Farewell NATO

A new year, and a new gold price - in the last 30 days, since early December, the Dollar price of gold has gone up more than 5%. The price as of today is above $4,440/oz.

This follows last year's spot gold price increase, which was 64%. That staggering performance has driven analysts from different investment banks to speculate how quickly gold will hit $5,000.

The analysts are not isolated. A Goldman Sachs survey of more than 900 clients conducted last November found that almost 70% thought gold prices will be higher by the end of 2026; 36% said gold will breach $5,000/oz.

While this projected price rise is no doubt satisfying for all gold owners, it's largely down to something we should all be nervous about - the end of the familiar.

This is not simply about the arrest of Venezuela's President, a malign and deadly criminal; maternal mortality in Venezuela went up by 65% during his Presidency, according to The Lancet. The nabbing of Maduro may be just a step in a new direction.

The complex nature of President Trump's decisions - prosecution of Maduro for narcotics trafficking while pardoning Juan Orlando Hernandez, former President of Honduras, who was convicted in a US court of assisting smuggling more than 400 tons of cocaine - is challenging.

Be it so-called international law or simply an agreement among allies, what we have all lived with for the last 80 years - the certainty of who is on 'our side' and what 'our side' might mean - has ended. European support of the 32-member North Atlantic Treaty Organization (NATO), founded in 1949 to counter threats from the Soviet Union, is slowly fading. A key element of NATO is its Article 5, which states that an attack against one member is an attack against all. Venezuela is not a member of NATO; but Greenland, part of the kingdom of Denmark, is.

Monroe reasserted

We are now living in a world where might not right dominates.

The US President wants to raise American defense spending by 50%, to $1.5 trillion, by 2027, "for the Good of our Country" as he says. He has also now said that US will withdraw from 66 multinational organisations.

At the same time he and his closest advisors reiterate their claims to absorb Greenland, and consider what to do with other places. President Trump has referred to Canada, a NATO founder member, as the 51st state of the US.

Never mind political opposition to any of this, the financial cost will be large. The US cannot go bankrupt, but spending lavishly will weaken its fiat currency. The US fiscal deficit in 2025 was around $1.8 trillion while the national debt is now climbing fast to $39 trillion.

The 1823 Monroe Doctrine, which asserted the separation of European affairs from those of the US, stressed that North and South America would not be subject to European interference, while insisting that European matters were entirely Europe's responsibility.

The US President now talks of the "Donroe" doctrine. The US, under his leadership, is not just pursuing political isolation. It is also showing its indifference to former alliances, such as NATO.

Effect on gold

2025 was a record year; the Dollar dropped by 9%, its worst annual performance in almost a decade. By May this year the US Federal Reserve - the country's central bank - will have a new chair. President Trump has already said he wants the successor to Jerome Powell to be much readier to cut interest rates.

Rate cuts will further weaken the Dollar and encourage gold investment.

More rate-cutting from the Fed will strengthen the determination of the White House to be seen as separate from Europe.This is not just farewell to NATO but also to 80 years of certainty. According to the former French premier Gabriel Attal, Europeans are now "powerless spectators of the unraveling of global rules". He says the world will now be "governed by force".

Americans may not find this prospect alarming. Many have longed for a President who is determined to put the US first. As the President's senior adviser Stephen Miller has said, we "are a superpower and we are going to conduct ourselves as a superpower."

A key part of America's superpowerdom is its fiat currency. If the US indeed pursues its isolationist political ideology the Dollar will become more isolated too. Countries that have been seeking an alternative international reserve to the Dollar will be incentivised to follow that course. The only feasible alternative right now is gold. Political isolationism, a rate-cutting Fed, continued turmoil in Ukraine, heightened insecurity in Europe - it's a heady brew, never mind anything else.

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.

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