Two Wall Street Journal reporters (David Uberti and Jack Pitcher) just wrote on the dramatic market rush to buy gold – an inert metal that pays no interest. Is this a judgment on Trump- managed capitalism?
They write:
Investors worried about the future of the dollar and other major currencies are piling into gold, bitcoin and other alternative assets, powering what has become known on Wall Street as the debasement trade. …
Most-actively-traded gold futures on Tuesday surpassed $4,000 a troy ounce for the first time. On Wednesday, gold rose further to settle at $4,043.30 a troy ounce.
The gold rally of 2025 is unusual in that it hasn’t been fueled by a financial meltdown. A 52% gain in futures this year is on track to outpace similar surges during the first year of the Covid-19 pandemic and the 2007-09 recession, trailing only the inflationary shock in 1979.
These days, investors are pouring money into precious metals such as gold and cryptocurrencies like bitcoin at the same time President Trump has pledged to juice the economy through tax cuts and traders have pushed stocks to records with a fervor for all things artificial intelligence.
As investors make increasingly speculative bets that the boom will continue, they are also looking for ways to shield themselves from potential fallout of U.S. policy dysfunction, including widening budget deficits and the current government shutdown. That is pushing them into assets not denominated in dollars.
Wall Street has pointed to this move as evidence that ballooning debt and uncomfortably high inflation are disrupting the outlook for currencies underpinning the global financial system.
“We’re seeing a tug of war,” said Joe Davis, chief economist at Vanguard Group. “You’ve got the S&P 500 pricing in an AI supernova and you’ve got the gold camp saying, ‘We’re going to have structural deficits, we have fiscal pressure in the U.S., and I need to manage that risk.’”
Gold prices have risen for years … Trump’s promise to upend the global trading system in 2025 added momentum by pushing the U.S. dollar by one measure to its weakest first half in more than five decades.
What do you think?