A gold alert.

"After a relatively subdued start to the year, gold prices started gathering steam in early March. By April, the precious metal had breached the $2,300 per ounce mark for the first time ever," and "as of 9 April, gold had made fresh life-time highs for eight straight sessions," wrote Abhishek Mukherjee. "Goldman Sachs has raised its gold forecast to $2,700 per ounce by year-end as against a target of $2,300 previously," driven by "EM Central Bank accumulation as well as Asian retail buying." Mint. "Gold traditionally has an inverse relationship with stocks." But in FY24, "the Nifty 50 index logged to the tune of 30% rise whereas the BSE Sensex shot up 27% this time." The small-cap index jumped nearly 62% while the mid-cap index sky-rocketed nearly 65% in FY24. Returns on gold were nearly 13.5%. Mint. "Gold experts say gold and equities moving in conjunction is a central bank triggered phenomenon." In 2022-23, "central bank purchases stood at 1081 tonnes and 1037 tonnes respectively," The People's Bank of China (PBoC) bought 225 tonnes in 2023, taking its gold reserves to 2,257 tonnes. The PBC's hunger for gold is driven by its desire for de-dollarization. In January-February 2024, the Reserve Bank of India (RBI) bought "0.43 million troy ounces, equivalent to 13.3 tonnes of gold, from the market. This represents over 80% of the total gold purchases made by the central bank in 2023, which amounted to 0.52 million troy ounces." TOI. The RBI's total gold reserves stand at 817 tonnes which "reflect a strategy aimed at diversifying its foreign exchange reserves and mitigating risks associated with currency fluctuations and economic uncertainties." ET. Why are central banks buying gold? What are they hedging against? Previously, gold hit lifetime highs in - "1970s (after the 'Nixon shock' ended the convertibility of the US dollar to gold); 2008 (global financial crisis); 2011 (European debt crisis) and 2020 (covid-19 outbreak)." Is another financial crisis in the offing? Not certain, but if there is one, markets will plunge and millions of retail investors in India will get badly hurt. There were nearly 161 million registered investors in the BSE and 79.2 million investors in the Systematic Investment Plan (SIP) in mutual funds. ET. "Unlike most financial assets, driven at their core by currencies whose supplies can be, and are, continuously increased through a couple of keystrokes on central bank computers, supply of gold in limited and constrained." "There is a small, if fanatical, group of 'experts' and financiers united by their deep distrust of modern central banking." Cryptocurrencies are extremely volatile, so "As an alternative to fiat currencies, that leaves gold - stable, trusted, liquid and non-fiat," wrote Somnath Mukherjee. A married woman in India can possess only 500 gm of gold ornaments, which are not of 100% gold (Kotak Life), but the government buys bullion in tonnes with our money and without any explanation. Luring people into gambling in stocks and increasing the number of dollar billionaires from 169 to 200 (ET). Gold is yellow. Perhaps it indicates a yellow alert. Will it turn red? We don't know.