As Eric Peters explained a few days ago, by pushing prices to overvaluation and reducing yields on every investment asset, central banks have destroyed investors ability to create a portfolio that can withstand even the slightest economic disruption. Peters correctly describes it as "the most obvious disaster in finance."
By reducing the yield on every investment asset, pushing prices to overvaluation, this policy also destroyed the ability of investors to build diversified portfolios capable of withstanding even the slightest economic disruption. Which ultimately results in reduced private sector risk-taking; the lifeblood of every economy. "This is the most obvious disaster in finance. Central bankers don't quite understand it."
As a result of such practices Peters touched upon (ie: negative interest rate environment and concerns over a struggling global economy), two things have occurred. First, gold has become one of the top performing assets YTD through April.
Secondly, total gold ETF holdings is seeing its fastest rise since 2009, with total holdings at a level not seen since 2013.
ETF holdings have risen along with spot prices...
As Bloomberg notes, China, Russia, and Kazakhstan have also been substantial and consistent buyers of gold. The World Gold council estimates that nations are expected to buy 400 to 600 tons this year, compared with 566.3 tons in 2015.
While it must be painful for those who have such disdain for the pet rock, the fact is that central banks are losing credibility with the market, and gold is one way of expressing that. As Elliott Management's Paul Singer said last month regarding investor confidence in the central planners: "If judgement continues to weaken, the effect on gold could be very powerful." Perhaps the markets are starting to wake up to the fact that the all-knowing central planners literally have no idea what they're doing, and if so, we'll let investors borrow our tinfoil hat.