Gold is booming – but investors lured in by the hype could lose out, warn experts

13 May 2025 Share Save Theo Leggett International business correspondent Share Save

BBC

Listen to Theo read this article “What you have there is about £250,000 worth of gold,” Emma Siebenborn says as she shows me a faded plastic tub filled with old, shabby jewellery – rings, charm bracelets, necklaces and orphaned earrings. Emma is the strategies director of Hatton Garden Metals, a family-run gold dealership in London’s Hatton Garden jewellery district, and this unprepossessing tub of bric-a-brac is a small sample of what they buy over the counter each day. It is, in effect, gold scrap, which will be melted down and recycled. Also on the table, rather more elegantly presented in a suede-lined tray, is a selection of gold coins and bars. The largest bar is about the size and thickness of a mobile phone. It weighs a hefty 1kg, and it’s worth about £80,000. The coins include biscuit-sized Britannias, each containing precisely one ounce of 24 carat bullion, as well as smaller Sovereigns. These are all available to buy – and the recent surge in gold prices has led to a surge in demand. Zoe Lyons, who is Emma’s sister and the managing director, has never seen anything like it – often she finds would-be sellers queuing in the street. “There’s excitement and buzz in the market but also nervousness and trepidation,” she tells me. “There’s anxiety about which way the market is going to go next, and when you get those emotions, ultimately it creates quite big trades.” At MNR jewellers a couple of streets away, a salesman agrees: “Demand for gold has increased, definitely,” he says.

Gold is certainly on a roll. Its price has increased by more than 40% over the past year. In late April it rose above $3,500 (£2,630) per troy ounce (a measurement for precious metals). This marked an all-time record, even allowing for inflation, exceeding the previous peak reached in January 1980. Back then the dollar price was $850, or $3,493 in today’s money. Economists have attributed this to a variety of factors. Principal among them has been the unpredictable changes in US trade policy, introduced by the Trump administration, the effects of which have shaken the markets. Gold, by contrast, is seen by many as a solid investment. Fears about geopolitical uncertainty have only added to its allure. Many investors have come to appreciate the relative stability offered by a commodity once dismissed by the billionaire Warren Buffett as “lifeless” and “neither of much use nor procreative”. Video: Why do we value gold so much? “It’s the kind of conditions that we consider a bit of a perfect storm for gold,” explains Louise Street, senior markets analyst at the World Gold Council, a trade association funded by the mining industry. “It’s the focus on potential inflationary pressures. Recessionary risks are rising, you’ve seen the IMF [International Monetary Fund] downgrading economic forecasts very recently…” But what goes up can also come down. While gold has a reputation as a stable asset, it is not immune to price fluctuations. In fact, in the past, major surges in the price have been followed by significant falls. So what is the risk this could happen again, leaving many of today’s eager investors nursing big losses?

What really triggered the goldrush

Helped by its relative rarity, gold has been seen as an intrinsic store of value for centuries. The global supply is limited. Only around 216,265 tonnes have ever been mined, according to the World Gold Council, (the total is currently increasing by about 3,500 tonnes per year). This means that it is widely perceived as a “safe haven” asset that will retain its value. As an investment, however, it has both advantages and disadvantages. Unlike shares, it will never pay a dividend. Unlike bonds, it will not provide a steady, predictable income, and its industrial applications are relatively limited.

Getty Images “There’s anxiety about which way the market is going to go next,” says the director of a gold dealership in London’s jewellery district

The draw, however, is that it is a physical product that exists outside of the banking system. It is also used as an insurance policy against inflation: while currencies tend to lose value over time, gold does not. “Gold can’t be printed by central banks, and it can’t be conjured out of thin air,” says Russ Mould, investment director at stockbroker AJ Bell. “In recent times, a big policy response from authorities when there’s been a crisis has been: slash interest rates, boost money supply, quantitative easing, print money. Gold is seen as a haven from that, and therefore a store of value.” There has recently been a significant rise in demand for gold from so-called Exchange Traded Funds, investment vehicles that hold an asset such as gold themselves, while investors can buy and sell shares in the fund. They are popular with large institutional investors – and their actions have helped to push up the price. When gold hit its previous record in January 1980, the Soviet Union had just invaded Afghanistan. Oil prices were surging, driving up inflation in developed economies, and investors were looking to protect their wealth. The price also rose sharply in the aftermath of the global financial crisis, leading to another peak in 2011. The recent increases appear to owe a great deal to the way markets have responded to the confusion triggered by the Trump administration.

AFP/Getty Images President Trump described Federal Reserve chairman Jerome Powell as a “major loser”

The most recent surge came after US President Donald Trump launched an online attack on Jerome Powell, the chair of the Federal Reserve. Calling for immediate interest rate cuts, he described Mr Powell as a “major loser” for failing to reduce the cost of borrowing quickly enough. His comments were interpreted by some as an attack on the independence of the US central bank. Share markets fell, as did the value of the dollar compared to other major currencies – and gold hit its most recent record. But gold’s recent strength is not wholly explained by the Trump factor.

Fears of weaponisation of the dollar system

The price has been on a steep upward curve since late 2022, partly, according to Louise Street, because of central banks. “[They] have been net buyers of gold, to add to their official reserves, for the past 15 years,” she explains. “But we saw that really accelerate in the past three years.” Central banks have collectively bought more than 1,000 tonnes of gold each year since 2022, up from an average of 481 tonnes a year between 2010 and 2021. Poland, Turkey, India, Azerbaijan and China were among the leading buyers last year. Analysts say central banks may themselves have been trying to build up buffers at a time of growing economic and geopolitical uncertainty.

Getty Images Some gold-buying operations have been reporting brisk trade

According to Daan Struyven, co-head of global commodities research at Goldman Sachs: “In 2022 the reserves of the Russian Central Bank got frozen in the context of the invasion of Ukraine, and reserve managers of global central banks around the world realised, ‘Maybe my reserves aren’t safe either, what if I buy gold and hold it in my own vaults?’ “And so we have seen this big structural fivefold increase in demand for gold from central banks”. Simon French, chief economist and head of research at investment firm Panmure Liberum also believes that independence from dollar-based banking systems has been a major driver for central banks. “I would look at China, but also Russia, their central bank is a big buyer of gold, also Turkey.

Getty Images The value of gold has increased by more than 40% over the past year

“There are a number of countries who fear weaponisation of the dollar system and potentially the Euro system,” he says. “If they are not aligning themselves with the US or the Western view, on diplomatic grounds, on military grounds… having an asset in their central bank that is not controlled by their military or political foes is quite an attractive feature.” Another factor may now be helping to drive the gold market upwards: FOMO, or fear of missing out. With new all-time records being set, it has filtered through into everyday conversation in some quarters. Zoe Lyons believes that this is the case in Hatton Garden. “[People] want a piece of the golden pie,” she says, “and they’re willing to do that through buying physical gold.”

Safe, but for how long?

The big question, though, is what happens next. Some experts believe the upward trend will continue, fuelled by unpredictable US policy, inflationary pressures and central bank buying. Indeed Goldman Sachs has forecast gold will reach $3,700/oz (£2,800/oz) by the end of 2025 and $4,000 (£3,000) by mid 2026. But it adds that in the event of a recession in the US or an escalation of the trade war it could even hit $4,500 (£3,400) later this year. “The US stock market is 200 times bigger than the gold market, so even a small move out of the big stock market or the big bond market would mean a big percent increase in the much smaller gold market,” explains Daan Struyven. In other words, it wouldn’t take a huge amount of turbulence in major investment markets to drive gold upwards. Yet others are concerned that the price of gold has risen so far, so fast that a market bubble is forming – and bubbles can burst.

AFP via Getty Images While gold has a reputation as a stable asset, it is not immune to price fluctuations

Back in 1980, for example, the dramatic spike in the gold price was followed by an equally remarkable correction, dropping from $850 (£640) in late January to just $485 (£365) in early April. By mid-June the following year, it stood at just $297 (£224) – a decline of 65% from its peak. The peak in 2011, meanwhile, was followed by a sharp dip, then a period of volatility. Within four months it had dropped by 18%. After plateauing for a while, it continued to fall, reaching a low point in mid-2013 that was 35% down from its highest. The question that remains is, could something similar happen now?

Could the bubble burst?

Some analysts do think prices will ultimately fall significantly. Jon Mills, an industry expert at Morningstar, made headlines in March when he suggested the cost of an ounce of gold could drop to just $1,820 over the next few years. His view was that as mining firms increased their production and more recycled gold entered the market, the supply would increase. At the same time central banks would ease off their buying spree, while other short-term pressures stimulating demand would subside, bringing prices down. Those forecasts have since been revised upwards slightly, largely because of increased mining costs.

Bloomberg via Getty Images Gold’s current strength is not wholly explained by the Trump factor

Daan Struyven disagrees. He believes there could be a short-term dip, but prices will generally continue to rise. “If we were to get a Ukraine peace deal, or a rapid trade de-escalation, I think hedge funds would be willing to take some of their money out of gold and put it into risky assets, such as the stock market… “So you could see temporary dips. But we are quite confident that in this highly uncertain geopolitical setup, where central banks want safer reserve holdings, that they will continue to push demand higher over the medium term.” Russ Mould believes there will, at the very least, be a lull in the upwards trend. “Given that it has had such a stunning run, it would be logical to expect it to have a pause for breath at some stage,” he says. But he believes that if there is a sharp economic slowdown and interest rates are slashed, the gold price could go higher in the long run.

One problem for investors is working out whether the recent record price for gold was simply a staging point in a continued upward climb – to more than $4,000 for example – or the peak. Simon French at Panmure Liberum believes the peak may now be very close, and people piling into the market now in the hope of making big money are likely to be disappointed. Others have warned that those recently lured into buying gold by hype and headlines could lose out if the market goes into reverse. “Short-term speculating can backfire, even though there will be a temptation to hang on to the coat-tails of the record run upwards,” is how Susannah Streeter, head of money and markets at Hargreaves Lansdown, has put it. “Investors considering investing in gold should do so as part of a diversified portfolio – they shouldn’t put all their eggs in a golden basket.” Top picture credit: Getty Images

The White House wants everyone to know that the Department of Government Efficiency is incredibly transparent. They also don’t want you to know who’s actually running it.

During a White House press briefing Tuesday, press secretary Karoline Leavitt refused to name the administrator of DOGE, and in the same breath lauded the Trump administration’s transparency on the inner workings of its government-destroying machine.

One reporter asked Leavitt to follow up on a hearing that had taken place the day before in Washington, where a Justice Department lawyer had openly admitted to the judge that he didn’t know who the administrator of DOGE was, while defending the organization’s unfettered access to sensitive government records.

“Can you tell us who the administrator of DOGE is?” the reporter asked Leavitt.

“Again, I’ve been asked and answered this question,” Leavitt replied, proceeding not to answer it. “Elon Musk is overseeing DOGE. There are—”

“Is he the administrator?” the reporter pressed.

“No, Elon Musk is a special government employee, which I’ve also been asked and have answered that question as well,” Leavitt said.

“Who is the administrator?” the reporter pressed again.

“There are career officials at DOGE. There are political appointees at DOGE. I am not going to reveal the name of that individual from this podium,” Leavitt said.

“I am happy to follow up and provide that to you, but we have been incredibly transparent about the way that DOGE is working.”

To lend some perspective on the Trump administration’s obvious obfuscation, there is no reason to keep the identity of anyone running a federal department secret—and the names of those people are both in the public interest and publicly available, with the one exception of DOGE.

Only after the press briefing did it come out that Amy Gleason is the acting director of DOGE. It’s not clear she knows this, however—she was in Mexico when reached by reporters, despite the fact that the DOGE head has made in-office work a centerpiece of his reign of terror.

College is often advertised as the best four years of one’s life, but many Americans now have regrets.

More than a third of all graduates now say their degree was a “waste of money,” according to a new survey by Indeed. This frustration is especially pronounced among Gen Z, with 51% expressing remorse—compared to 41% of millennials and just 20% of baby boomers.

Overall, a growing share of college-educated workers are questioning the return on investment (ROI) of their degree, Kyle M.K., a career trend expert at Indeed, told Fortune. It’s something that’s not all too surprising considering that the average cost of a bachelor’s degree has doubled in the last two decades to over $38,000, and total student loan debt has ballooned to nearly $2 trillion.

“Another 38% feel student loans have limited their career growth more than their diploma has accelerated it,” M.K. said. “Together, these realities are nudging universities and employers to shift focus from pedigree to practical skill. In fact, 52% of U.S. job postings on Indeed don’t list any formal education requirement.”

However, for many young people, this realization is coming too late. Already, some 4.3 million Gen Z have been left behind as “NEETs”—not in education, employment, or training—with no clear direction on how to restart their early careers.

The long road to finding value in a degree

For young people in particular, who are navigating a less than ideal job market, it can be difficult to see the long-term ROI of college. This is especially true when, for some subjects, like psychology, philosophy, or English, it can take over 20 years in the workforce for the degree to pay for itself, according to the Education Data Initiative.

However, ​​Christine Cruzvergara, chief education strategy officer at Handshake, warns against valuing a degree from a purely quantitative standpoint.

“It’s shortsighted to focus only on immediate employment, as that makes the assumption that the value of higher education is only to get your first job,” Cruzvergara told Fortune. “When in reality, higher education contributes to career advancement opportunities, exposure to a variety of fields, aids in self-discovery, and develops management and leadership skills.”

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While nearly 70% of young graduates believe they could do their job without a degree, they may have not been exposed to their network without it. Cruzvergara says that universities are failing to promote that they’re more than just a piece of paper that’ll open doors after graduation day, but a hotbed for learning and meeting like-minded people while on campus.

For example, Mark Zuckerberg dropped out of Harvard during his sophomore year to focus on building Facebook into the social media empire it is today. But he couldn’t have done it without the four cofounders he met at university.

“Gen Z faces a particularly uncertain job market, and there’s a need for a better connection between education investment and outcomes,” she adds.

AI has spooked college graduates into a cynical spiral

The spread of artificial intelligence into all parts of education and the workplace has made college graduates question their degree even more, with some 30% feeling AI has outright made their degree irrelevant—a number that jumps to 45% among Gen Zers.

This is despite efforts from thought leaders in the space to calm fears about AI replacing workers. “AI is not going to take your job,” Netflix’s co-CEO Ted Sarandos said last year. “The person who uses AI well might take your job.”

While M.K. admits that skill areas like routine programming, basic data analysis, and templated content creation have become highly exposed to AI, fields like nursing, advanced project management, and creative strategy are relatively insulated.

“AI is more of an amplifier than a pink slip,” M.K. said, adding that above all else, those who prioritize lifelong learning and have open conversations with their employer about AI will be able to soar in the wake of technological advancements.

“AI won’t invalidate a solid education, but it will reward those who keep upgrading their toolkit.”

U.S. dollar banknotes are seen in this illustration taken March 19, 2025. REUTERS/Dado Ruvic/Illustration Purchase Licensing Rights , opens new tab

Summary

Companies Dollar on Thursday posted biggest daily fall since November 2022

Deutsche Bank warns of crisis of confidence in dollar

Dollar’s role as No.1 reserve currency called into doubt

LONDON, April 4 (Reuters) – In times of market panic investors tend to rush to the safety of the dollar, but when stocks swooned in response to U.S. tariffs this week, they ran away from it. Investors say it’s a sign that the greenback’s global standing may be eroding.

The dollar, for decades a safe haven, on Thursday fell about 1.7% in its biggest daily drop since November 2022 (.DXY) , opens new tab , after President Donald Trump imposed tariffs on imports at levels not seen since the early 1900s. Stock markets also tanked, as tariffs ignited recession worries.

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In interviews and published markets commentaries, many investors and analysts pointed to the Trump administration for the anomaly. Its protectionist policies, upending of the global economic order in place since World War II, and a growing U.S. debt pile have been chipping away at the dollar’s appeal, they say.

Left unchecked, a crisis of confidence in the dollar could also undermine its position as the world’s reserve currency , they added.

“What we’re seeing today is a further indication that the structure and nature of the U.S. dollar’s relationship to global markets has changed,” said Thierry Wizman, global foreign exchange and rates strategist at Macquarie in New York.

“There’s an underlying basis for this, which is the changing role of the U.S. in the world.”

Any erosion of the dollar’s standing as a safe-haven is bad news for investors and policymakers – at least in the near term.

For investors, who have piled trillions of dollars into buoyant U.S. markets in recent decades, a sharp dollar fall could result in higher interest rates for longer. That’s because price pressures at home could make it harder for the Federal Reserve to cut rates.

At the same time, a rapid strengthening of currencies against the dollar is a headache for other central banks navigating a weaker economic outlook , as it makes their exports more expensive and potentially harder for them to revive growth. The euro, for example, just had its best day against the greenback in more than two years.

The U.S. dollar has dropped 6.1% this year on fears that tariffs will knock growth

The recent depreciation in the dollar showed that concerns about the currency’s status had “left footprints in financial markets already,” Sweden’s central bank deputy governor Per Jansson said at an event in London on Tuesday.

“If (the dollar’s status) would change, that would be a big change for the world economy … and would basically create a mess,” he told Reuters afterwards. “I really do not hope the U.S. goes there.”

The White House press office did not immediately respond to a request for comment.

Despite such growing worries, the dollar is still firmly positioned as the world’s top reserve currency. Trump has said he wants it to maintain that status and warned against attempts to undermine it, while signalling a weaker dollar would be good for exports.

The currency also has an inherent competitive advantage: It’s backed by the world’s largest economy, the deepest capital markets and an established rule of law. There is no real alternative in the near term.

In addition, its fall so far this year – the dollar has slumped about 6% against other major currencies – could ease if Trump is able to turn around sentiment on the economy through pro-growth policies such as tax cuts and deregulation

Dollar is down 4% versus a basket of other top currencies this year

Brad Setser, a senior fellow at the Council on Foreign Relations, said that although the U.S.’s appeal as an investment destination has been reduced, the dollar’s course will largely be determined by how the U.S. economy responds to the Trump tariff shock. What’s more, higher returns on U.S. bonds than on other government bonds still matters for investors, he said.

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Even so, the reversal in its fortunes is remarkable. Going into the year, investors had expected Trump tariffs to boost the dollar, as they believed his policies would spur growth.

So while investors expected tariffs to be inflationary, the consensus was it would hurt economies abroad more while leading to higher rates at home, strengthening the currency.

That’s turned out to be wrong. His tariffs are so sweeping that investors now fear the U.S. will be hurt the most by them as prices rise at home and growth slows. Several investment banks have raised the probabilities they give of a U.S. recession

The negative sentiment is reversing money flows into the U.S., thereby reducing demand for dollars. Foreign holdings of U.S. assets had surged to $62 trillion in 2024, from $13 trillion a decade earlier as international investors flocked to outperforming American stocks, bonds and real estate, official U.S. data shows.

The U.S. net investment position has collapsed over the last decade to $26 trillion

And the hit to the U.S. as an investment destination could deepen. President Emmanuel Macron on Thursday called on European companies to suspend planned investment in the United States in response to the tariffs imposed on the bloc.

“The three pillars of support that helped the dollar (were) U.S. exceptionalism, high interest rates, and strong portfolio flows. All three have been severely weakened and potentially reversed as a result of the deluge of tariff announcements,” said Paresh Upadhyaya, director of fixed income and currency strategy at Amundi, the biggest European asset manager.

Earlier this week, Deutsche Bank warned of the risk of a crisis of confidence in the U.S. currency, while bond giant PIMCO said it had turned more cautious on the dollar.

Satori Insights founder Matt King said outflows from the U.S. would likely continue.

“It has the potential to run significantly further, partly because of the magnitude of the long only (U.S. equity and dollar) positions that have been built up over an extended period,” he said, and the likelihood of this driving a sustained cycle of self-reinforcing losses.

As a result, the future of a currency often referred to as “King Dollar” for its strength and dominance in global forex markets suddenly looks uncertain.

James Malcolm, head of FX strategy at UBS, said he saw similarities between the current situation and the mid-1980s ahead of the Plaza Accord, when the economically outperforming U.S. pressured major partners to support it in weakening the dollar and ease widening U.S. deficits.

“While we will get a different set of events, the effect – the dollar going down a lot more – should be the same”.

The idea the Trump administration may push through a “Mar-a-Lago Accord” – a grand bargain to weaken the overvalued dollar – has gained traction even if it’s unlikely. More broadly, the weaponisation of finance , including the dollar, is a growing concern among some in Europe.

“This erratic behaviour is too risky. This is such an inflexion point for the role of the U.S.,” said Antonio Fatas, macroeconomist at INSEAD business school in France.

“The problem is that we don’t have an alternative to the dollar – and that is why this is going to be painful. I don’t think anyone wins in the short term.”

Reporting by Dhara Ranasinghe, Alun John and Gertrude Chavez-Dreyfuss; Additional reporting by Yoruk Bahceli, Naomi Rovnik, Harry Robertson, Amanda Cooper, Mark John and Marc Jones; Editing by Paritosh Bansal, Elisa Martinuzzi and Hugh Lawson

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DeepSeek shows AI’s centre of power could shift away from US

28 January 2025 Share Save Marc Cieslak AI correspondent Share Save

Getty Images DeepSeek was developed for a fraction of the price of its US rivals

DeepSeek’s arrival at the top of the Apple App Store charts has placed it firmly in the public consciousness, shaking the belief that the US would continue as the largely unchallenged global superpower of AI. This dominance has been mainly down to enormous capital investment – but China’s DeepSeek was developed for a fraction of the price of its US rivals. Its sudden debut has had a huge impact, wiping $1tn off the value of US tech stocks. The efficiency and capability of DeepSeek’s model should not be underestimated. All of this has been achieved using lower-end technology, a consequence of US restrictions on the export to China of high-tech components – Nvidia’s H100 chip at the higher end and its H800 chip at the lower end, both of which are commonly used in AI.

The US barred its export over fears that China could challenge American AI dominance if given unfettered access to Silicon Valley technology, so a viable AI model created in this environment speaks for itself in terms of ingenuity and potential. Despite this, it is what DeepSeek represents, rather than what it has produced, that may ultimately be its lasting legacy. It highlights a new way of thinking about the economics of the AI industry. It levels the playing field for governments and companies with aspirations to become AI power players. And it demonstrates that innovation born of necessity can produce results with the power to make the money markets rethink the economic direction of travel. Many already felt the US AI industry was rife with inflated valuations, leading to talk of an AI bubble. That bubble hasn’t quite burst, but its structural integrity is certainly now under strain. Some may interpret DeepSeek’s impact as a sign that the seat of AI power is shifting eastward – but it’s also possible that innovators worldwide will now take inspiration and attempt to develop their own lower-cost AI technologies. The investment plans announced in the US – worth hundreds of billions of dollars – were simply not replicable elsewhere, but that may no longer be such a problem.