We must begin by clarifying the question. It is true that inflation is slowly decreasing, but we cannot say that it is under control. Let us remember that the latest CPI data in the United States was 3% annualised and that in the Eurozone it is 2.6%, with eight countries publishing data above 3%, including Spain.

This is why central banks need to give the impression of hawkishness and maintain rates or lower them very cautiously. However, monetary policy is far from being restrictive. Money supply growth is picking up, the ECB maintains its "anti-fragmentation mechanism," and the Federal Reserve continues to inject money through the liquidity window. We can say, without a doubt, that monetary policy is beyond accommodative.

At the end of this article, the price of gold is above $2,400 an ounce, up 16.5% between January and July 19, 2024. In the same period, gold has performed better than the S&P 500, the Stoxx 600 in Europe, and the MSCI Global. In fact, over the past five years, gold has outperformed not only the European and global stock markets, but also the S&P 500, with only the Nasdaq surpassing the precious metal. This is a period of alleged recovery and strong expansion of the stock markets. On the one hand, the market is discounting the central banks' continued accommodative and expansionary policies, even possible high debt monetization, given the unsustainable deficits in the United States and developed countries. That is, the market assumes that the Federal Reserve and the ECB will not be able to maintain the reduction of their balance sheets in the face of rising debt and public spending in many economies. As a result, gold protects many investors against the erosion of the currency's purchasing power, i.e., inflation, without the extreme volatility of Bitcoin. If the market discounts further monetary expansion to cover the accumulated deficits, it is normal for the investor to seek protection with gold, which has centuries of history as an alternative to fiduciary money and offers a low-volatility hedge against currency debasement.

Another important factor is the central bank's purchase of gold. JP Morgan is credited with the phrase "gold is money and everything else is credit." All the world's central banks include treasury bonds from countries that serve as global reserve currencies in their asset base. This allows central banks around the world to try to stabilize their currencies. When we read that a central bank buys or sells dollars or euros, it is not making transactions with physical currency but with government bonds. Hence, as the market price of government bonds has fallen 7% between 2019 and 2024, many of these central banks are facing latent losses from a slump in the value of their assets. What is the best way to strengthen a central bank's balance sheet, thereby diversifying and reducing exposure to fiat currencies? Purchase gold.