A Wall Street Guru Bets on Gold and Explains Why It Remains His Favorite Hedge

Gold is once again at the center of Wall Street bets. Michael Hartnett, strategist at Bank of America (BofA), keeps the precious metal as his preferred hedge against the risks of a weakening US dollar, at a time when gold-linked funds are seeing their largest inflow of capital since the beginning of the year.

According to the latest flow data collected by BofA, gold funds received $6.3 billion in one week, the largest inflow since January 2026. This movement occurred in a scenario where investors also allocated $25.4 billion to cash, $23.8 billion to bonds, and $16.1 billion to stocks.

For Hartnett, the appeal of gold is part of a broader strategy he calls "Anything but the dollar", aimed at positioning in assets that can benefit from or provide a hedge against a loss of value of the US currency.

In this sense, the strategist stated that "the operation is to be long on gold... it remains the best hedge against dollar devaluation, bond collapse, asset inflation, and the capitalist populism versus the socialist populism of the 2020s."

The recommendation comes in a context of strong investor positioning and a search for hedges against various macroeconomic risks. For Hartnett, gold offers protection not only against dollar depreciation but also against an asset inflation scenario or a deterioration in the bond market.

The strong inflow of money into gold-linked funds shows that this strategy is gaining traction among investors. The $6.3 billion captured in the last week represented the highest flow in seven months.

BofA's strategy, however, is not limited to gold. The bank believes that a scenario of weakness in the US currency could also favor emerging market assets.

Within that universe, the entity particularly focused on Latin America and pointed to the presidential elections in Brazil on October 4 as one of the events that could define the direction of the region's markets.

According to BofA, Latin American assets responded favorably to electoral victories of candidates perceived by the market as more favorable to businesses. The bank highlighted that the seven presidential elections held since January 2025 were won by right-wing candidates or those leaning towards the right.

Beyond gold, the latest flows reported by Bank of America showed strong demand for assets considered of higher quality. Investment-grade bonds received $10.6 billion, the largest inflow in the last five weeks.

European stocks also attracted capital, with inflows of $1.2 billion, their best record since February. The movement was different in other markets. Chinese stocks recorded outflows of $14.5 billion, the largest exits since May, while technology funds suffered redemptions of $1.2 billion.

Despite maintaining its bet on gold, Bank of America also raised a caution signal regarding the overall positioning of investors.

The BofA Bull & Bear indicator fell from 9.7 to 9.3 points, due to lower flows into high-yield assets and exits from the technology and healthcare sectors. Despite the decline, the bank believes that positioning remains "excessively bullish".

BofA also warned that "greed is always harder to reverse than fear" and noted that, historically, ending a bull market often requires a combination of excessive positioning, overly optimistic expectations about corporate earnings, and a tightening of economic policy.