Gold Is Telling a Bleak Story About America Right Now

By Jacob Weindling | October 7, 2025 | 1:35pm

Photo by National Design Studio

Economy Gold

Gold Is Telling a Bleak Story About America Right Now

It was frankly, adorable when the Wall Street Bets crew shifted from their Gamestop short squeeze to trying to do the same thing to silver. It’s one thing when a stock is concentrated in fewer hands and an over-zealous hedge fund gets exposed to a short squeeze, but the commodities slash currencies that man has used forever are another story entirely. There is an old finance joke about how you can be right about your gold or silver trade, you just have to wait a decade for it to unfold. There is a lot of money from around the entire world sloshing around in these two precious metals, and that was before Trump entered office. It’s not easy to move them quickly to any large degree, and yet, the charts currently say otherwise.

Gold is having its best year since 1979, and the dollar is having its worst year since 1973. These facts are related. Goldman Sachs doesn’t expect this generational bull rally for gold to stop, as it just surpassed $4,000 a troy ounce for the first time ever, and they see it hitting $4,900 by late next year. This weekly chart of gold (in white) is astonishing, and the sideways movements before it demonstrate how it proves the decade-long trade joke true. This is a boring, safe asset. When you plot the dollar (in blue) underneath it, the inverse relationship the charts detail since the 1960s is pretty clear.

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Monthly chart showing the dollar and gold moving inversely to one another since the 1960s, with gold going parabolic now and in 1979

Chart by TradingView

Let’s zoom in on the last year and change the chart to a daily view so we can see how the dollar has moved relative to gold under the reign of Trump 2.0. The symmetry of these moves since the dollar peaked to open 2025 is really something.

Chart showing gold and DXY moving inversely to one another since August of last year

Chart by TradingView

A lot of people are looking at gold and saying that the market is anticipating a crash, and that is not quite right. One problem many political observers have with the market is they speak in absolutes that risk managers find antithetical to their entire worldview. Of course the stock market is over-valued. Any schmuck who knows what the Shiller PE Ratio is can see that. It was over-valued last year too, and it just went up more. The key to being good at finance is timing the market, as it can stay irrational longer than bears can stay solvent. Just because the market is irrational does not mean it has to crash either, and healthy pullbacks can and do happen.

The stagflationary dynamics Trump is unleashing do not need to lead to a catastrophe like 2008—stagflation is generally a dynamic where everything slowly just gets worse and worse until you reach a point where when it comes to monetary policy, you’re trapped between a rock and a hard place. We look far more like the 1970s right now than the 1930s, save for Trump’s 1934-style tariffs. All this chaos doesn’t have to lead to a crash, we can just slowly slip into a different economy with less inherent growth, which is the base case among a lot of economists for this anti-immigrant crusade fundamentally transforming the most robust labor force on planet earth. The American economy that stock market bulls knew and loved is dead under Trump, and money around the world is adjusting to a new U.S. era with higher debt and less growth that is shockingly dependent on AI data center spending.

“Instead of the traditional 60/40 asset allocation to equities and bonds, Morgan Stanley has suggested a 60/20/20 split, where gold has an equal weight with fixed income,” wrote the Financial Times this week. That gets to what really is going on, and it’s not investors anticipating a crash, but adding a new risk premium to America and changing the math inherent to how they invest. If they were anticipating a crash, they wouldn’t be telling people to invest 60 percent of their portfolio in an overvalued stock market. In fact, that they suggest cutting your allocation from bonds and not stocks suggests strongly that they are bullish on stocks because they are bearish on stocks’ denominator, the dollar.

Investing is just another word for risk management, and American debt is literally called “risk-free.” It forms the theoretical basis of any portfolio as the baseline returns that anyone can get without taking any risk and just buying a Treasury Bond. That said, the 20- and 30-year Treasury Bonds have called that term into question multiple times this year in establishing the TACO Trump meme, and so what Morgan Stanley is recommending falls along the line of changing risk models more than a Chicken Little-esque belief that the sky is falling. Risk-free debt just ain’t what it used to be.

Republicans passed a bill to take healthcare away from Americans that will blow out the deficit (which is financed by Treasury Bond issuance), further calling our recently downgraded debt into question. Bonds are just loans you make to a government or business, and the rate you are paid on them reflects the risk that you may not get your principal back when that loan expires. If asset managers are telling their clients to shift half of their money out of bonds and into gold, that means the risk profile around bonds has changed, and the original risk-free asset often reserved for crises is en vogue again.

This gold rally is a global retreat from buying American debt and dollars. It’s on us to prove to investors that our risk profile is as attractive as it was a year ago, or even five or ten years ago. Unfortunately, the bad faith weaponization of American debt has reached a stage where the worst people we know do have a point, and we spend more annually on debt interest payments than we do on defense spending. Debts racked up across the Western world seeing slowing economic growth are a big problem, and bond investors know it.

Fund managers typically suggest their clients invest two percent of their portfolio in gold, because it’s not an asset you invest in when times are good. It’s a hedge on economic calamity. It traded in a seven percent range between 2013 and 2019, while it is up 96 percent the last two years and is up over 51 percent this year as I write this. Something has fundamentally changed in the American economy to a degree unseen since 1979.

What we are witnessing in gold is not necessarily a harbinger of economic doom—although it very well could be given that the last spike like this preceded three years of on again, off again recessions amidst the Volcker shock—but of changing global risk profiles. America is not seen as a trustworthy partner to the degree it was before Trump came into office. The tale the dollar and gold are telling this year is a simple one; America is being left behind by the rest of the world, and so long as gold is going parabolic, there’s no reason for any of their money to come back.