SG Cross Asset Strategy Team write that on many occasions since 2012, market participants have heard that gold has ‘lost its glitter’. Now, as we head into the new year, they believe 2019 will be a turning point and they would recommend investors consider increasing the gold allocation in their portfolios. Why? SG say that gold fundamentals and positioning have not been supportive in recent years, while the fact that it remains a bond proxy has been a drag. The set up is different in 2018 they say. With US real yields and the US dollar to be capped, they expect gold to break free. The scarcity of safe-haven assets should allow gold to shine again. They also suggest a smart way to gear to a gold position in the derivatives space. As a by-product SG believe that the EUR, CHF, SGD and CNY would benefit from a higher gold price and equity volatility environment. Being long Asian currencies with a positive net IIP (International Investment Position) in the scenario of a rapidly rising gold price would also make sense, they say. In equities, SG make the case for a stronger co-movement between gold and gold miners where they believe that both could prove beneficial protection assets to navigate through the downward repricing of risky assets: the economic slowdown could prove relatively mild as per their central scenario, but the effect on asset valuations is not likely to be smooth after years of QE drip.