"The world is changing before our eyes"

So said the British Chancellor Rachel Reeves (the chief financial officer of the UK Labour government) in presenting her 'Spring Statement' this week. As if chiming in with Rachel Reeves' somber reminder of global mutability, the European Commission (the European Union's (EU) executive body) the same day instructed EU households to stock up on essential goods to survive at least 72 hours of crisis.

Reeves announced large cuts to welfare benefits, which will push an estimated 250,000 people (including 50,000 children) into 'relative poverty', defined as the percentage of people living in households below 60% of annual median income. The welfare spending cuts were justified by Reeves' acknowledging that the UK's growth will be half what had been expected, 1% of gross domestic product (GDP) instead of 2%, this year.

This is grim news for the UK economy, welfare recipients, and the Labour Party, which was elected less than a year ago pledging to kickstart economic growth. The OBR - the Office for Budget Responsibility, the body which does independent analysis of public finances - estimates that the UK's inflation, down by 0.2% to 2.8% in February, will rise to 3.7% mid-2025.

Rather than economic growth, stagflation is creeping a little closer in the UK.

Going it alone

Reeves didn't mention President Trump but clearly she was referring to him when she said the world was becoming "more uncertain" and that trading relationships "more unstable". But clearly she had some of his administration's policies - particularly tariffs and the reiteration that Europe needs to shoulder more responsibility for its defense - in mind.

Few could dispute that NATO members have been defense free-loaders on the back of the US for many years.

Tariffs on the other hand sharply divide opinions. The US Treasury Secretary Scott Bessent has defended the Trump administration's 'America First' trade policy and its tariffs, saying that "economic security is national security" and that tariffs are aimed at re-balancing the international economic system and that "international economic relations that do not work for the American people must be re-examined." Against that a wide number of independent economists are forecasting a rise in US inflation as a result of higher costs for imported goods. In the face of drooping consumer confidence, retrenchments on stock exchanges, and expectations that inflation will rise to 3.7% - well above the Federal Reserve's target of 2% - President Trump now appears to be softening his stance, saying that tariffs will likely be more "lenient than reciprocal".

Gold's friend

The paradox at the heart of this is that President Trump - unpredictable as he is - is proving to be gold's best friend. Since Joe Biden quit the presidential race the Dollar price of gold has gone up by 25%. Central banks started running down their gold reserves in the late 1990s and continued through the early 2000s. That has rapidly gone into reverse since the Great Financial Crash of 2007-08, when fiat money appeared to be vulnerable to whims of markets and politicians. Gold - the great decentralised currency - suddenly came into its own again.

At some point President Trump will turn his attention to the vast gold reserves the US supposedly holds at Fort Knox. More than 8,133 tonnes is currently held by the US Treasury at a book value of $42.22/ounce, giving a total value of $11 billion. If it were marked to market these reserves would be worth nearly $800 billion. Even that huge sum would barely dent the US national debt, fast approaching $37 trillion. But it could have other uses that will surely attract President Trump and his advisers, such as setting up a sovereign wealth fund.

No one should buy gold to make a quick profit, despite the evidence of gold's recent market-beating price run. Patience, caution, faith, all the virtues that we learned from our parents, are required. But as the world stage looks increasingly fragile, it's high time that those who believe in the most important virtue - self-defense - accumulated more gold; especially if it's possible to use it as money, with Glint.

For UK clients: At Glint, we make every effort to demonstrate a balanced conversation between gold, silver, crypto and fiat currencies when it comes to purchasing power and, while we strongly believe that gold is the fairest and most reliable currency on the planet, we need to point out that it isn’t 100% risk free. While we have seen a steady increase over time, the value of gold can fall, which means that its purchasing power can also decline.

For US clients: Graphic representations of value are for illustrative purposes only. The Glint debt card is issued by Sutton Bank, member FDIC. The sale, purchase and storage of precious metals are offered by Glint and not Sutton Bank. Your investment in precious metals through Glint is

·        Not insured by the FDIC.

·        Not a deposit or other obligation of, or guaranteed by, Sutton Bank.

·        Subject to investment risks, including the possible risk of loss of the principal amount invested.

All investments involve risk, including possible loss of principal. The value of precious metals is affected by many economic factors, including but not limited to the current market price, demand, perceived scarcity, and quality of the precious metal. Precious metals can increase or decrease in value. Past performance is not a guarantee of future results. As such, investing in precious metals may not be suitable for everyone.