Gold prices are at an all-time high

We are living in a moment of chaos: who is allied with whom? Can we trust our leaders? Is the world itself about to end? We don’t know – and neither do the markets. And markets have an interesting characteristic: fragile nerves. At the first sign of insecurity, at the first shadow of doubt, stock values plummet, debts spiral downward, and billions upon billions can be wiped out by a bad impression. Some of the billionaires close to Trump are experiencing this firsthand, including Bernard Arnault and even Elon Musk, who, after Tesla’s stock crash, saw $120 billion evaporate, according to The Economic Times. Perhaps Warren Buffett is in a better position, having sold a massive amount of shares in recent months and now sitting on a cash pile exceeding $300 billion. In any case, Buffett is not the only one who, in these uncertain times, has turned to more tangible investments. As reported by the Financial Times, more and more individuals and companies have recently rediscovered a passion for gold, perhaps the ultimate safe-haven asset, which has recently reached a record level of $3,004 per troy ounce—a unit of measurement from the British imperial system that is the international standard for trading precious metals, gemstones, and gunpowder. This extraordinary surge, marking a 14% increase since the beginning of the year, has been driven, as mentioned, by growing uncertainty about global trade dynamics, triggered by Donald Trump’s aggressive tariff policies. The former U.S. president’s protectionist approach has raised fears of a large-scale trade war, with the risk of rising inflation and economic contraction.

The sudden surge in gold has forced major investment banks, including Citibank, Goldman Sachs, Macquarie, and RBC, to revise their price forecasts upward. Some analysts predict that the precious metal could reach $3,300 per ounce by the end of the year. Since 2000, gold has outperformed major stock indices, establishing itself as one of the best-performing assets of the 21st century. Adrian Ash, head of research at BullionVault, told the Financial Times that gold has benefited from a series of financial shocks, including the 2008 crisis, the Brexit vote in 2016, and rising geopolitical tensions. According to Ash, confidence in the invulnerability of Western democracies has been completely eroded, increasing the perceived value of gold as a safe-haven asset. Furthermore, the growing interest of central banks, particularly in emerging markets, which have been purchasing over 1,000 tons of gold annually for three consecutive years to diversify their reserves, has fueled the phenomenon. Additionally, as explained in the same article by John Ciampaglia, CEO of Sprott Asset Management: "Global debt levels have exploded over the last 25 years and are starting to weigh on economies and balance sheets. That’s why gold has proven to be a store of value—not just in the past 25 years, but for the past 5,000 years—because it can maintain its value compared to traditional currencies." Adding to this, according to the Financial Times, is the prospect of a monetary policy easing by the Federal Reserve. Since gold is a non-yielding asset, it benefits directly from lower interest rates, which make fixed-income investments such as bonds less attractive. The expectation of Fed rate cuts has thus increased gold demand, helping to push prices even higher.

This situation recalls historical moments such as the 2008 financial crisis, when gold surpassed $1,000 per ounce for the first time, and the height of the COVID-19 pandemic, when it reached $2,000 in August 2020. Now, with economic uncertainty once again at the forefront, gold's performance is following patterns already seen in the past. One of the most surprising developments has been the massive influx of gold bars into the United States, driven by fears that Trump might impose tariffs on gold. According to another article in the Financial Times, since the day of his election, more than $70 billion worth of gold has been transported to New York, leading to a record buildup in COMEX reserves. This "migration" has distorted the entire global market, causing a temporary shortage of physical gold in London, the world's largest gold trading hub, and creating difficulties due to differences in bar size standards: in London, they weigh 400 ounces, while in New York, they are under 1 kilogram. This has made an intermediate stop in Switzerland necessary, where the gold is melted and reformed before being sent to the United States. And now, the gold flow into New York is causing a liquidity crisis in London. The waiting time to withdraw gold bars from the Bank of England has increased to over four weeks, sending short-term gold leasing rates to record highs. Not to mention that transporting gold between London and New York is a costly and complex operation that involves armored truck transportation, commercial flights with a five-ton limit per aircraft, further transport to refineries where it is melted down, converted into smaller bars, and finally shipped to the United States. The entire process adds an extra cost of about $3–5 per ounce.

With the risk of gold tariffs now decreasing, the Financial Times forecasts a slowdown in gold flows to New York. If Trump avoids imposing restrictions on gold imports, investors may begin shifting their reserves back to London, attracted by lower storage costs. However, regardless of short-term fluctuations, gold will continue to be a key asset for those seeking protection against economic instability. With central banks continuing to accumulate gold bars and investors looking for a hedge against inflation, the precious metal appears poised to maintain its status as a strategic asset in global financial markets. Meanwhile, Swiss refinery furnaces will continue working non-stop, meeting a demand that, after millennia, shows no signs of slowing down.