Who defeated the "Gold Standard"?

Against the backdrop of the normalization of global geopolitical risks, the weakening of the US dollar credit system, and rising economic uncertainty, gold has become the "yardstick" for measuring asset value.

Analysts Liao Jingchi and Wang Daji from Zhejiang Merchants Securities stated in a research report released on the 16th that under the hypothetical "gold standard" framework, the assets that have outperformed gold since 2018 are extremely limited, with only a few cryptocurrencies, micro-cap stock indices, precious metals industries, and small-cap factor strategies recording positive returns.

The report indicates that this reflects macro characteristics such as the weakening of the US dollar credit, the normalization of global geopolitical risks, and rising economic uncertainty, highlighting the long-term allocation value of gold as a safe-haven asset.

From an industry perspective, Zhejiang Merchants Securities pointed out that only high-dividend stocks have shown relative resilience in the long term, while recently, financial technology, especially cryptocurrencies, has significantly outperformed; in the secondary industry, precious metals stand out, with new momentum outperforming old momentum; from the perspective of style and strategy factors, small-cap stocks are the absolute winners, with the micro-cap stock index outperforming gold in all periods.

Major Asset Classes: Cryptocurrencies Stand Out, Others Driven by Liquidity

According to the Zhejiang Merchants Securities report, from March 2018 to June 2025, among major asset classes priced in gold, only a few cryptocurrencies recorded positive returns, while other categories generally underperformed.

The report points out that the outperformance of cryptocurrencies stems from payment convenience, technological innovation premiums, and supply scarcity, such as Bitcoin's halving mechanism reinforcing its "digital gold" attributes, providing investors with an alternative allocation to combat the weakening of the US dollar credit, especially during periods of frequent geopolitical conflicts.

Equity assets show strong nominal growth, but are relatively weak when priced in gold, primarily relying on liquidity injections, such as the peak growth rate of US M2 at 26.7% driving US stocks, but excluding "monetary illusion," real returns are limited, warning investors to be cautious of downside risks when liquidity recedes.

The weak performance of fixed income and commodities reflects rising economic uncertainty, with tight silver supply and demand making it relatively resilient, but oil prices have fallen by 61.7% due to increased shale oil production, which may exacerbate volatility exposure for energy investors.

In real estate, US and Indian housing prices have underperformed to a lesser extent, benefiting from economic resilience and demographic dividends, but overall lag behind gold.

Industry Performance: New Momentum Outperforms Old Momentum, High Dividends Provide Buffer

The report shows that since 2018, all first-level industries of CITIC have underperformed gold, but resource products and new momentum are relatively strong, such as coal and banks with high dividends (averaging 5.8% and 4.8%) narrowing the gap, and if dividends are included, the underperformance is even smaller At the same time, industries represented by new momentum such as electric new energy and TMT have underperformed less than the old momentum represented by the real estate chain.

In the past year, with the transformation of China's economy from old to new momentum, big finance and technology have outperformed comprehensive finance, non-bank finance, and sectors such as computers, media, and defense industry, outperforming gold, mainly benefiting from an increase in risk appetite, the catalyst of virtual asset themes, and the revaluation of technology assets. In contrast, resource products, consumer goods, and the real estate chain have significantly underperformed.

In the secondary industry, from 2018 to now, precious metals have exclusively outperformed, and emerging technologies such as semiconductors have outperformed old technologies since 2018. A barbell allocation (such as banks + consumer electronics) can narrow the decline by 39.8%, achieving a more stable performance.

In the past year, big finance, new consumption, technology, and military industry have outperformed emerging financial services II (related to digital currency), securities II, cultural entertainment (self-indulgent new consumption), semiconductors, and weapons and equipment II, among others, outperforming gold. This is mainly due to an increase in risk appetite, the catalyst of virtual asset themes, and the revaluation of technology assets.

The weakness of resource products and the real estate chain reflects insufficient demand, and investors may need to adjust to varieties with high profit certainty.

Style and Strategy: Small-cap Dominance, Prominent Contrarian Mechanism in Micro-cap Stocks

From the perspective of style and strategy factors, small-cap stocks have become the absolute winners.

In the A-share weight style, the report shows that since 2018, only the micro-cap stock index has outperformed gold, benefiting from the contrarian investment mechanism, low valuation, and liquidity premium, with its price fluctuations negatively correlated with ROE and positively correlated with PB.

In the past year, micro-cap stocks and financial styles have outperformed gold. It is worth noting that the dividend style has underperformed significantly, with severe internal differentiation; only banks have performed strongly, while other cyclical dividend varieties have performed poorly.

In terms of strategy indices, the small-cap factor is clearly leading, with relatively good performance forecasts. Since 2018, the small-cap scale factor has outperformed Shanghai gold, while large-cap has lagged, reflecting that industry upgrades favor emerging small caps.

The main viewpoints of this article come from the report "Who Defeated the 'Gold Standard'? — A Deep Review of Assets, Styles, Industries, and Gold" published on July 16 by Zhejiang Merchants Securities analysts Liao Jingchi, Wang Daji, and Gao Qisheng