Gold at $5,000: The "barbarous relic" is having the last laugh

Key topics:Gold surges past $5,000 amid global uncertainty and safe-haven demandSouth African miners see massive gains, boosting local economy and RandCentral banks aggressively buying gold, signalling long-term market shift.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here..By Alec Hogg.In the investment world, there are decades where nothing happens, and then there are weeks where decades happen. We are living through one of those weeks.This morning, the gold price punched through the psychological $5,000 an ounce ceiling, trading as high as $5,074. To put that in perspective for the BizNews tribe, it was only a few years ago we were debating whether the metal could hold $2,000.For years, my hero Warren Buffett dismissed gold as a "barbarous relic"—a useless cube that you stroke while it stares back at you, doing nothing. But even the Oracle of Omaha might have to concede that when the world loses its head, capital follows a very old, very predictable path. It flows to safety..Follow the Money.So, why $5,000? And why now?First-principles thinking tells us to ignore the noise and focus on the drivers. The "Sell America" trade is gathering genuine momentum. Between the escalating tensions over Greenland—with President Trump locking horns with Europe—and the US Federal Reserve’s independence under siege, the Greenback is losing its shine.This morning, the Rand strengthened below R16.10 against the US Dollar for the first time in three and a half years. Next stop the 15s, and who knows what comes next? The SA currency has been benefiting from the very real (PGMs) and now mainly psychological (gold) link to precious metals. Global central banks, particularly in the East, have been net buyers of gold for months. They aren’t just nibbling; they are gorging. As we’ve often discussed in Boardroom Talk, when the big money moves, you don’t stand in front of the train. You get on board.The result is a classic flight to safety. The Financial Times and Wall Street Journal are awash with reports of "unavoidable uncertainty." Goldman Sachs, US investment bank, has been bullish for some time have already recalibrated its sights, lifting a year-end target to $5,400. Independent analysts like Ross Norman are even more aggressive, eyeing $6,400..The Windfall for SA Inc..For South Africa, this is the kind of tailwind finance ministers dream about.Our resources sector is often the only thing standing between the JSE and irrelevance, and right now, it is doing the heavy lifting. The Rand’s strengthening is also a reprieve for consumers facing imported inflation.On the JSE, gold miners are printing cash. If you look at the share price action of Harmony, Gold Fields, AngloGold Ashanti and Sibanye they are up over 200% in the last 10 months. Yes, there has been some profit-taking in the past week—trees don’t grow to the sky—but the fundamentals remain rock solid. While Peter Major is a sceptic, some other analysts are staying aboard. As one analyst noted, we are far from the "blind faith" phase of the cycle. This isn't mania; it's a rational repricing of risk..What Happens Next?.The experts are divided, as they always are. The bears will tell you that volatility is coming, that the trade is "crowded," and that a resolution to the Greenland spat could see a sharp pullback to $4,600.But the bulls make a compelling case. With US debt spiralling and geopolitical chess games becoming more dangerous, the "store of value" argument has never been stronger. J.P. Morgan sees the trend of central bank diversification running well into 2027.For the private investor, the lesson is clear. The world is changing. The old rules of the 60/40 portfolio are being rewritten in real-time. The message from the market is loud and clear: in a world of fiat uncertainty, hard assets are king.It’s going to be a bumpy ride, but for South Africa’s miners and the Rand, long may the "barbarous relic" shine.

Gold at $5,000: The "barbarous relic" is having the last laugh

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