Real Assets

Runaway Gold

Since bottoming at around $1,630/oz in October 2022, the price of gold has increased by more than 150%.1 Among the more remarkable aspects of this rally is that it has occurred amid mostly rising interest rates, historically a headwind for the gold price, suggesting other factors are at play.

It’s been our experience that the gold market can sometimes serve as the metaphorical canary in the coalmine, sussing out potential dangers before they manifest in asset prices more broadly. One such danger, in our view, has been the massive and ongoing accumulation of government debt.

The US federal deficit, for example, remains historically outsized relative to the unemployment rate—as it has since the outbreak of Covid-19.2 This persistent deficit spending has imparted some positive nominal drift to the economy, which has trickled down into corporate earnings, margins and supported risk assets. We believe it also helps explain the decoupling of gold and Treasuries shown below.

Gold—whose relatively fixed supply historically has enabled it to participate in the nominal drift of the economy over time—appears to be acknowledging the double-bind facing US policymakers: Do nothing to address the deficit and increase the risk of inflation, or take action to curb deficit spending and increase the risk of recession.

Gold and Treasuries Exhibit

1 Source: World Gold Council; data as of November 30, 2025.
2 Source: Haver Analytics, Bureau of Economic Analysis, US Treasury, Federal Reserve Bank of St. Louis; data as of October 30, 2025.

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