Gold surpasses 'magnificent seven stocks': Is Yellow metal now more precious than Apple, Microsoft, Alphabet, Amazon, Meta Platforms, Nvidia, Tesla?

Gold's glorious run continues as the precious yellow metal has subdued the demand of "magnificent seven stocks". According to the latest BofA Fund Managers survey, gold accounted for the most crowded trade in October. With this the bullion has surpassed the "long Magnificent Seven" stocks.

"Magnificent Seven" stocks are Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), Meta Platforms (META), Nvidia (NVDA), and Tesla (TSLA).

Worries over inflation, deteriorating U.S. fiscal health, Federal Reserve independence, and geopolitical instability are raising questions about the stability of long-term Treasuries, traditionally the world's safest asset. In response, many central banks are turning back to that "barbarous relic", gold.


Gold has recently surpassed the euro to become the second-largest global reserve asset after the U.S. dollar and, for the first time since 1996, gold represents a bigger share of central banks' reserves than Treasuries.

The last time gold accounted for a greater share of global reserves than Treasuries was 1996. That date is significant. Many European countries sold gold aggressively in the late 1990s ahead of the launch of the euro. Surprisingly, the biggest seller was Britain, which wasn't even joining the single currency union.

Gold slumped to around $250 an ounce in August 1999, down 40 per cent from early 1996. This prompted central banks to adopt the "Washington Agreement" that September to effectively cap their sales.

In broad terms, the late 1990s was not a gold-friendly time. It was a period of solid growth, low and stable inflation, subdued macro volatility, and the rarest of rare occurrences – a U.S. budget surplus.

Nearly three decades on, the global macro environment is very different, one far more conducive to gold. Treasuries, in relative terms, are struggling.

FAQs

Q1. What are 'Magnificent Seven' stocks?
A1. "Magnificent Seven" stocks are Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), Meta Platforms (META), Nvidia (NVDA), and Tesla (TSLA).

Q2. Why is Gold price is rising?
A2. Worries over inflation, deteriorating U.S. fiscal health, Federal Reserve independence, and geopolitical instability are raising questions about the stability of long-term Treasuries, traditionally the world's safest asset. In response, many central banks are turning back to that "barbarous relic", gold.