North American pension-fund investment in private-market loans reached an eight-year high in 2022, even as banks pulled back on lending and default rates inched upward.

The average share of these retirement funds parked in the illiquid, typically unrated debt has crept up steadily to 3.8%, the highest on record, according to analytics company Preqin. Though a fraction of the overall portfolio, private credit now amounts to more than $100 billion in the retirement savings of U.S. and Canadian teachers, police and other public workers, according to a Wall Street Journal estimate based on Federal Reserve data and pension financial reports. And the pensions are planning to add more: Their average target allocation is 5.9%.

The $300 billion California State Teachers’ Retirement System is the latest to show interest in increasing private-credit investment and giving the asset class a permanent place in its portfolio. The Calstrs board Thursday directed staff to include private credit in proposals for the pension’s new asset allocation, which board members will vote on later this year.
The $90 billion Ohio Public Employees Retirement System added a 1% allocation to private credit in January, following in the footsteps of the $450 billion California Public Employees’ Retirement System and the $230 billion New York State Common Retirement Fund, which are building out private-credit portfolios of 5% and 4%, respectively. In Canada, some pension funds took advantage of early-Covid market dislocation to expand their already-robust private-debt portfolios.

The ramp-up is part of a decadeslong pivot by pension funds to private-market assets and other alternatives to stocks and bonds in search of investment returns of 6% or more. U.S. state and local retirement funds are hundreds of billions of dollars short of what they need to cover benefits and market losses in 2022 largely obliterated the funds’ record 2021 gains. Pensions rely on taxpayer funds or worker contributions when investment returns fall short.

When investing in private credit, a pension fund typically gives money to a manager who also collects money from other institutional investors. U.S. pension funds often turn to the same big managers handling their other private-market assets, including Ares Management Corp. , Blackstone Inc. and Oaktree Capital Management LP.
The manager pools the money in a fund that makes loans—typically unrated, subprime loans—to companies or other enterprises for a period of around five to seven years. Often the loans go to private-equity-held firms in areas such as software or healthcare, to pay for an overhaul or restructuring ahead of an eventual sale. But the debt can finance anything from airline leases to credit for online shoppers.

A slowdown in bank lending in 2022 made room for the growth of private-market debt. Investors lent out an estimated $200 billion in private credit last year, up from $156 billion in 2021, according to data from PitchBook LCD, which began tracking those figures last year because the increase was so stark. Meanwhile, institutional leveraged-loan issuance fell by 63% and high-yield bond issuance by 78% from 2021 to 2022, the firm found.
There is more than $1 trillion in total private debt outstanding, according to Preqin. The asset class has taken off over the past decade after rules stemming from the 2007-09 financial crisis made banks more reluctant to issue and hold loans to middle-market companies.
market retreat makes room for pensions to add illiquid, unrated debt.

Private credit now amounts to more than $100 billion in the retirement savings of U.S. and Canadian teachers and other public workers, according to an estimate.
North American pension-fund investment in private-market loans reached an eight-year high in 2022, even as banks pulled back on lending and default rates inched upward.

The average share of these retirement funds parked in the illiquid, typically unrated debt has crept up steadily to 3.8%, the highest on record, according to analytics company Preqin. Though a fraction of the overall portfolio, private credit now amounts to more than $100 billion in the retirement savings of U.S. and Canadian teachers, police and other public workers, according to a Wall Street Journal estimate based on Federal Reserve data and pension financial reports. And the pensions are planning to add more: Their average target allocation is 5.9%.

The $300 billion California State Teachers’ Retirement System is the latest to show interest in increasing private-credit investment and giving the asset class a permanent place in its portfolio. The Calstrs board Thursday directed staff to include private credit in proposals for the pension’s new asset allocation, which board members will vote on later this year.The $90 billion Ohio Public Employees Retirement System added a 1% allocation to private credit in January, following in the footsteps of the $450 billion California Public Employees’ Retirement System and the $230 billion New York State Common Retirement Fund, which are building out private-credit portfolios of 5% and 4%, respectively. In Canada, some pension funds took advantage of early-Covid market dislocation to expand their already-robust private-debt portfolios.

The ramp-up is part of a decadeslong pivot by pension funds to private-market assets and other alternatives to stocks and bonds in search of investment returns of 6% or more. U.S. state and local retirement funds are hundreds of billions of dollars short of what they need to cover benefits and market losses in 2022 largely obliterated the funds’ record 2021 gains. Pensions rely on taxpayer funds or worker contributions when investment returns fall short.

When investing in private credit, a pension fund typically gives money to a manager who also collects money from other institutional investors. U.S. pension funds often turn to the same big managers handling their other private-market assets, including Ares Management Corp. , Blackstone Inc. and Oaktree Capital Management LP.

The manager pools the money in a fund that makes loans—typically unrated, subprime loans—to companies or other enterprises for a period of around five to seven years. Often the loans go to private-equity-held firms in areas such as software or healthcare, to pay for an overhaul or restructuring ahead of an eventual sale. But the debt can finance anything from airline leases to credit for online shoppers.

A slowdown in bank lending in 2022 made room for the growth of private-market debt. Investors lent out an estimated $200 billion in private credit last year, up from $156 billion in 2021, according to data from PitchBook LCD, which began tracking those figures last year because the increase was so stark. Meanwhile, institutional leveraged-loan issuance fell by 63% and high-yield bond issuance by 78% from 2021 to 2022, the firm found.

“A year ago it was competitive. Now, though, banks aren’t lending and public markets are shut,” said Craig Packer, co-founder of Blue Owl Capital, a private-market asset manager, in remarks to investors last month.

The California Public Employees’ Retirement System is among those building out private-credit portfolios.
There is more than $1 trillion in total private debt outstanding, according to Preqin. The asset class has taken off over the past decade after rules stemming from the 2007-09 financial crisis made banks more reluctant to issue and hold loans to middle-market companies.

Retirement officials said private credit is appealing because interest payments adjust to match prevailing rates and give cash-hungry pension funds a steady income stream. Managers and consultants said the rising rate environment creates opportunity because companies struggling to cover interest costs may be willing to take out relatively expensive private loans to keep cash flowing. And, they said, if a private loan is at risk of default, a small group of lenders can intervene earlier and negotiate more easily than is possible in public markets.

     New listings in China are breaking records even as turbulent markets cast a pall over the global initial-public-offering business.

The disconnect shows how markets in Shanghai and Shenzhen remain relatively shielded from developments elsewhere, bankers say, despite the fact that foreign buyers have increased their investments in mainland China in recent years. IPOs in China raised more than $33.8 billion so far this year, up from more than $30.4 billion a year earlier, according to Dealogic. This year’s tally is the highest figure since at least 2009, according to Dealogic. That is the year when the data provider began giving banks league-table credit for work on onshore listings, after the market was opened to non-Chinese bookrunners.The figures include both primary listings—for companies whose stock wasn’t previously trading anywhere—and secondary listings by companies that already had a presence on another exchange. 

In contrast, the global dollar value of IPOs fell 71% to more than $90.2 billion over the same period. In Hong Kong, IPO volumes have tumbled 92% from a year ago to nearly $2.2 billion, the lowest point since 2009.

Investors have balked at putting money into new listings globally. Surging inflation, rising interest rates, Russia’s invasion of Ukraine and uncertainty over the trajectory of the Covid-19 pandemic have put pressure on world stock and bond markets. Shares of rapidly growing technology companies—a mainstay of IPO markets in recent years—have been among the hardest hit. While estimates of Chinese growth have fallen—due in part to strict Covid-19 lockdowns—and the benchmark CSI 300 index has fallen about 15% this year, issuance has proven resilient.

High trading volumes also are supportive for the market, bankers say, because this liquidity helps give investors confidence they can trade in and out of newly public stocks rapidly if needed. Another driver is that Chinese companies typically have to undergo a long approval process before listing on a domestic exchange and are therefore eager to join the public markets once they get the go-ahead.

New listings on China’s main boards are usually priced at modest levels, with an unwritten rule capping their valuation at listing.

This year’s biggest mainland listing was the $4.4 billion debut in April of energy giant Cnooc Ltd. The company, whose shares also trade in Hong Kong, was delisted from the New York Stock Exchange last year due to an investment ban introduced by former President Donald Trump.Bankers and lawyers say new listings could also pick up later in the year in Hong Kong, which is traditionally a major destination for offshore listings by mainland Chinese companies. 

Regulators in Beijing and Washington have stepped up their scrutiny of Chinese companies that are listed in the U.S., or firms that plan to list there. That has increased the appeal of Hong Kong as an alternative destination. A dispute over access to audit papers could lead to Chinese companies being booted off U.S. exchanges as soon as next year.

For deals to resume broadly, however, global markets need to become less volatile. Investors also have a range of concerns about China, including economic growth, technology regulation, Covid-19 policy and U.S.-China audit negotiations. And China has yet to publish finalized rules on offshore listings, which will include Hong Kong.

The city’s exchange operator, Hong Kong Exchanges & Clearing Ltd. , has said it had 170 active applications as of the end of May for IPOs on its main board. International share sales from China “could be the story of the second half,” if those IPOs start to appear, said Udhay Furtado, co-head of Asia-Pacific equity capital markets at Citi.

Investing is all about risk and reward, but at the moment it’s mostly about risk and not very much reward. Some risks aren’t just badly rewarded, but are more expensive than holding the very safest forms of money.

The extra yield that can be earned above cash by buying risky junk bonds is the lowest outside the credit bubble of 2007, in data that go back to 1986. A standard, albeit flawed, Wall Street valuation measure shows the smallest extra reward for the risk of holding stocks over cash since the dot-com bubble burst two decades ago.

So why take the risk and hassle of investing, when a nice safe money-market fund or Treasury bill is so attractive? There are two basic answers. One is that investors don’t expect cash to stay so appealing, and want to lock in future yields. The second is that after a decade when cash was trash with a zero yield, few think of cash as anything other than a temporary place to park money.

That thinking needs to go, at least for now. There’s little reward for venturing out of cash.

The Federal Reserve pays 4.55% to money-market funds on its reverse-repurchase facilities, part of its effort to soak up cash from the economy and keep rates high. That’s more than the yield on safe AA-rated bonds, such as those from Apple or Berkshire Hathaway. These are companies that are rock-solid—but they still carry far more risk than cash held at the Fed or in T-bills, where the three-month yield is 4.54%.

In part this is explained by investors’ expectation of Fed rate cuts starting in the summer, expectations that intensified on Wednesday when Fed Chairman Jerome Powell didn’t push back hard against the recent rally. This has resulted in an inverted yield curve, with yields on longer-dated Treasurys lower than those on short-dated bonds and cash.

But we’ve had inverted yield curves plenty of times before (before every recession in the past 60 years, in fact). Not since the ICE Merrill Lynch index started in 1988 has cash yielded more than safe AA bonds. Investors always demanded a higher premium above Treasurys for the extra risk of the bonds that more than offset the lower yield on longer-dated bonds during the inversion.

The difference this time is that companies are borrowing for longer, meaning the inverted yield curve lowers their bond yields more than in the past. The extra yield they pay above Treasurys, though higher than at many points in the past, is still low and not enough to bring yields back above cash.

Stocks are harder to analyze because they don’t promise a fixed coupon, unlike bonds. The standard way to extract the future premium they offer is to compare cash or bonds to the earnings yield on stocks, profit divided by price, or the inverse of the PE ratio.

The earnings yield is currently 1 percentage point above the rate on a three-month T-bill, an extraordinarily low level considering the riskiness of stocks. Again, some of that is because investors are betting that the Fed will move into rate-cutting mode later this year, helping stocks.

Some of it is because the measure is flawed, comparing the nominal return on cash with earnings, which have some connection to inflation.

But much of it is because stocks are still expensive compared with interest rates, even after the big selloff last year.

One way to try to fix the problems is to compare the earnings yield on stocks with the 10-year real yield, from Treasury inflation-protected securities (TIPS.) Here stocks offer a pickup of 4.5 percentage points over TIPS, which doesn’t sound too bad. But it is: This is the lowest extra reward since 2007.

Some might believe that the risks of stocks and bonds are lower than in the past, that a soft landing for the economy is a sure thing, or simply be happy to take risk even for lower rewards than usual.

Indeed, just because risky assets are expensive compared with cash doesn’t mean cash is sure to outperform. If everything goes as markets expect, interest rates will fall, stocks rise and those who locked in their yield on longer-maturity corporate bonds will be happy.

But think about reward for risk taken. Risk-free cash—debt-ceiling-driven default aside—looks very attractive.

Our information/charts  are NOT buy/sell recommendations. Are  strictly provided for educational purposes only. Trade at your own risk and analysis.

Investors commonly hear that when inflation surges, it is best to put your money into physical assets that track the jump in prices, with real estate often suggested as the best option. But physical assets, particularly properties, generally can’t be bought as easily or quickly as securities, and acquiring them often entails significant transaction costs.

The second-best option is usually to rebalance your stock portfolio to shift it into industries that do well in an inflationary environment. So, when inflation surges, what industries do best for a stock portfolio? 

To sum up: Shares in real-estate investment trusts or companies in the real-estate industry are not the best option. Stocks in the materials and energy industries outperform all others by a long shot, according to the findings of a study  conducted with research assistants.
Gathered data on the returns for all stocks listed on the New York Stock Exchange or Nasdaq over the past 50 years   then examined the course of the consumer-price index over those years and found three spikes in prices during which the inflation rate doubled in less than 24 months: March 1973 to May 1975, April 1978 to September 1980, and February 2021 to March 2022.
The median real-estate stock delivered a 3.32% annualized return over the three periods, far below the annualized returns of 18% for the median energy company and 16.81% for the median materials company.On the opposite end of the spectrum, healthcare (including pharmaceuticals) performed the worst, with an annualized return of minus 8.44%, followed by consumer staples at minus 6.73%, consumer discretionary at minus 5.71%, utilities at minus 4% and technology at minus 3.64%.

The negative results for healthcare, tech and consumer discretionary are understandable, because these are interest-rate-sensitive industries. But the results for consumer staples and utilities might surprise some investors, because these are often thought of as safe assets in rough times. 

     After languishing throughout last year, growth stocks have zoomed higher. The outlook for bonds is brightening after a historic rout.

The rebound has been driven by renewed optimism about the global economic outlook. Investors have embraced signs that inflation has peaked in the U.S. and abroad. Many are hoping that next week the Federal Reserve will slow its pace of interest-rate increases yet again. China’s lifting of Covid-19 restrictions pleasantly surprised many traders who have welcomed the move as a sign that more growth is ahead. 

Still, risks loom large. Many investors aren’t convinced that the rebound is sustainable. Some are worried about stretched stock valuations, or whether corporate earnings will face more pain down the road. Others are fretting that markets aren’t fully pricing in the possibility of a recession, or what might happen if the Fed continues to fight inflation longer than currently anticipated.

Once a relatively placid area of markets following the 2008 financial crisis, currencies have found renewed focus from Wall Street and Main Street. Last year the dollar’s unrelenting rise dented multinational companies’ profits, exacerbated inflation for countries that import American goods and repeatedly surprised some traders who believed the greenback couldn’t keep rallying so fast. 

The factors that spurred the dollar’s rise are now contributing to its fall. Ebbing inflation and expectations of slower interest-rate increases from the Fed have sent the dollar down 1.7% this year.

Even after the S&P 500 fell 15% from its record high reached in January 2022, U.S. stocks still look expensive.

Of course, the market doesn’t appear as frothy as it did for much of 2020 and 2021, but a steeper correction in prices ahead.

The broad stock-market gauge recently traded at 17.9 times its projected earnings over the next 12 months, according to FactSet. That is below the high of around 24 hit in late 2020, but above the historical average over the past 20 years of 15.7, FactSet data show.

Investors repeatedly mispriced how fast the Fed would move in 2022, wrongly expecting the central bank to ease up on its rate increases. They were caught off guard by Fed Chair Jerome Powell ‘s aggressive messages on interest rates. It stoked steep selloffs in the stock market, leading to the most turbulent year since the 2008 financial crisis.

Current stock valuations don’t reflect the big shift coming in central-bank policy, which will have to be more aggressive than many expect. Though broader measures of inflation have been falling, some slices, such as services inflation, have proved stickier. Positioning for such areas as healthcare, would be more insulated from a recession than the rest of the market, to outperform.

Gone are the days when tumbling bond yields left investors with few alternatives to stocks. After a turbulent year for the fixed-income market in 2022, bonds have kicked off the new year on a more promising note. The Bloomberg U.S. Aggregate Bond Index—composed largely of U.S. Treasurys, highly rated corporate bonds and mortgage-backed securities—climbed 3% so far this year on a total return basis. That is the index’s best start to a year since at least 1989, according to Dow Jones Market Data. 

It is important to reconsider how much of an advantage stocks now hold over bonds, given what he believes are looming risks for the stock market. He predicts that inflation will be harder to wrangle than investors currently anticipate and that the Fed will hold its peak interest rate steady for longer than is currently expected. Even more worrying, it will be harder for companies to continue passing on price increases to consumers, which means earnings could see bigger hits in the future.

Among the products, in the fixed-income space are higher-quality and shorter-term bonds. Still, he added, it is important for investors to find portfolio diversity outside bonds this year. For that, commodities as attractive, specifically metals such as copper, which could continue to benefit from China’s reopening.

Fidelity Investments, said she can still identify bargains in a pricey market by looking in less-sanguine places. Find the fear, and find the value.

The S&P 500 is trading above fair value, she said, which means “there just isn’t widespread opportunity,” and investors might be underestimating some of the risks that lie in waiting. 

Investors are moving their money out of stocks and into ultrasafe assets that had largely been unloved for the past decade—such as cash, Treasury bills, certificates of deposit and money-market funds. Investors put $51.4 billion in global money-market funds in the week through April 27, the most for a week since October, according to Refinitiv Lipper. During the entire month of April they yanked $19.2 billion out of stock exchange-traded funds—the biggest outflows since 2019, according to Morningstar Inc.
If stocks were still rising the way they did the past several years, these alternatives would likely be of little interest to investors. After all, the S&P 500 delivered annualized returns of 17% over the past decade. But between investor worries about tightening monetary policy, inflation, and Covid-19 lockdowns and supply-chain disruptions slowing global growth, the stock market has had an indisputably grim year.
The S&P 500 is now down 16% in 2022—on course to deliver its worst return since 2008. Even bonds, which have been hit by their own brutal selloff, have managed to beat the stock market so far this year. The Bloomberg U.S. Aggregate Bond Index, which includes Treasurys, mortgage-backed securities and investment-grade corporate debt, has returned negative 9.4% in 2022.
This time around, the market hasn’t gotten the same lift. The S&P 500 posted its sixth consecutive week of losses Friday, a streak last matched in length during the height of the 2011 European debt crisis. Many investors see the tumult as the consequence of the Fed finally winding down easy money policies that sent shares soaring and encouraged people to keep putting money into the stock market because they felt they had no other palatable choices.
Stock investors faced with rising interest rates and falling stocks have historically been rewarded by sticking it out in the market. For instance, the Fed raised interest rates in 1986 and 1987 to try to fight inflation. After stocks careened on Black Monday, the central bank immediately lowered rates again, helping stocks go on to produce double-digit percentage returns the following two years.

More recently, stocks fell in 2018 after the Fed raised rates and indicated it would continue to do so the following year. The central bank then wound up cutting rates three times—effectively taking away its 2018 rate increases—to try to give the U.S. economy a buffer from the trade war and slowing global growth. The S&P 500 once again rallied, rewarding investors with double-digit percentage returns in 2019, 2020 and 2021. Returns on cash and cash-like investments trailed well behind stocks over that period.
In one scenario, the Fed pulls off what’s called a soft landing: cooling down the economy enough to get inflation back near its 2% target, but avoiding actually tipping the economy into a recession. That might help make stocks attractive again since corporate profits would remain strong, something that should encourage investors to place bets on publicly traded companies.
In a less upbeat scenario, the Fed’s interest-rate increases wind up putting the economy at the risk of recession. Bond yields should then fall, since they typically go down when investors are less optimistic about the economy and go up when they see higher growth and inflation in the future.

Two of Asia’s financial hubs aimed to reinvent the SPAC. So far, it is proving slow going. Exchanges in Hong Kong and Singapore have always said they aim for quality not quantity with their rules for blank-check companies, touting better investor protection than in the U.S.

But as the U.S. SPAC business has lost momentum, global banks and international investors have grown more cautious about their involvement in these vehicles. And market turmoil brought on by the Ukraine war and the Federal Reserve’s interest-rate increases has made it harder to sell new listings to investors.

SPACs, or special-purpose acquisition companies, are cash shells that first raise money from public investors and list on an exchange, and then hunt for private companies to merge with. 

Nine months after SPACs were allowed in Singapore, just three such listings have taken place. In Hong Kong, where rules took effect in January, only two have gone public. The second, Vision Deal HK Acquisition Corp. , listed earlier this month.

That is a far cry from the U.S., where even as investor appetite has cooled, nearly 70 SPACs have listed this year, according to data from industry tracker SPACInsider.

Most of those 12 applicants, all of which are backed by mainland Chinese or Hong Kong investors, rushed to file in the first three months of 2022 and the majority are still awaiting approval. No new applications have been lodged in Hong Kong in the past two and a half months.

Pent-up demand from Chinese investors has, in part, helped fill Vision Deal’s order book. Vision Deal raised the equivalent of $127 million after allocating the vast majority of shares to mainland Chinese and Hong Kong investors.

Both Singapore and Hong Kong drew lessons from the U.S.’s experience and adopted strict requirements that hold SPAC sponsors and investment banks accountable for the eventual merger transaction, known as a de-SPAC.

Hong Kong mandates that at least 20 institutional investors buy into each SPAC IPO and has detailed rules about independent investors funding de-SPAC transactions.

Both requirements could amount to serious hurdles. The Asia Securities Industry & Financial Markets Association, a trade group, last year urged against the requirement for SPAC IPO investors, saying even in the U.S. there were only about 40 active institutional investors in SPACs.

Another challenge could be finding independent investors to put in fresh capital alongside the merger. “Unless the target is extremely attractive, it would be challenging for most SPAC promoters to find sufficient investor demand for the deal,” said John Baptist Chan, a Hong Kong-based partner at law firm King & Wood Mallesons, which advised the trade group on its feedback to the SPAC consultation.

In Singapore, no new SPAC applications have been filed since the trio of IPOs at the end of January, all linked to state investment behemoth Temasek Holdings.  

Some international private-equity firms investing in China are choosing to denominate new funds in the country’s local currency, going against a wider slowdown in global demand for bets on Chinese startups.  The appetite for allocating capital to funds focused on China has waned over the past year, the result of factors including tensions between Beijing and Washington, higher U.S. interest rates and a prolonged crackdown on China’s once-hot internet sector.  

U.S. dollar capital raised by China-focused private-equity funds plunged more than 80% to just under $23 billion in 2022, the lowest amount raised since 2010, according to data from Preqin Pro. Yuan-denominated funds have held up much better. The equivalent of around $455 billion was raised by yuan funds in 2022, just 4% down on the year before.
These yuan funds are getting demand from a mix of local and international investors.
Many Chinese private investment firms that previously relied heavily on raising capital from the likes of U.S. pension and endowment funds have seen a drop in demand in the past year. Only about half of the investors in private-equity funds are committing to follow-on fundraising rounds. Another benefit from investing in Chinese consumer companies in yuan is that the majority of them end up seeking listings in the domestic A-share market, which is traded in yuan, he added.
The choice of the yuan does have challenges. Government-backed funds, a crucial source of capital, often demand that money managers push their portfolio companies to invest in the local economy—a practice known locally as “reverse investment.” It is typically agreed before any commitment to fundraising. They also often want to directly invest in companies alongside the private-equity funds, rather than accepting a role only as a passive investor in the funds.

Gold purchases by everyone from central banks to institutions and ordinary investors have lifted the precious metal in 12 of the past 17 sessions, according to Dow Jones Market Data.

The most-actively traded gold futures contract has climbed nearly 20% from its September low to about $1,930 an ounce—its highest level since April 2022. Prices are poised to gain for the sixth consecutive week, which would mark the longest weekly winning streak since the nine-week run that carried gold to a record of $2,069.40 in August 2020.

The advance comes after rising interest rates dragged gold to a lukewarm 2022. Gold avoided the steeper, double-digit losses suffered by stocks and bonds, but still disappointed those who had expected it to thrive during a time of elevated inflation. Now, signs of cooling price increases and weakening growth are lifting investors’ hopes of a respite from the Federal Reserve’s aggressive rate increases. 

The yield on the 10-year U.S. Treasury inflation-protected security, a gauge of the risk-free return investors can get from bonds after adjusting for expected inflation, shot upward last year from a trough of around minus 1% in March to as high as positive 1.75% in October. Rising real yields tend to drag on the price of gold by diverting cash into alternative safe investments. That pressure, however, has abated in recent months, with the 10-year TIPS yield recently back down to 1.2%

Hedge funds and other speculative investors have pushed net bullish bets on gold to the highest levels since April 2022, according to Commodity Futures Trading Commission data tracking futures and options during the week ended Jan. 17. That is a sharp divergence from their bearish positioning during fall of last year.

Other precious metals are also enjoying a resurgence. Silver and platinum, both of which are used as precious and industrial metals, have added 23% and about 6.5% over the past three months, respectively.

Mining companies are ramping up supplies of critical minerals for rechargeable batteries such as lithium, cobalt and nickel. Graphite, a key battery component, has largely been overlooked.  Some of the world’s biggest auto and battery makers and the U.S. government are racing to secure graphite supplies amid looming signs of shortages of the mineral suitable for batteries. So far graphite prices haven't reflected the tight supply,