Gold’s dramatic rally – more than doubling over the last two years – crystallizes gold’s historic role as a gauge of fear in markets. Gold gained +65% in 2025 (vs S&P 500 +16%), its best performance since 1979, and is already up +17% in 2026 due largely to the so-called debasement trade, whereby investors retreat from Treasuries and the U.S. dollar.
In recent weeks, the Trump administration’s actions — attacks on the independence of the Federal Reserve, threats to annex Greenland, military intervention in Venezuela — have spooked markets. The massive selloff in the Japanese bond market last week is the latest example of investors rejecting heavy fiscal spending. “Gold is the inverse of confidence,” said Max Belmont, a portfolio manager at First Eagle Investment Management. “It’s a hedge against unexpected bouts of inflation, unanticipated drawdowns in the market, and flare-ups in geopolitical risk.”
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