Mark Bristow, the CEO of Barrick Gold, may know a thing or two about political volatility. While the mining company is based in Toronto, he is South African by heritage. “Very clearly the market is telling you there is only one reserve currency in this world, and that is the one politicians can’t print—and that is gold.” Given recent gold-price gains, his observation, cited in the Financial Times, is more than commercial expediency.
Tariffs are not new, but we may not have had the foresight to see such a direct correlation between trade politics and the gold price. As long as the White House weaponizes cross-border business, then the gold price is likely to be firm, if not buoyant. The rationale is straightforward. Tariffs will stoke economic upheaval; gold represents a hedge against those deteriorating fundamentals. By adding into the mix a healthy dose of geopolitical volatility, you can quickly appreciate why gold may be one of the best performing asset classes this year.
There is little need to distinguish between the actual implementation of tariffs and the threat of imposing them. Businesses want to outmaneuver the potential train wreck and will likely raise prices anyway. That notion was implicit in Fed Chair Powell’s testimony before the Senate Banking Committee last week. Anecdotally, we note that our preferred brand of coffee rose overnight by $1 a pound at the end of January, apparently on the mere idea that tariffs could be levied on Colombian goods.
An opinion piece in The New York Times is a powerful read: “This Is What the Courts Can Do if Trump Defies Them.” The explanation becomes nightmarish when the authors explain that destabilizing the judiciary would have serious economic consequences, including a fall in value of the dollar. Setting aside issues related to an attendant constitutional crisis, gold advocates may find a silver lining in that outcome. Gold is priced in dollars, so currency weakness means bullion is cheaper to buy in Chinese yuan or Indian rupees, likely elevating demand.
The most direct argument in support of the gold price is official purchases. The World Gold Council calculates that central banks again acquired more than 1,000 tons of the precious metal last year. The Central Bank of Poland was one of the most aggressive buyers, bringing the argument in favor of the gold price back to one of political instability. In this case, Warsaw-based officials simply had to remind themselves that the border with Ukraine is 800 kilometers away. ■
Our Vantage Point: Gold could be the best performing asset class in 2025. Uncertain geopolitics will likely sustain price buoyancy, especially with central banks continuing outsized official purchases.
Learn more at the Financial Times
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