The rise of Precious Metals amidst fiscal fiasco4 Sep 2025 07:30
We may be a ‘share ‘ but the good news is we’re a ‘gold ‘ share !
Here’s a snippet from the telegraphs business section this morning. Gold is where it’s at not currency :
‘Meanwhile, the politicisation of monetary policy in the US alongside tariffs and immigration curbs make it unlikely that inflation will stay in check over there. Here, price rises are running at twice the Bank of England’s target. It’s little wonder bond yields stand at a multi-decade high.
All of this bad news is catnip to gold bugs. In fact, fiscal dominance – low interest rates today paid for by higher inflation tomorrow – is the perfect backdrop for the safe-haven precious metal.
‘It feels like bonds and gold are more firmly grounded in reality than shares right now’
For an inflation hedge that pays no income and so benefits from low interest rates, what’s not to like about a neutered US central bank? Both gold and silver have doubled in three years. Gold stands at a new all-time high above $3,500.
September can be the cruellest month for investors.
According to Bank of America, the S&P 500 has fallen 56pc of the time during this month. In the first year of a presidency, the odds are slightly worse and the average fall slightly greater. Since 1927, September is the only month of the year with an average decline (February and May are flat and the other months positive).
After four consecutive months of gains, with valuations looking stretched again, the odds of a stock market stumble this month cannot be dismissed.
So, it feels like bonds and gold are more firmly grounded in reality than shares right now. Which is not the same thing as predicting a correction.
Investors can hold onto conflicting messages at the same time for longer than seems rational.
The bond and gold markets can fret about bad policy long before it gets in the way of a continuing equity bull market that’s underpinned by earnings growth and a genuine technological revolution.
If inflation is the outcome – and I think this is inevitable – it seems logical to favour shares and gold over bonds and cash. Exuberant, yes; irrational, maybe not yet.’
Sign In
Follow the stocks
