Gold Appreciates, While Confidence Plummets
- ccancino3
- Nov 18
- 3 min read
The new high achieved for the price of an ounce of gold, exceeding US$4,000 dollars in October 2025, is not a traditional bullish movement. It is a symptom of a much deeper problem: the weakening of the confidence in the global monetary and fiscal system. What does this mean for investors and for the role of gold as a safe haven asset?
The primary driver behind this phenomenon is the Federal Reserve System's (Fed) monetary policy of the United States. Short-term yields are falling because markets are deducting multiple interest rate cuts. At the same time, long-term yields remain high, not due to growth expectations, but rather due to fears of fiscal unsustainability in the US.
The spread between 2 and 10-year bonds recently widened to 60 basis points, which analysts call a "bull steepener". This historical pattern indicates that investors lack confidence in the stability of the monetary policy and seek to protect themselves from structural risks.
Even though the core inflation remains at 2.8%, the dollar is weakening. This contrast reflects the fact that the “green-back” loses credibility as global reserve currency, while the political pressure on the Fed is mounting. President Donald Trump himself has made public his intention to influence monetary policy decisions, further eroding the institutional trust.
Another key factor is the demand for physical gold. Since 2022, central banks have bought more gold than what they have sold, an unequivocal sign that they are seeking to diversify their reserves and reduce their dependence on the dollar.
The World Gold Council confirms that this movement is not temporary, but rather the result of a sustained trend driven by emerging countries and developed economies. The motivation is clear: The search for security in view of an uncertain environment.
In parallel, private investors begin to turn to physical gold again. Many of them do not do it for the yields, since gold does not pay interest, but for security. In times of doubt, the priority is not immediate profitability, but the preservation of assets.
Debt, Dysfunction and Distortion
Gold acts as a thermometer for trust. Its dizzying rise reveals three structural cracks:
1. Record debt: The United States is facing increasingly large fiscal deficits, prompting warnings from global financial institutions about the sustainability of its debt.
2. Political dysfunction: Internal polarization and pressure on the Fed threaten the independence of the U.S. monetary policy.
3. Monetary distortion: The disconnect between inflation, interest rates and the weakening of the dollar reflects a system under stress.
In this context, the price of gold goes up because it is a safe haven from the financial and political instability that the global reserve currency faces.
What Does It Mean for Investors?
This is more than a temporary bullish movement of gold. It's a collapse of confidence. Investors understand today better than ever that gold must be seen less as a speculative asset and more as an insurance against systemic risk.
Those who seek diversification and stability have found in gold a hedge against three current threats: rising debt, persistent inflation and institutional weakening.
History shows that in times of crisis, gold strengthens as a strategic hedge, preserving its purchasing power when other assets lose it.
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