Gold has continued its impressive gains this week, with the price of the precious metal blowing through USD $1200 and AUD $1700 per ounce this week, within touching distance of its all time high in the local currency. Share-market volatility is obviously a driver, but does it really justify a +15% move in USD terms in the past month? After all, inflation is still non-existent, with the latest bout of market weakness, and soft macro data likely to put downward pressure on official CPI prints for some time. Despite this, its clear sentiment has done a full 180, with only the brave willing to short the metal, whilst UBS this week acknowledged gold is again being seen as the "final financial market hedge". Looking at the oil/gold ratio, the ratio between gold and financial assets, and the 20 trillion in negative real yielding sovereign debt, we wonder what is really happening. We also can't help but think the latest market movements are telling us that if free market capitalism were a person, they'd be diagnosed with clinical depression (VIEW LINK)


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