The fundamentals have not changed

In Dollar terms the gold price has gone up by more than 50% in 2025. In other fiat currencies the rise has been less but nevertheless significant - more than 40%. The Dollar price surpassed $4,000/oz on 8 October, then fell a few percent but remains close to that mark as October comes to an end. The remarkable and unforeseen rise of gold took hold in the first half of this year, when the Dollar price went up by 25%.

At the same time those first six months were the worst for the US Dollar in more than five decades; it fell by almost 11% against a basket of other fiat currencies. As the Dollar fell, gold rose, in a perfectly normal and predictable outcome. History didn't change. A falling Dollar makes gold less expensive, never mind what it says about the US administration.

Fundamentals

The American billionaire Ray Dalio, a consistent gold fan, has now called gold "the most fundamental money". Given gold's lengthy history as a dominant medium of exchange, that seems obvious.

There are other important fundamentals about gold, worth remembering at moments when the price weakens. Its connection to the Dollar is not simply about the nature of money. It's also a reflection of a much bigger consideration - how well the US is being managed.

The jury is not just out but almost paralyzed on how well the US is being governed. While its equity markets seem to be doing incredibly well - the S&P 500 is trading at more than 30 times earnings, while the long-term average for the same index is closer to 15 times earnings - fears that a tech bubble is expanding are growing. Nvidia has just become the world's first company to notch up a $5 trillion market value, bigger than Japan, India, the UK and all other countries save the US, China and Germany.

Yet it's now been a month since the US government shut down, as its Congress could not agree to pass a fresh federal budget. Reports state that millions of Americans are about to lose food benefits, and hundreds of thousands of workers are not being paid. The non-partisan Congressional Budget Office (CBO) says the US will lose as much as $14 billion and have its gross domestic product (GDP) reduced by one or two percentage points in the final quarter of 2025.

As it is the losses are already significant. The US Federal Reserve this week cut American interest rates, putting them between 3.75 and 4%, despite having no information from the Bureau of Labor Statistics (BLS) about the current unemployment rate. Reliable information about the US economy has disappeared.

One of the most respected US investors, Warren Buffett, is holding a record amount of cash at his company Berkshire Hathaway. His pause for thought may be over-nervousness; it may not be.

The whirlwind extends

As the US national debt heads towards $39 trillion, it is becoming daily clearer that President Trump is determined to overwhelm all domestic opposition. His tariff 'wars' apparently have toppled all international resistance. In less than a year he has changed the world.

Is that a good thing? Certainty has disappeared. Trust too.

The next few years will test humanity like nothing since the 19th century. Back in the 19th century English textile workers began to lose their financial stability as automated machinery kicked them out of work. Called Luddites, they protested, sometime violently. In the end they proved unable to halt this 'progress'.

AI, now accelerating through all societies, will do the same. Millions of jobs will be jettisoned or overtaken by this fresh automation. The pace of change will displace all previous certainties, one of them being the nature of fiat money. What will be considered money in the future? Ray Dalio will one day soon be considered a visionary.

As debt and automation drown more of our certainties, gold will again be recognized as the most fundamental money. Its price will go up, it will go down, but that fundamental truth will never fade.

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.