You can bet your bottom dollar there is trouble ahead when gold keeps flying high into the stratosphere.
The yellow metal hit a record high of over $3,000 an ounce yesterday on fresh fears that President Trump’s tariff war – combined with escalating geopolitical tensions – will hurt the US economy, send stock markets crashing and weaken the greenback.
Gold has now risen by 15 per cent since the start of the year, after climbing by nearly a third last year.
Over the last five years, it has now doubled in price as canny investors sought refuge from our turbulent financial markets.
They are not the only ones looking for safer returns. Some of the world’s top money men are dumping US stocks at the fastest pace in 25 years because of fears that Trump’s trade policies will not only hit the countries which he is threatening, but will have a huge impact on the US as well.
The new Bank of America global survey of fund managers makes for grim reading. The report highlights the biggest drop in global growth expectations ever, the biggest drop in US equity allocation ever and the biggest jump in cash allocation for five years.
Glittering: Gold hit a record high of over $3,000 an ounce on fresh fears that President Trump’s tariff war will hurt the US economy, send stock markets crashing and weaken the greenback
BofA calls it the “bull crash”, the result of stagflation, the impending trade war but also the end of US exceptionalism. Some managers predict the US could tip into recessionary trade war compared with growth last year of 2.8 per cent.
What’s bad for the US is turning out better for Europe as the funds have invested in the UK and Eurozone stocks at the highest level since 2021.
And where has the money gone? Mainly to high-yielding banking shares, now the world’s favourite sector. How everything comes round eventually.
The continent’s stock markets have had one of the best starts to the year for nearly four decades. Much of the shift has been driven by a more stable environment in the eurozone with lower interest rates and inflation.
But the switch has much to do with the surge in industrial stocks – particularly defence ones which have soared on the back of Trump’s demand that NATO countries pay more.
German defence shares are up again after Chancellor Friedrich Merz pushed his debt brake reforms through the Bundestag which will mean pumping billions more euros into rearming.
Yet the White House is strangely quiet about the warnings, almost ambivalent. To date, Scott Bessent, US treasury secretary and Trump’s most senior economic adviser, has shrugged off the fears, arguing the recent shake-out of tech stocks is normal and, what’s more, healthy.
Bessent may be right, that a correction, certainly in the tech sector, was well overdue. You almost wonder whether Trump welcomes a little recession fever.
We’ll know more today when the Federal Reserve meets to decide on interest rates. The gold bugs would tell us to keep stocking up.
Pawn profits
There’s one business that never goes out of business. In fact, the harder the times, the more business they do. And that’s pawnbroking.
Founded in 1897, H&T is now the country’s biggest pawnbroker and sixth largest jewellery retailer, and trade is booming.
Profits are up 10 per cent while demand for its services – what it calls the company’s pledge book – was up 26 per cent as a record number of customers borrowed with the firm for the first time.
It’s a tricky business to judge: on the one hand it makes money out of other people’s misery yet it can also offer a temporary lifeline during times of struggle.
At least the higher gold price helped both ends of the transaction: H&T benefits from higher margins and higher demand for gold when the price rises and customers get a little more too when they pledge their items. Sad but true.
Slide away
What planet do the men and women at the Office for National Statistics live on? The new “inflation basket” includes yoga mats, virtual reality headsets and men’s pool sliders.
Out are local newspaper adverts and gammon joints. I get yoga mats (useful) and VRs – it’s a big market, set to reach £520million in four years. But men’s pool sliders? Please, they should be banned.
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