Gold is shattering record after record. The metal keeps surging to new all-time highs… And investors may have plenty more upside ahead.
The latest breakthrough? Gold surged past $4,600 per ounce on Monday after a range of news showing financial and geopolitical unease. The metal closed the day at $4,597 per ounce.
The chaotic headlines just keep on coming:
- U.S. President Donald Trump pushing to acquire Greenland and discussing moves to change Cuban leadership
- Heightened tensions between Iran and Israel, with Iran saying it’s willing to take preemptive strikes
- Threats from the Trump administration to criminally prosecute Federal Reserve Chair Jerome Powell
- Potential for Trump’s tariffs to be declared unconstitutional, meaning that the U.S. may need to issue even more debt to make up the lost revenue
- A U.S. economy that has moved from “low hire, low fire” to simply “no hire,” as indicated by the unemployment report for December
And all of these come on top of a strained U.S. budget, a debt load that can’t afford further massive outlays… and a wave of central banks diversifying away from the U.S. dollar.
Yes, that’s a lot of uncertainty. But the role of gold has long been a defensive, “safe harbor” investment that investors flee to when times get rough. So, gold is playing its typical role.
Gold Touches a New Record on Geopolitical Instability
A number of geopolitical issues are spooking the global financial markets (and driving the price of gold higher)…
The U.S. takedown of Maduro may be just a first taste of what’s to come in 2026. In the wake of this ouster, President Trump immediately began rattling his saber about taking Greenland. And analysts have speculated that the U.S. might oust Cuban leadership as well.
Any move on Greenland would be a direct affront to NATO and the decades-long defensive partnership among the U.S. and many European countries. Trump’s rhetoric threatens to upend one of the longest cooperative partnerships among some of the world’s largest economies.
Events in the Middle East are also simmering. Tensions among the U.S., Israel, and Iran are the main focus right now.
Iran is facing widespread demonstrations against the government. The Iranian government has cracked down on protestors. And President Trump has discussed potential attacks on military targets in Iran in response to the violence.
Iran later announced that it has shifted to a preemptive military posture, threatening to attack Israeli and U.S. bases and other targets if it anticipates an attack from them.
From an investment standpoint, escalating tensions don’t look good for U.S. finances (even if they may be good for defense companies).
That’s where gold comes in. But geopolitical worries may not be the biggest factor behind gold’s rally…
Gold Prices Driven by U.S. Governance, Financial Weakness
As striking as all this geopolitical uncertainty is, it likely isn’t the key cause for gold’s surge past $4,600.
Instead, the bigger reason may be the Trump administration’s attack on Jerome Powell.
The Department of Justice has opened a criminal probe against the Fed chair. It’s threatening an indictment against him related to the $2.5 billion renovation of the Fed’s headquarters.
Powell came out with a direct statement in response, saying…
This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions – or whether instead monetary policy will be directed by political pressure or intimidation.
Many analysts are viewing the DOJ’s investigation as an attack on the Fed’s independence. By law, the Fed is tasked to make interest-rate decisions as it sees fit, based on its own judgments on the economy’s long-term health and performance.
Trump wants the Fed to lower interest rates and stimulate the economy. However, economists worry that an aggressive fall in rates will lead to higher inflation. Worse, they say, would be the financial markets’ loss of trust in the nation’s central bank.
So, gold has been rising on these threats to the Fed’s independence. And the metal was already climbing, with everyone looking ahead to when Powell’s term ends in May.
Trump could install a more sympathetic chair… Or we might see an even bigger shake-up in the Fed’s board (the Trump administration is still also trying to prosecute another member of the Fed’s Board of Governors, Lisa Cook).
Either outcome could stoke further inflationary fears.
The Supreme Court will soon rule on the constitutionality of Trump’s tariffs, too, which are widely seen as illegal. If the court strikes down the tariffs, the U.S. would need to borrow potentially hundreds of billions of dollars more per year to fund its spending… And that could put upward pressure on interest rates.
Such a ruling would come at a time when the U.S. is already running near-record budget deficits.
A slowing economy isn’t helping, either. While the Bureau of Labor Statistics reported that unemployment ticked lower in December to 4.4%, the economy didn’t add many net jobs during the period – just 50,000.
If the jobs slowdown spills over into a recession, the government would collect less in taxes. It would likely need to issue more Treasurys to cover the budget deficit.
Combine this stew of geopolitics and basic economics with a move from the world’s central banks to buy more gold… and it’s not hard to imagine gold ripping higher.
We’ve already seen China continue to buy gold in a big way. Its central bank recently bought more gold for the 14th month straight.
Many are predicting gold could hit $5,000 or more in the coming weeks. But most people don’t realize there’s a right way (and a wrong way) to invest in gold…
One analyst says there’s a better way than buying gold bars… coins… or even a risky gold miner. Best of all, you can get started with his No. 1 way to buy gold in 2026 for less than $50.
Good investing,
James Royal
Gold has already shattered records this year…
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