Written by: Steven Feldman, CEO Hard Assets Alliance
It’s Halloween, the air is filled with a foreboding chill, and the markets seem to be playing their part in this haunting tale.
Concerning signals are emerging across the financial landscape. Bond prices have crashed, the U.S. dollar is surging, and yet, against all odds, gold is at an all-time high — up over 30% this year — marking one of its best years on record.
How can this be, when all the signs tell us that gold should be heading in the opposite direction?
The Ghosts of Market Past: Bonds and Gold’s Unholy Divergence
Traditionally, bonds and gold are like old companions — when uncertainty rises, they tend to rise together as investors seek safety. But this year, they’ve become estranged, with bonds plunging while gold remains eerily resilient. It’s as if gold is possessed, defying the usual laws of market physics. What’s going on?
I think I understand why. Two years ago, I made a presentation to a group of prominent financial advisors and was nearly laughed out of the room for suggesting that gold would thrive even in a rising interest rate environment. “Gold prices are doomed!” they insisted. But I saw the real threat: The U.S. government’s enormous debt load would soon begin rolling at higher rates, exacerbating deficits and the national debt (now nearing $36 trillion with a $1.8 trillion deficit this past fiscal year alone).
As such, global investors and central banks have fled the deteriorating credit of the U.S., seeking a safe haven that isn’t weighed down by the specter of dollar declines or default risk. That haven is gold — an asset with no credit or counterparty risk.
When the Fed cut rates by 50 basis points, you might have expected bonds to rise along with gold. But those 50 basis points are a mere “drop in the bucket” compared to the massive wave of rolling Treasury debt. The sheer scale of U.S. borrowing continues to outpace the ability of incremental rate cuts to prop up the bond market.
Instead, the growing debt burden only strengthens the case for gold, as investors turn away from Treasuries toward the safety of an asset that holds its value in times of financial distress.
The Fed’s Soft Landing — or a Zombie Recession?
The Fed continues to promise a “soft landing,” but gold is sending a different, much scarier message. In the 1990s, when the Fed managed to achieve a soft landing, gold traded lower. But today, gold’s performance suggests significant challenges may be lurking just beneath the surface. Could it be that the Fed’s soothing words are masking the reality that we’re already in a zombie recession?
Government dysfunction, geopolitical unrest in the Middle East and Europe, and the global scramble for resources are all feeding into this unsettling dynamic. Gold isn’t just rising — it’s rising fast. If this trend continues, could we find ourselves in another 1979, when inflation spiked, and gold skyrocketed by 126% in a single year?
Why Gold is Defying Market Logic — Where Do We Go from Here?
The truth is the forces pushing gold to new highs are not going away. The U.S. fiscal outlook is grim, geopolitical tensions are escalating, and inflation — while temporarily tamed — could easily return to haunt us. In this uncertain environment, gold remains the ultimate safe haven.
As we enjoy the Halloween festivities, let’s remember that what’s happening in the markets is no trick — it’s a warning. Gold was whispering. Now, it’s speaking loud and clear: Don’t be lulled by the soothing tones of central bankers and market commentators. The real monsters — debt, inflation, and uncertainty — are still out there.
Stay vigilant, and as always, make sure your portfolio is prepared for the long term. Gold may just be the light in this dark, haunted financial landscape.
Wishing you a safe and spooky Halloween,
Steven Feldman
CEO, Hard Asset Alliance
