Prominent economist Robin Brooks has stated that gold has lost its status as a safe-haven asset.
The lustrous metal is now trading as a pro-cyclical, high-beta asset that mirrors the behavior of risk markets like Bitcoin and the S&P 500.
According to Brooks, the traditional days of gold remaining uncorrelated with swings in risk appetite are over.
Hence, it has a reputation as a reliable hedge during times of geopolitical and economic distress.
Growing correlation
Gold would typically maintain a correlation near zero with the S&P 500. At the same time, Bitcoin’s historical correlation hovered at a modest baseline level under 0.15.
During the peak of the debasement trade (late 2025 – early 2026), Bitcoin’s correlation with equities rapidly surged to as high as 0.55. At the same time, gold’s correlation began a noticeable upward crawl.
Over the past few months, however, gold’s correlation with the S&P 500 has skyrocketed to over 0.50. It is now precisely on par with Bitcoin, which is rather unprecedented.
The yellow metal now drops alongside equities when there is growing risk aversion.
Brooks has noted that this is exactly the opposite of how a true safe haven is supposed to behave.
Retail inflows
There is a permanent widening of the investor base. A massive run-up in gold prices over the past year mechanically inflated central bank balance sheets. There has been no actual institutional buying frenzy or sudden abandonment of the U.S. Dollar, according to Brooks.
The almost inescapable marketing of the “debasement trade” throughout late 2025 drew a massive influx of retail investors into the gold market. These new buyers are fundamentally more skittish and pro-cyclical than traditional bullion holders.
Brooks initially believed this high equity correlation would fade. His reasoning was that retail “tourists” were flushed out during market corrections. However, he is now convinced that gold’s mechanics have been altered.
