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This is an edition of The Atlantic Daily, a newsletter that guides you through the biggest stories of the day, helps you discover new ideas, and recommends the best in culture. Sign up for it here.<\/p>\n
When prices are high and global conflicts destabilize the world, some investors start looking backwards\u2014away from an uncertain future and toward the predictability of the past. And what\u2019s older and more dependable than gold?<\/p>\n
Last week, amid widespread geopolitical turmoil and a weakening U.S. dollar, the price of gold hit a historic high of $4,000 an ounce. This year has so far been gold\u2019s best since 1979, a moment of instability so profound that it led to recession. Gold prices are much closer to a genuine \u201crecession indicator\u201d than, say, the resurgence of frozen yogurt or an uptick in Uber Eats orders. That\u2019s because, over the past 50 years, spikes in the price of gold have typically been correlated with widespread inflation and geopolitical dysfunction. In 1979, amid double-digit inflation numbers in the United States and a global energy crisis, investors stocked up on the precious metal as a way to counter those shocks. In the years following the 2008 financial crisis, as investors lost trust in major institutions once seen as \u201ctoo big to fail,\u201d gold prices shot up again. And when persistent inflation was crushing the U.S. dollar after the coronavirus pandemic in 2020, gold once again soared.<\/p>\n
The precious metal has long been considered a safe-haven asset, because, unlike the U.S. dollar, its inherent value isn\u2019t determined by any state government. Although it\u2019s probably not realistic for everyone to start piling into Diamond District jewelry shops and hoarding gold bars, gold remains an appealing, if old-fashioned, alternative to more contemporary investments: Its value stems from its shine and rarity, not its ability to produce a line of credit.<\/p>\n
Some investors see gold as a standard way to diversify their portfolio. Others, stereotypically known as goldbugs, tend to be broadly skeptical about contemporary monetary policy. Just as investors in bitcoin, so-called digital gold, have historically skewed libertarian and anti-institutional, the most extreme goldbugs are betting against the system, doubtful that the Federal Reserve is capable of keeping the U.S. dollar strong. There\u2019s also only so much of the metal lodged in the planet\u2019s crust, compared with the dollar, which can be printed ad infinitum. At least until someone like Elon Musk figures out how to increase its supply by mining asteroids, gold will likely remain the doomer\u2019s hedge of choice. Whereas a different sort of investor looks to get in early on promising new technological innovations, the goldbug doesn\u2019t lose sight of what\u2019s tried-and-true.<\/p>\n
Gold prices have already risen more than 50 percent this year and are showing no signs of stopping. The story of today\u2019s gold boom began in 2022, when Russia invaded Ukraine and Western governments decided to sanction the Russian central bank by freezing its foreign-exchange reserves. The scale of these sanctions was a reminder of why countries might want to own assets that can\u2019t be easily frozen. Especially in emerging markets, central banks around the world \u201crealized that the truly only safe asset\u201d is gold, Daan Struyven, a co-head of Global Commodities Research at Goldman Sachs, told me.<\/p>\n
The whiplash of President Donald Trump\u2019s tariff spree this spring introduced new uncertainties for the global market. No nation or territory was off-limits (including remote islands inhabited only by penguins and seals). Trump\u2019s scattershot approach has had clear consequences, especially for countries with fledgling markets. Kazakhstan, Bulgaria, and Indonesia are among the many nations now buying gold by the ton, according to World Bank data\u2014ostensibly to insulate themselves from any future shocks caused by U.S. policy. Meanwhile, Struyven explained, the ongoing question of whether America\u2019s own central bank will retain its independence could also be contributing to gold\u2019s historic run, because \u201cthe gold price tends to rise when questions about central-bank governance rise.\u201d<\/p>\n
The other main driver of this price spike is less abstract. Some Wall Streeters are concerned that the value of the U.S. dollar will continue to erode as the national debt climbs and the Federal Reserve loses its grip on the currency. They\u2019re making what\u2019s become known as the \u201cDebasement Trade,\u201d shifting money away from the weakening U.S. dollar and into harder, more independent assets such as gold and bitcoin. Shrinkflation, stagflation, good-old-fashioned inflation\u2014all of it means that your paycheck doesn\u2019t go as far as it once did, and all of it is good for gold.<\/p>\n
The mystery of the current gold rally is that the S&P 500 is also up. The stock-market index reached an all-time high earlier this month, which would seem to suggest that the American economy isn\u2019t quite as close to the brink as the price of gold might indicate. But the reality probably has to do with a bifurcated market. Joe Davis, Vanguard\u2019s global chief economist, told The New York Times on Saturday that this rare case of gold and stocks moving in a parallel upward trend has to do with \u201cdramatically different\u201d investor perspectives: The optimists are going with equities, and the pessimists are going with gold. In today\u2019s economy, there\u2019s room enough for both.<\/p>\n
Another way to put it is that a bet on the S&P 500 amounts to faith in the fruits of modern industry: AI and renewable energy, to name a couple. A bet on gold is a recognition that all empires eventually fall, and a return to something much more ancient.<\/p>\n
Related:<\/p>\n
Here are four new stories from The Atlantic:<\/strong><\/p>\n Today\u2019s News<\/strong><\/p>\n Dispatches<\/strong><\/p>\n Explore all of our newsletters here.<\/em><\/p>\n Evening Read<\/strong><\/p>\n Illustration by Ben Kothe \/ The Atlantic<\/p>\n The Drink That Americans Won\u2019t Give Up Without a Fight<\/p>\n By Ellen Cushing<\/p>\n Coffee is in trouble. Even before the United States imposed tariffs of 50 percent on Brazil and 20 percent on Vietnam\u2014which together produce more than half of the world\u2019s coffee beans\u2014other challenges, including climate-change-related fires, flooding, and droughts, had already forced up coffee prices globally. Today, all told, coffee in the U.S. is nearly 40 percent more expensive than it was a year ago. Futures for arabica coffee\u2014the beans most people in the world drink\u2014have increased by almost a dollar since July. And prices may well go up further: Tariffs have \u201cdestabilized an already volatile market,\u201d Sara Morrocchi, the CEO of the coffee consultancy Vuna, told me. This is a problem for the millions of people who grow and sell coffee around the world. It is also a problem for the people who rely on coffee for their base executive functioning\u2014such a problem that Congress recently introduced a bipartisan bill to specifically protect coffee from Trump\u2019s tariffs.<\/p>\n Read the full article.<\/p>\n More From The Atlantic<\/em><\/p>\n Culture Break<\/p>\n Jill Krementz<\/p>\n Remember. Diane Keaton\u2019s quest for beauty left an imprint on American culture, Adrienne LaFrance writes.<\/p>\n Watch. Amy Poehler was the perfect host for the actual 50th anniversary of Saturday Night Live (streaming on Peacock). Although she can \u201csnark with the best of them, she always radiates a palpable compassion,\u201d Michael Tedder writes.<\/p>\n Play our daily crossword.<\/p>\n P.S.<\/p>\n I spent this past weekend reading American Pastoral, which I\u2019ve somehow never done before, and there\u2019s a sad moment when one character, a sort of crotchety older man, attempts to send a check to his son\u2019s jilted ex-wife. In the accompanying letter, meant as an apology on behalf of his womanizing son, the man recommends putting all of the money straight into gold, because \u201cthe dollar isn\u2019t going to be worth a thing.\u201d This is the prototypical goldbug, the staunch cynic and old-school prepper who might come across as scolding and bitter but is usually right at the end of the day. If a character in a novel or film is broadly \u201cinto gold,\u201d you already know quite a bit about them.<\/p>\n \u2014 Will<\/p>\n Rafaela Jinich contributed to this newsletter.<\/p>\n When you buy a book using a link in this newsletter, we receive a commission. Thank you for supporting <\/em>The Atlantic.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" This is an edition of The Atlantic Daily, a newsletter that guides you through the biggest stories of the day, helps you discover new ideas, and recommends the best in culture. Sign up for it here. When prices are high and global conflicts destabilize the world, some investors start looking backwards\u2014away from an uncertain future<\/p>\n","protected":false},"author":1,"featured_media":28104,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[55],"tags":[129,13408,7598],"class_list":{"0":"post-28103","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-social-issues","8":"tag-gold","9":"tag-ominous","10":"tag-rush"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/28103","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=28103"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/28103\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/28104"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=28103"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=28103"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=28103"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n