The world has lost faith with the US dollar. The age of Pax Americana and trust in the American empire is over. Looking across the global economy, however, it is not clear that there is any one better alternative, at least in terms of traditional currencies. Gold, and bitcoin, are perhaps the best alternatives.

Gold is on a tear. The price of bullion has jumped almost 50% since January, heading for its strongest annual return since the hyper-inflationary days of the late 1970s. Last week it surged past $3,900 an ounce, leaving investors asking one question: What will stop it from going even higher?

This bull market has been years in the waiting. For more than a decade after the global financial crisis the metal traded in a relatively narrow band between $1,000 and $2,000 an ounce. That range was finally broken in late 2023, when prices pierced the upper limit and started climbing.

As might be expected, the timing coincided with the peak of the interest rate cycle. The Federal Reserve delivered its last rate hike in mid 2023. Once investors began to anticipate easier monetary policy they reassessed the opportunity cost of holding gold. Lower rates benefit zero-yielding assets like gold because they reduce the penalty of holding it instead of yielding securities such as government bonds or money market funds.

Keep up with the latest headlines on WhatsApp | LinkedIn

The rally then picked up speed in mid-2024 as the Fed restarted rate cuts, having paused for a few months to assess the risk of a resurgence of inflation. With more...