Gold is at $3100 $3200 $3300 $3400 / ounce this morning. Again.
Source: Kitco, Inc.
The last time gold hit that level was April 21. Then, it made news. Now, everybody yawns. The media won’t mention it until it sets a new record price in today’s dollars.
We’re still just a bit over $100 below the all-time high price of gold, in real (CPI-adjusted) dollars. That’s by my calculation, based on the price of gold at the end of 1979/start of 1980. And the BLS CPI calculator.
As a noted in the last post, the previous high (in real terms) occurred during absolutely dreadful economic times — stagflation following two Arab oil embargoes against the U.S.
Now, by contrast, we’re seeing a near-all-time-real-record price for gold, in a world with a basically good economic climate, except for U.S. repeatedly shooting itself in the foot.
If I had to guess what has pushed gold to this price level, I’m betting that the Trump administration will soon have no choice but to start testing the waters on various forms of default on Treasury debt. Nothing too radical at first. Maybe floating the idea of forcing T-bill holders to hold that debt for another few months, beyond the term of the bills they hold.
But between gutting the IRS (and essentially declaring open season on tax cheating), extending the existing costly tax cuts, and piling on more tax cuts, failing to find any material “efficiency” savings, and so on — while repudiating any and all international agreements — and threatening the Chair of the Fed — if we now slide into a deep recession (with the resulting automatic ballooning of the Federal deficit — I’m guessing we’re going to end up being unable to finance the Federal debt in conventional ways.
So the economic geniuses of the Trump Administration need a dress-rehearsal now, in anticipation of the coming cash crunch in Treasuries. After they’ve driven the economy into recession.
Sounds insane, I know. But insane is what we do now.
Maybe I’ll earn myself a prison term in the newly rehabbed Alcatraz, just for saying it. Maybe I’ll be forced to march as part of the spectacle on the next Leader’s Birthday military parade. Or maybe the 200 trade deals that Trump claims he has already made will somehow save the day.
Or maybe all that bullshit is coming home to roost a lot sooner than anyone would have guessed.
That’s what I think this most recent rise in the price of gold means. Q3 2025 is when all the economic nonsense that’s gone on so far really starts to hit the fan. Smart money is finding safe havens other than Treasuries, in anticipation. And gold, despite its many drawbacks, is one of the few safe havens left.
