Gold has been making headlines for months now, but relatively few of the reports below those headlines have accurately explained what’s been happening.
There was a notable exception published last week — a commentary that was remarkable for two reasons:
1) It faithfully recounted and correctly analyzed what has been driving this bull market, and….
2) It came from the most mainstream of news sources: Reuters.
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Headlined “Gold’s bubble behavior may signal paradigm shift,” a recent op-ed by Edward Chancellor does a great job of explaining gold’s role as money throughout the millennia of human history, and recaps the drivers behind the bull markets in gold as an asset class since the early 1970s.
The current bull market in gold, as I’ve maintained for some time, is unique in this relatively short history of gold as an investable asset. Chancellor does a great job in explaining this, and in the process quotes none other than Dan Oliver, who we were pleased to have as a presenter at the recent https://www.moneymetals.com/50th-anniversary-new-orleans-conference-silver-round-1-troy-ounce-999-pure/1679" rel=”noreferrer”>New Orleans Conference:
“By the turn of this decade, it had become received wisdom that gold moves inversely with long-term real interest rates. Thus, its value swooned in 2022 when central banks tightened the cost of borrowing and bond yields climbed. Then something unexpected happened: gold started to rise exponentially even as inflation turned down and inflation-adjusted bond yields rose.
“Daniel Oliver of Myrmikan Capital, a firm that invests in microcap gold miners, says this regime shift was caused by then U.S. President Joe Biden’s decision to seize Russian foreign exchange reserves following Vladimir Putin’s invasion of Ukraine in February 2022. This act shook the foundations of the international monetary system in which the U.S. dollar had long served as a lynchpin. Reserve managers at a number of central banks started looking for an asset that could not be seized and was not the liability of another sovereign. They returned to the original reserve asset: gold.”
The article goes on to explain the debt trap in which the Fed is now ensnared: With Federal debt now about four times higher as a percentage of GDP than in the 1970s, neither Chairman Powell nor Trump’s upcoming chair will have the ability to raise rates to combat inflation.
In short, a very significant depreciation in the purchasing power of the dollar, as well as fiat currencies across the globe, is inevitable.
Chancellor ends this excellent article by noting that a paradigm shift will be required for gold to continue to advance to higher levels:
“Thus, it’s not unreasonable to conclude that the rising gold price reflects a host of https://www.moneymetals.com/gold-price" rel=”noreferrer”>fiscal, financial, and geopolitical uncertainties. However, if the bull run is to persist, another paradigm shift is necessary. Central bankers have significantly increased their gold holdings, but most investors have not. That has proved a costly mistake. According to Goldman Sachs, the optimal portfolio over the last 10 years would have held half its assets in gold.
“Asset allocators generally view government bonds as a safe asset to offset volatile equities. In recent years, however, bonds have become positively correlated with equities. During bouts of financial turbulence, both asset classes tend to go down. Gold has provided better protection: when the U.S. stock market sold off in the first quarter of this year, gold shone. Enthusiasts never cease reminding us that gold is the only genuine risk-free asset. Private investors currently have negligible exposure to the precious metal. A little rational exuberance on their part and gold really would take off.”
Frankly, I don’t agree with Chancellor here. I would argue instead that gold’s remarkable advance so far tells us that a paradigm shift has already occurred.
https://www.moneymetals.com/news/2025/11/25/the-future-is-now-004504" rel=”noreferrer”>Gold has returned to official recognition as money, and the only money that cannot be debased.
It’s up to private investors to recognize that new paradigm.
And when they do, “gold really would take off.”
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