Our portfolio has significantly outperformed the MSCI World index this year, as rising political uncertainty and a slowing US economy have weighed on the S&P 500. In contrast, European stocks have remained relatively resilient. We hold no US stocks because I expect these trends to continue.
Recent media reports suggest that Donald Trump is again considering removing Jerome Powell as Chair of the Federal Reserve. A serious attempt to remove Powell would likely undermine confidence in US institutions, weaken the dollar, raise Treasury yields, and support gold.
$GOLD has already surged 25% year-to-date, reaching a new record high of $3,400 per ounce today.
There are several powerful forces behind gold’s rally:
1. Record economic policy uncertainty is pushing investors toward “insurance” assets such as gold.
2. A weaker US dollar has made gold cheaper for foreign buyers, boosting global demand.
3. Central banks have been buying aggressively, with China standing out as a particularly active buyer.
4. Trump’s tariff policies have revived fears of stagflation—a mix of weak growth and high inflation—which has historically been a bullish environment for gold. In the 1970s, during a similar backdrop, gold rose tenfold.
5. Momentum-driven inflows into gold ETFs are amplifying the rally, as trend followers and technical traders pile in.
What happens next with gold will be driven by geopolitics.
Further tariff escalations, renewed Trump threats to remove Fed Chair Powell, or continued heavy central bank buying could push gold toward the high $3,000s.
On the other hand, a breakthrough on trade, a ceasefire in Ukraine, or an unexpected spike in interest rates could send gold retreating back into the high $2,000s.
I don’t invest in gold myself, as I prefer assets that generate cash flow—something commodities like gold don’t offer. That said, I see a case for including gold in more diversified, lower-risk portfolios. It’s best viewed as insurance: it may not pay a yield, but it tends to perform well when most other assets struggle.
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