Gold, Stocks, Bitcoin Soar in 'Everything Rally'

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The Rise of the "Everything Rally" in Global Financial Markets

International gold prices have surged past US$3,900 per troy ounce, with the milestone of US$4,000 now within reach. This rise coincided with record highs for the three major indices on the New York Stock Exchange and a breakthrough for Bitcoin, which surpassed the US$125,000 mark on the 5th. This phenomenon, known as the “Everything rally,” marks a rare occurrence where both safe-haven assets like gold and risk assets such as stocks and cryptocurrencies are rising simultaneously.

Historically, gold and risk assets have shown an inverse relationship. Gold typically rises during times of economic uncertainty or anxiety, while stocks tend to climb when optimism about economic recovery is high. However, this pattern has recently been disrupted. Analysts suggest that the current rally is fueled by an influx of liquidity since the start of the COVID-19 pandemic and a weakening U.S. dollar, driven by expectations of further interest rate cuts by the Federal Reserve.

Unstoppable ‘Gold Rush’…US$4,000 in Sight

On the 3rd, December gold futures on the New York Mercantile Exchange (NYMEX) closed at US$3,908.9 per troy ounce, surpassing all-time highs. International gold prices, which began the year around US$2,600 in January, first crossed the US$3,000 threshold in early April following U.S. President Donald Trump’s announcement of reciprocal tariffs. Within just six months, they have now exceeded the US$3,900 level. This year’s 48% increase mirrors the KOSPI’s 47.9% rise, making it the highest among major countries this year.

Current gold prices have far outpaced year-end forecasts from major global investment banks. The World Gold Council (WGC) attributes the recent surge to a growing fear of missing out (FOMO) among institutional investors. John Reed, WGC’s chief market strategist, told the Financial Times (FT), “Hedge funds that missed the gold price surge have started entering the market through ETFs (exchange-traded funds), fueling FOMO.”

HSBC predicted in a report on the 3rd that gold prices could rise above US$4,000 per ounce in the short term. Last month, Goldman Sachs suggested that if the independence of the U.S. Federal Reserve is undermined by pressure from President Trump, international gold prices could surge to US$5,000. In the worst-case scenario of shaken confidence in the Fed, investors might shift funds from U.S. Treasuries—a traditional safe-haven asset—to gold.

Stocks and Bitcoin Also Surge…‘Three Lows’ Fuel Rally

While major stock markets in the U.S., Japan, and South Korea continue to hit record highs, the MSCI World Index (ACWI), which includes 3,000 stocks from 47 developed and emerging markets, has rebounded 18% since the beginning of the year and about 34% from its April low. This indicates that the recent stock rally is not limited to a few countries.

Financial Times columnist Robert Armstrong noted, “While there were few alternatives to U.S. stocks over the past decade, this trend is changing recently,” pointing to the simultaneous rally in U.S. small-cap stocks and emerging market equities. He added, “One possible explanation is that expectations of U.S. rate cuts have influenced the rise in emerging markets and interest-rate-sensitive small-cap stocks. However, if U.S. rate cuts and a weak dollar are the background of the recent rally, it does not explain why European stocks have been relatively underperforming.”

According to the Bank for International Settlements (BIS), cross-border bank credit worldwide reached a record US$34.7 trillion (approximately 4.9 quadrillion Korean won) as of the first quarter of this year. This figure has surpassed the previous record of US$33.6 trillion set before the Financial Services Commission. This reflects the surge in loans provided by global banks to governments, corporations, and financial institutions worldwide, indicating an overflow of liquidity in the global economy.

Projections suggest that the so-called "three lows"—low interest rates, a weak dollar, and low oil prices (around US$60 per barrel)—will strengthen the "Everything rally." Park Sang-hyun, an iM Securities researcher, evaluated, “Although inflation, fiscal risks, and tariff uncertainties remain, the Fed’s accommodative monetary policy stance, the weak dollar trend, and low credit risks have sufficiently created an environment for funds to flow back into risk assets.”

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