Americans are going bonkers over gold, both on the supply and demand side. Many are digging deep into their family vaults to sell heirloom pieces as scrap, while others are hoarding gold over anxiety and fear. The net impact is a frenzy of activity in the retail market that has not been seen since the late 1970s.
The common denominator on both sides of the transaction is economic uncertainty. Headline layoffs in the federal government, while impacting less than 2% of the American workforce, is having a powerful trickle-down effect. That emotion is likely one reason why the US housing market is soft. The Mortgage Bankers Association just sharply lowered estimates for existing and new-home sales in 2025. Meanwhile, fear of inflation֫—something new to those consumers in their wealth accumulation phase—is a catalyst for gold purchases. There may now be shoeboxes of the precious metal in the back of bedroom closets.
Demand. Doom spending impacts the gold industry. Analysts note a trend toward buying non-essential items as a way of coping with stress. Turmoil seems to surround Americans, whether stretching the household budget to cover the cost of groceries or watching images of irregular immigrants being plucked off the streets. Spasmodic geopolitics intensifies the backdrop.
Supply. The bauble business embraces experiential retail. The buzz created by merchants in Los Angeles’ Jewelry District or New York’s Diamond District—to cite just two examples—can be euphoric, elevating gold prices, if not profits. Pawn shops nationwide seem to be doing a lively business passing cheaply-acquired fine jewelry to local refiners.
Are we in a gold-price bubble? The idea seems improbable. One clue: There remains fundamental support for the precious metal at the institutional level. We are seeing in our work some qualified names trade out of US Treasuries, shifting into a lopsided barbell strategy across real estate and gold. Central banks meanwhile continue to buy gold. In a sign of the times, the National Bank of Poland holds more gold than the European Central Bank.
Retail investors may be less interested in following an array of fundamental variables. In many instances, their reality begins-and-ends with a precise indicator like price movement in SPDR Gold Shares (NYSE: GLD). This exchange-traded fund was launched in 2004, fast becoming one of the largest ETFs in the market. It now holds about $100 billion in assets.
SPDR Gold Shares, among similar products, has brought a new generation of retail investors into the precious metal. Those holdings, representing a tangible asset, are likely to be sticky investments amid wider financial-market volatility. We understand that the downside in price could eventually be vicious based on how easy it is liquidate positions with a mobile app. Still, “selling the peak” is a rare focus for gold investors at this time. ■
Our Vantage Point: A simple truth is now prominent in the gold market. Economic confidence, once destroyed, may take years to rebuild. We think consumer interest in the precious metal will remain durable amid uncertain White House policies and uneven global developments.
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