Gold is outperforming the Nasdaq 100 since the launch of ChatGPT
There’s a bull market in anti-humanity.
Gold is glittering.
The shiny metal, which drives no future cash flows and offers no yield, has now delivered a better price return than the Invesco QQQ Trust, which tracks the Nasdaq 100, since the launch of ChatGPT at the end of November 2022.
What does it mean that the so-called barbarous relic is doing so well — even better than the AI-driven tech-heavy index?
For some perspective, in April 2013, my old boss Joe Weisenthal (then at Business Insider) wrote about how it was “great news” that the price of gold was crashing.
Some excerpts:
“Investing in gold is a rejection of government money and finance. Money flowing into gold-related assets represents a belief that rocks (however shiny they are) are a better place to invest than human endeavors (like stocks).”
“You can see that even with the recent upturn in stocks, relative to gold, gold has crushed stocks since 2000.
Arguably, 2000 represented a peak in belief in the capabilities of humans. The internet inspired all kinds of crazy optimism about how humans would re-shape the world for the better. The ebullience spread beyond the net. There was, for example, optimism about new ways of transporting humans: Fuel cells! Segway!
Of course, the bubble crashed. Then we had 9/11. Then we had two wars. Then we had the housing implosion. Then we had the financial crisis. Then the horrible recession. Then the European crisis and the debt ceiling and everything else.
In other words, we had a series of a events that, for good reason, shook our faith in humanity. During this time, people thought about history on a large scale. And gold, having been used as a money for thousands of years, did pretty well, especially relative to stocks, which represent companies made up of humans.”
If you agree with Weisenthal’s mental model (I do!), that makes what we’re living through now all the more striking.
We have similar (if not more!) techno optimism that we did during the dot-com bubble, this time over AI, and it’s sent tech shares soaring.
Yet we have the outperformance of gold, which in my view is primarily a function of:
Concern that global fiscal and monetary policymakers are willing to allow inflation to run hotter than it has during the 30 years that preceded the pandemic (i.e. “The Great Moderation”);
A diversification away from US assets in favor of the shiny metal, on the margin, fueled by:
The sanctions imposed on Russia in the wake of its invasion of Ukraine, and a desire by other countries to not potentially have reserves frozen in the same nature;
Uncertainty around US policymaking as it pertains to trade, capital flows, and the independence of monetary policy.
Put these things together and there seems to be building distrust about macroeconomic policymaking coupled with an implicit disassociation between “technological progress” and “human progress” — which may be down to the fact that artificial intelligence is being billed as a labor-replacing technology (see: Salesforce).
Gold and tech ripping together, for these reasons, tells us we’re in the midst of a bull market in anti-humanity.
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