Gold is Top Hedge Amid 'Anything But Dollar' Theme, BofA Strategist Says

Gold remains the premier asset for hedging against a weakening U.S. dollar and broader market risks, according to a recent note to investors from Bank of America strategist Michael Hartnett. The recommendation comes as gold funds recorded their largest weekly capital influx since January.

Gold Inflows Surge

According to the latest weekly fund flow data from Bank of America, gold funds attracted $6.3 billion in inflows over the most recent week. This marks the largest single-week inflow for the asset class since January.

In the note, Hartnett reiterated his "Anything But Dollar" investment theme, stating plainly, "The trade is long gold." He described the precious metal as "the best hedge against dollar debasement, bond market crash, asset inflation, and the political game of populist capitalism vs. populist socialism in the 2020s."

Shifting Global Fund Flows

The move into gold occurred alongside broad inflows into other asset classes. BofA's report detailed significant capital movements across markets:

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• Money market funds: +$25.4 billion
• Bond funds: +$23.8 billion
• Equity funds: +$16.1 billion

Within fixed income, investment-grade bonds saw inflows of $10.6 billion, the largest in five weeks. European equity funds also attracted $1.2 billion, their best week since February. In contrast, Chinese equity funds experienced outflows of $14.5 billion, the largest weekly withdrawal since May, while technology funds saw outflows of $1.2 billion.

BofA Indicator Signals "Greed"

Despite the defensive move into gold, Bank of America's proprietary "Bull & Bear Indicator" continues to signal market froth. The indicator dipped slightly to 9.3 from 9.7, a level that still reflects "excessively bullish" positioning among investors, according to the bank.

The minor decline was attributed to weaker flows into high-yield bonds and outflows from technology and healthcare stocks. Hartnett warned that "'greed' is historically harder to reverse than 'fear'" and that a true end to a bull market typically requires a combination of concentrated positioning, overly optimistic earnings expectations, and a turn toward policy tightening.