Gold experienced a remarkably strong January due to the increased volatility on stock markets worldwide. Many stocks seemed not just quite as invincible as previously thought. Even Wall Street’s favorites, such as Apple, were deep in the red.

Right about Christmas – during the cold December month – many major stock markets suffered from considerable turbulence. Stock prices fell and fell hard.

This can be observed in the VIX as well. The VIX is an important indicator of market volatility. Without going into too much detail, the VIX is an implicitstock market volatility, which is derived from underlying option prices. Because of what resembled a stock market panic in December, VIX escalated from roughly 20 to 35.

But what has happened with volatility ever since December’s turbulence? Volatility fell gradually toward the levels seen over the course of last year’s summer months – when we experienced another handful of instances of exuberant stock market positivity. In February, VIX fell even further and currently hovers around “just” 14.

In other words, markets appear to think that everything is going great – and, as a consequence, that a rather weak December month merely meant a temporary setback and was, in essence, a reflection of a brief but unjustified fear among stock market investors. This is one of the reasons why gold prices gradually corrected after rallying earlier this year.

This week, I wanted to take the opportunity to share another interesting graph with my readers. You might be aware of the fact that I have mentioned on multiple occasions that Trump’s tax cuts will hardly have any impact. (That is, with regard to US economic growth, as Trump’s tax cuts are obviously having a terrifying impact on the growth of the national debt!) You might also be aware of the fact that economic growth – both in the United States as elsewhere, for instance in Europe and China – is weakening.

Now it appears that growth will not pick up and recover in the short run. Observe, for instance, the following chart with the (monthly) growth in capital investment, including national defense.

What do we observe? For the first time since 2015 it is a third month in a row that growth in capital investment is negative – that is, capital investments are declining. Instead of investment in new capital goods, existing capital goods are – in a metaphorical sense – thrown out with the trash.

And this means bad news for economic growth both in the short and intermediate term. An important driver of economic growth is not backing the “good news” narrative, which is often implied by the press. I am convinced that economic growth is well beyond its peak – at least for the current economic cycle that kicked off in 2009.

Volatility could easily drop even further, which means that gold prices will remain under pressure in the meanwhile. But the underlying economy is weakening. And, as a result, it will be inevitable that the roles will be reversed in due time.