Gold is good hedge against S&P 500, devaluation: Wells Fargo's Kwon

10/13/2025 3:43:24 PM	medium term sharp up	20 days later	-4.21%	-6.32%

10/7/2025 12:54:42 AM	short term up	5 days later	-1.54%	-1.54%
10/3/2025 5:51:34 PM	medium term cautious up	21 days later	+3.37%	+1.69%
9/23/2025 11:33:29 PM	medium term up	20 days later	+0.31%	+0.31%
9/4/2025 8:56:40 PM	short term cautious down	5 days later	+0.83%	-0.42%

Osang, I'm not going to ask you specifically about Ford, but there was a lot in what Phil was saying about tariff impacts, about labor. We get this delayed CPI report tomorrow and there are questions about uh inflation's continuing effects on the economy. What are you looking for in that report that's perhaps going to signal whether the market continues to hang in or whether there are pressure points to be concerned about?

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Osang

Yeah, I I mean I think CPI print tomorrow is going to be binary. Um, I do think the risk is skewed to the upside though for the equity market because I think heading into this week, uh, I think the setup this week was pretty unfavorable for the equity market because we saw no AI earnings and AI uh, earnings were really dominated by regional banks and industrials which are obviously seeing more headwinds than AI. Um, but if you think about the setup from next week, we have all the hyperscalers that are coming out. We have the Fed meeting and US China meeting. So I think all of which are probably going to be more positive for the equity market than negative. So unless CPI comes in really hot, um I think the risk is skewed to the upside that investors might want to position more bullishly into those events next week.

Okay. Then what about gold, right? It's been on this torrid run, but I doubt dollar devaluation probably has something to do with that. Not sure how much of that continues. I'm not sure. a good week for the markets overall and perhaps more stability. If that's actually good for gold, if people are using it to hedge against their concerns about how long this goes, how should investors position that in their portfolios?

Host

Osang

I think after the selloff, gold is is is a great entry point for gold. I think what's really driving uh gold higher these days is really devaluation. Not just the dollar, but really the fiat currency devaluation. Uh so, I mean, I'm sure you heard that term being thrown around quite a lot. We actually came up with a measure to gauge where we are in the currency cycle which is M2 money supply divided by the gold price. So essentially the number of ounces of gold that the entire money supply in the economy can purchase. So if that goes up that's revaluation goes down that's devaluation. We went back all the way to the 1800s and found that we are in the fourth currency devaluation cycle that started in 2022 which coincided with the Russia Ukraine and the hiking cycle. And based on regression we found three drivers of the currency cycle. the budget balance, the fiscal deficits, debt to GDP, and inflation. All of which are probably going to remain negative for the foreseeable future, which means the devaluation cycle likely continues. And the reason why that matters for equities and gold is historically the S&P 500 always underperform gold during devaluation, which is happening right now. So I think it's a great hash against uh owning you know S&P 500 and against devaluation.

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