Gold and crypto bulls share a common outlook. Enthusiasts of these assets typically have an anarchic streak. They distrust fiat money (government-issued currencies not backed by any physical assets).
Affections often overlap. Libertarian thinkers like Dominic Frisby value both for their ability to disintermediate the state. Frisby is the author of Bitcoin: The Future of Money? and the upcoming The Secret History of Gold.
Gold bugs (bullish gold investors) don’t attract as much attention as their crypto counterparts, so the metal’s record-breaking rally hasn’t captured the public imagination like Bitcoin did when it hit the $100k mark after Trump’s election.
Yet gold’s rise has been just as impressive and more consistent. It has increased from $1,820 in October 2023 to $3,150 by the end of March 2025. Often viewed as a hedge investment, gold usually thrives in times of market instability. But it continued rising through 2024, even as the S & P 500 posted record returns.
The World Gold Council attributes this to gold’s unique ability to prosper in both market environments. It is “is often correlated with the stock market during risk-on periods … (and) decouples and becomes inversely correlated during periods of stress”. When stocks are rising and global liquidity is high, gold is important in a diversified portfolio. And during periods of stress, investors keep flocking to bullion as a defensive asset.
Economic and political uncertainty
Trump’s unpredictable new administration is providing gold with a further boost. Investors are preparing for new tariff announcements on what Trump calls “liberation day”. Many economists fear his protectionist measures will damage global growth and spark further flight to safe-haven assets.
Consensus is that tariffs will hit corporate profits and take money away from equity markets. They are also likely to weaken the US dollar, due to inflation and general investor confidence. That makes gold, priced in USD, cheaper for foreign buyers.
Less tangibly, it also adds to a general sentiment of uncertainty. That’s seen in the political as well as economic sphere. Outcomes from Trump’s realist foreign policy are currently uncertain. Investors may welcome an end to the Russia-Ukraine war but those talks are currently deadlocked.
Uncertainty also reigns over the US-China relationship. Writing in The Times, the historian Niall Ferguson argues that strategy appears confused. On one hand, the Trump administration is pursuing officious economic policy against its great power rival. But other rhetoric and action suggests rapprochement. Trump talks of solving “many problems together” and has recently granted TikTok “a stay of execution”.
Central Banks
Central banks, often detested by gold bugs as currency manipulators, are first amongst those heeding this uncertainty and buying up gold reserves. Writing in The Economist, Mike Bird argues Russia’s invasion of Ukraine was the “pivotal moment”.
Subsequent sanctions demonstrated the risks of other safe assets, like US Treasuries. These would be no use if squeezed out of the international financial system. Unsurprisingly, China’s central bank has been the largest purchaser of gold reserves. Closely followed by countries with more ambiguous relationships with the US: Turkey and India.
But even countries with stronger Western ties are buying in. Bird reports that The Monetary Authority of Singapore (MAS) has raised its holdings by 75 tonnes. And the National Bank of Poland has purchased 167 tonnes, as part of its strategy to keep 20 per cent of reserves in gold.
Inflation
Central bank gold purchases also reflect scepticism among insiders that inflation is truly behind us. Gold has historically performed well during inflationary periods, a key factor behind its strong rally since the loose monetary policies of the Covid era.
As a tangible asset with intrinsic value, gold holds its purchasing power when fiat money cannot. Even as a non-yielding asset, gold looks attractive when treasury yields go negative and equities flounder.
Gold bugs like Danielle DiMartino Booth believe the current levels of US debt mean sticky inflation. Echoing the recent fears of Ray Dalio, she argues the US risks a wage-price inflation spiral and even a future fiscal crisis of confidence. As public money crowds out private investment and dilutes purchasing power, the US may grapple with inflation for the foreseeable future.
Outlook for Gold: Bullish and Resilient
Gold’s outlook continues to look good. Unlike past cycles where gold only surged during market stress, it is now decoupled, reflecting its dual role as a risk-on asset during high liquidity periods and a safe haven in times of uncertainty.
Key drivers of this strength include:
- 🪙 Geopolitical volatility under Trump’s renewed presidency.
- 🪙 Rising fears of protectionism, dollar devaluation, and inflation.
- 🪙 A surge in central bank buying, not just from adversaries but also allies.
- 🪙 Deepening distrust in fiat currencies – shared by gold and crypto enthusiasts alike.
Gold is no longer just insurance against chaos. It’s increasingly a core strategic asset in a world that’s losing faith in traditional safe havens.
