In times of crisis, investors look to gold for safety. With the current Covid-19 pandemic, it’s no different. But our attachment to gold may be more archaic than economic. In olden days, the yellow metal embodied magical properties. This relic remains a legacy for many investors. Some of the world’s largest hedge funds are doubling down on gold. Among the best known are Paul Singer’s Elliott Management, Andrew Law’s Caxton Associates and Danny Yong of Dymon Asia Capital. Likewise, fund managers in Hong Kong have been encouraging retail investors to jump into gold. State Street Global Advisors, for example, has halved the lot size for its Hong Kong-listed SPDR Gold Shares, the world’s largest gold-backed exchange-traded fund, to five shares per lot since April 24. That means ordinary investors can take out smaller blocks of shares. As an investment move, it has not been a bad one. Gold has gone up by roughly 15 per cent since late March, when equities markets plunged to depths not seen since the last financial crisis. But then, stocks have regained most ground. The S&P 500 has risen by 26 per cent from a bear market trough in late March while the Hang Seng Index has gone up by more than 10 per cent during the same period. There is always the argument that at a time of unfettered money printing, gold is the only way to save yourself from the horrible scourge of inevitable inflation. But as Keynesian economics has predicted, and from what we witnessed in the last financial crisis: monetary easing, even when excessive, is not inflationary in a depressed economy. The global economy may be more depressed now than the last round. Unlimited quantitative easing has many problems, leading to asset bubbles, moral hazards, and distortion of markets and resource allocation. It also favours the rich and penalises those without assets, thereby worsening social and economic inequalities. But being rich, most well-known gold bugs don’t care too much about such issues. Inflation, however, hits both rich and poor alike. And that, they do care about. Like the security blanket that Linus, the character in the comic strip Peanuts , takes everywhere with him, many investors have a need to hang on to gold in times of shock and uncertainty. Help us understand what you are interested in so that we can improve SCMP and provide a better experience for you. We would like to invite you to take this five-minute survey on how you engage with SCMP and the news.