Gold’s reputation as a market refuge is under scrutiny as its price behavior increasingly mirrors that of risk assets — including Bitcoin and the S&P 500 — according to economist Robin Brooks.
Brooks says gold has shifted from its traditional role as an uncorrelated hedge into a pro-cyclical, high-beta asset. In recent months the metal’s correlation with the S&P 500 has climbed above 0.50, a stark change from its historical near-zero relationship with equities. By comparison, Bitcoin’s long-term correlation with stocks was usually below 0.15, although that relationship briefly spiked to about 0.55 during the late‑2025/early‑2026 “debasement trade” — a period when rhetoric about fiat currency weakness drew heavy retail interest into alternative stores of value.
That convergence means gold now moves more like Bitcoin and equities: it tends to fall alongside stocks when investors cut risk exposure. Brooks argues this undermines gold’s basic safe-haven function — instead of buffering portfolios during shocks, it’s behaving like an amplifier of market moves. He traces the shift to the sharp gold rally over the past year and an influx of new retail buyers drawn in by promotional narratives about currency debasement. Those newer participants, Brooks says, are quicker to sell in moments of stress than the older, steadier bullion holders. The rally also mechanically boosted the value of gold on central bank balance sheets, but Brooks dismisses the idea that institutions suddenly flooded into bullion or abandoned the dollar.
Brooks initially expected the correlation to unwind once short-term traders were shaken out, but now believes the market’s trading structure has changed more fundamentally.
Meanwhile, volatility in crypto markets kept the spotlight on Bitcoin. On June 5, Bitcoin dipped below $60,000 — its weakest level since October 2024 — briefly erasing the gains it had made after the November 2024 U.S. election. Bitcoin critic Peter Schiff warned that a breach of the recent low could trigger “another round of panic selling,” calling the rebound above $61,000 a product of opportunistic “bottom fishing” rather than a sustainable recovery. Schiff, who runs macro advisory Euro Pacific Asset Management and founded SchiffGold, has long argued that gold is a superior store of value to Bitcoin.
Not everyone shares Schiff’s bearish near-term view. In a June 4 client note, Standard Chartered digital-assets head Geoffrey Kendrick described the week’s price action as “painful” but kept a bullish long-term stance. Kendrick suggested institutional strategies could reload on Bitcoin after selloffs — a pattern that has occurred previously — and pointed to a potential scenario where this pullback becomes a buying opportunity if Bitcoin reaches $100,000 by the end of 2026.
What it means for crypto investors
- Safe-haven comparisons are blurring: both gold and Bitcoin are showing stronger ties to equity markets, so investors can’t assume either will reliably protect portfolios in a broad market selloff.
- Short-term flows matter: retail and momentum-driven participants can change an asset’s risk profile quickly, increasing correlation and volatility.
- Divergent views persist: some see the current weakness as a buying window ahead of big upside; others warn of deeper downside if key levels break.
For traders and portfolio managers, the takeaway is to reassess hedging strategies and position sizes in light of higher cross-asset correlations — and to watch whether these recent patterns prove temporary or signal a lasting structural shift.
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