…
Gold has not protected against inflation in every regime: it surged in the 1970s, then fell between 1980 and 1982 while prices still rose. The factor that separates these episodes is the real rate. TL;DR Gold's inflation hedge holds only…
An asset that pays no income is not free to own. Holding gold means forgoing the real return an inflation-linked bond would pay: that shortfall, the real rate, is its true cost to hold. TL;DR Holding gold means giving up…
Over half a century, the real gold price has shown no relationship with inflation (correlation +0.04) but has fallen when the 10-year real interest rate rose (−0.40): it is the opportunity cost, not the level of prices, that governs the…
The negative stock-bond correlation is not a property of bonds but of a disinflationary regime — and it can flip. In an inflationary regime the two classes fall together, as in 2022. TL;DR Bonds cushion equities only while disinflation reigns:…
The euro fund and the bond ETF expose to the same raw material — rates — through two opposite channels. One smooths returns over time and reacts with a lag; the other tracks an index continuously and absorbs rises and…
Credit is a second engine in fixed income, independent of duration. A high yield ETF and an investment grade ETF of the same maturity do not track the same signal: the former depends on the credit cycle, the latter remains…
Inflation-linked bonds protect the purchasing power of the principal against rising prices, but not against rising real rates. In 2022, despite double-digit inflation, TIPS and OATi ETFs fell, because the real-rate component outweighed the indexation. TL;DR Buying an inflation-linked bond…
A bond ETF’s maturity sets its duration, and therefore the size of its reaction to rates. Short, intermediate and long do not describe three levels of risk, but three distinct behaviours depending on the direction of real rates. TL;DR Maturity…
Duration measures, in years, how sensitive a bond’s price is to a change in rates. It is duration, not the headline yield, that determines the size of a bond fund’s reaction to a rate move. TL;DR A bond fund's duration…
