Gold is the barometer of current events, and as such, it sends out a very strong signal. At a time when the global economy is reeling under the effects of financial instability, trade wars and geopolitical conflicts, the yellow metal is racking up record after record. This trend is not insignificant: in a world in the throes of restructuring, monetary sovereignty is once again a key issue, and gold appears to be the pillar of this transformation.
Rapidly accelerating demand
Gold prices are reaching new heights all the time. On the one hand, central banks continue to increase their reserves at a steady pace. On the other, political and economic uncertainty in the United States is further fueling this demand. The current interest in gold is reinforced by Donald Trump’s recent announcements. The American president is already imposing high tariffs on Mexico and Canada, and may soon extend these measures to China (by 60%) and Europe (by around 10%). These announcements are a forceful reminder to every state of the need to be financially independent and not to rely on any allies. While the United States exploits the hegemony of the dollar and the extraterritoriality of its law, the imposition of these tariffs reinforces the need to hold assets that are independent and disconnected from the American system. As an asset neither controlled nor held by any authority, gold plays this role to the full. The same is true for individual investors, in a context where confidence in governments is at an all-time low and political instability is widespread. Gold purchases are accelerating not only in authoritarian and dictatorial countries, but also in developed democracies…
Over the past few weeks, and especially over the past few days, the US market has been running amok. Gold trading has reached record levels, while technology stocks have collapsed, particularly after the historic sell-off in Nvidia. In the face of such high volatility, even the leading US S&P 500 index is experiencing brutal changes, recording around $1 trillion in gains or losses every day. Meanwhile, gold stocks in New York are exploding, reaching over $82 billion, while London is facing a shortage. An imbalance that testifies to the strong tensions on the physical gold market, but above all to the exuberance embodied by the American market at this time.
Breaking points for gold’s ascent
Gold is also reaching record levels for purely financial reasons. US growth slowed to 2.3% in the fourth quarter, well below expectations. More broadly, the massive US debt burden, the renewed rise in inflation in the US and Europe, as well as growing doubts about the ability of central banks to control this persistent inflation, are reinforcing gold’s appeal as a safe-haven asset. At the same time, the risk of higher taxes on capital in many countries (which themselves face an often inextricable budgetary situation) serves as a springboard for the yellow metal – which escapes all state control. At a time when financial difficulties are multiplying worldwide (historic public and private indebtedness, high interest rates, growing deficits, high inflation, etc.), gold is more than ever perceived as a long-term financial store of value… As J.P. Morgan’s famous quote from the early 20th century reminds us: “Gold is money. Everything else is credit”. And this principle applies more than ever today. Gold’s appeal lies in its physical nature, which enables it to survive monetary and financial crises. In fact, it will continue to rise as long as money is continually created, as it is today, and the value of fiat currencies continues to depreciate. A financial system based on debt only strengthens the assets that serve as stores of value, and gold still appears to be the most prized asset.
History has also always shown that the yellow metal thrives in times of geopolitical crisis. Global conflicts in Ukraine, the Middle East and repeated attacks (in Syria, now Somalia…) keep demand high, as they further weaken the global economic order. In this uncertain climate, investors are looking for assets that escape the uncertainties of geopolitical tensions and monetary policies. Whereas in the past, this craze mainly concerned individual investors, institutions are now investing on a massive scale. This trend is particularly marked in China, Russia, India and Turkey, where central banks are accumulating gold at an unprecedented rate. Furthermore, with the return of a direct confrontation between the USA and Europe in terms of realpolitik, it is likely that European countries will gradually join the gold-buying camp, despite their already high stocks (particularly in Germany, France and Italy).
An inevitable weakening of the dollar
If gold no longer loses its appeal when the dollar rises, a weak dollar remains a bullish sign for the yellow metal. So, despite the recent rise in the dollar driven by Trump’s aggressive policies, several factors point to a decline in the greenback in the years to come, or even by the second half of 2025. Firstly, the reorientation of central bank purchases, secondly, the coordinated sale of US bonds, and thirdly, the prospect of an interest rate cut by the Fed are already helping to weaken the US currency. In the longer term, the dollar is evolving in a cyclical pattern that heralds a downward turn. Global balances are being redefined, and in this new context, a decline in the greenback becomes inevitable.
This transformation is restoring the advantage of tangible assets and economies less dependent on the US financial system. In this context, gold will play a central role, along with commodities, critical resource companies, and equity markets outside the US (notably in emerging countries). The end of globalization as we have known it means a return to scarcity, which has only one financial translation: assets linked to rare values will be attractive, while those produced in abundance will lose their appeal.
A trend that will continue
All the signs seem to indicate that gold will continue to soar. It is even likely that the $3,000 threshold will be reached before the end of 2025. Even if we must not overlook the volatility inherent in the market, long-term history shows that the current period is extremely favorable for gold. The framework inherited from the twentieth century, based on the uncontested hegemony of the dollar, is gradually crumbling, paving the way for a new period in which gold could once again take center stage. Through the accumulation of yellow metal by the new powers – China, Russia, India and Brazil – the world’s financial system is shifting. As history has shown, in times of transition, gold never disappears, but reclaims its place.
