Author: David R. Kotok, Post Date: February 4, 2019

What do 72 countries – including developed nations such as Canada, Australia, Japan, and Sweden; emerging giants such as Argentina, Brazil, Mexico, Nigeria, India, Iran, and Russia; and small countries such as Burundi, Haiti, Myanmar, Syria, and Tonga – all have in common?

Market Commentary - Cumberland Advisors - Gold

Not much, you might say; they differ vastly in such metrics as population, GDP per capita, inflation rate, income inequality, and political stability. Yet these 72 nations do share one surprising feature: The price of gold is at an all-time high in the currencies of all these countries. Furthermore, the price is not far from its historical zenith in terms of the British pound, the Chinese yuan, the Swiss franc, the euro, and even the US dollar.

This phenomenon was pointed out to us by Ross Norman, CEO of Sharps Pixley, a London bullion broker, who wrote an article titled “Gold hits an all-time high in 72 currencies” (Jan. 15, 2019; available at

So what’s going on here? We can certainly point to the drastic appreciation of gold over the last 20 years. Since 1999, gold has risen by the following percentages relative to these nations’ currencies (some figures are approximate):

Australian dollar 298%
Brazilian real 699%
British pound 470%
Canadian dollar 290%
Egyptian pound 2231%
Indian rupee 644%
Iranian real 6103%
Japanese yen 329%
Mexican peso 861%
Nigerian naira 1720%
Russian ruble 612%
S African rand 914%
Swedish krona 419%
Turkish lira 1648%
US dollar 345%

(Data source:

In the span of these two decades we have seen the dot-com bubble and crash (followed by recession), the US housing crash and Great Financial Crisis (and recession), and then the longest bull market in US history. Gold has tended to tread water in most major currencies in the latter period, from March 2009 to present, but it’s clear that a post-millennial flight from risk and into gold has been a powerful and globally consistent pattern. There has simply been more financial, economic, and geopolitical turbulence over the last two decades than there was in the period 1945–2000.

Sovereign debt must be a factor in gold’s ascendance, too. Around the world, nations have responded to the challenges of our era by taking on ever greater debt. From 2000 to 2017, these nations experienced the following percentage growth in debt to GDP:

Argentina 24%
Brazil 33%
China 109%
France 67%
Germany 10%
India -7%
Italy 26%
Iran 233%
Japan 93%
Mexico 135%
S  Africa 23%
Spain 72%
Russia -74%
Turkey -43%
US 86%

(Source for US and other data:

Interestingly, the biggest increases in central bank gold holdings from 2000 to 2018 are found among both nations with the greatest debt growth and those with the least.

Country Gold holdings in tonnes
(Debt/GDP change) Q1 2000 Q3 2018 Percent change
China (109%) 395 1843 367
India (-7%) 358 586 63
Mexico (135%) 7 120 1614
Russia (-74%) 423 2036 381
Turkey (-43%) 116 259 123
US (86%) 8139 8133 -0.1


Apparently, gold purchases are driven more by central bank policy than by economic factors per se. Gold can, however, be a geopolitical force. Bloomberg reported on Jan. 25, 2019, that the Bank of England – at the urging of US officials – had blocked an effort by the embattled Maduro regime in Venezuela to repatriate $1.2 billion in gold. (See

In conclusion we can certainly say that gold has retained its global significance as a store of value, and indeed there has been a widespread, strong, and sustained “flight to gold” in this century.

Cumberland’s US ETF managed accounts hold a position in GDX, a gold miner ETF.

David R. Kotok
Chairman and Chief Investment Officer
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