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Readers asked me to comment on gold and silver.
 

Gold and Silver Price

• Gold: $4442.75 per Ounce a New Record High
• Silver: $68.91 per Ounce a New Record High

Long-term readers know that I have been on the gold bandwagon for over two decades.

But I am not a cheerleader. So, I don’t post every new high.

For new readers, my key view has been and still is: The price of gold is not a function of the US dollar index.

Rather, the price of gold is a function of faith in Congress and the Fed not to destroy the dollar. By that measure, faith is collapsing, and deservedly so.

Yet, for years on end, commentators would frequently say things like “gold is up because the dollar is down”, or vice versa.

We can debunk that idea in one image.

Gold vs the US Dollar
 

In January of 2014, the US dollar index was 80. At the same time, gold was $1,200 per ounce.

Since then, the US dollar index rose to 98, up 22.5 percent.

Also, since then, the price of gold rose to $4,442, up 270 percent.

What Happened?

• The desirability to hold the US dollar vs a basket of currencies rose.
• The desirability to hold gold vs the US dollar soared.

Clearly, those are independent things over the long haul.

Gold vs Faith in Central Banks
 

I created similar charts years ago and periodically update them. The above chart is recent enough to not type all those anecdotes again.

Faith in the Fed and Congress is a much better explanation for moves in gold than fluctuations in the dollar.

Gold vs. Faith in Central Banks Major Timeline

August 15, 1971: Nixon ended convertibility of gold at the then fixed price of $35.00 per ounce. Nixon’s actions allowed the Fed and Congress to inflate at will.

January 21, 1980: Gold spiked to a then-high of $850 per ounce in the wake of Nixon shock.

March 1980: Volcker restored faith in central banks by jacking up interest rates to 20 percent. Volcker was followed by Alan Greenspan, labeled the “Great Maestro” for keeping inflation under control.

May 7, 1999: Brown’s Bottom! On the BOE announced plans to dump gold for other assets. Gold was $282. The notice drove the price to $252. The event is named after Gordon Brown, then the UK Chancellor of the Exchequer.

August 23, 2011: Gold hit a then record high of $1923 with a European debt Crisis.

July 26, 2012: ECB president Mario Draghi made his famous “Whatever it Takes” speech. “Within our mandate, the ECB will do whatever it takes to preserve the Euro, and believe me, it will be enough.” What did Draghi do? Curiously, nothing at all. However, his statement calmed the bond and equity markets. Gold was clobbered.

December 17, 2015: Gold bottoms as faith in central banks peaks again.

What followed was QE to absurd levels, three rounds of massive free money fiscal stimulus during Covid, and the Fed misjudging the ensuing inflation.

Now we have an insane tariff policy by Trump, a Fed that still does not understand inflation, and Trump's pressure on the Fed to cut rates.

What About Silver?

Silver sometimes acts like a monetary metal and sometimes like an industrial commodity.

Right now, it’s clearly acting like a monetary metal and/or there is a huge supply shortage.

Unlike gold, silver gets used up and ends up in landfills. In contrast, nearly every ounce of gold ever mined is still in existence.

Debt and Deficits

All the Trump administration's bragging about addressing the deficit is nonsense. Gold doesn’t believe that story will last and neither do I.

On May 12, 2025, I noted The “One Big Beautiful Bill” Will Continue Spending at Biden’s Level

The bill is certainly big, but it’s also damn ugly.

On June 21, 2025 I commented Record Deficits as Far as the Eye Can See and Trump Begs for More

Let’s investigate CBO deficit projections vs what actually happened.

On August 14, 2025, I commented US Debt Now Grows by $1 Trillion Every 150 Days

US national debt just topped $37 trillion and is growing fast.

Looking at recent history, by decade, the U.S. added $1 trillion to the Debt: 

• Every 24 months in the 2000s, on average 
• Every 11 months in the 2010s, on average 
• Every 5 months in the 2020s, on average 

Since August 14, debt rose from $37 trillion to $38.5 trillion.

If you think Trump’s tariffs are going to pay down that debt or do much to reduce deficit spending, you are more than a bit crazy.

A Word About Faith

Gold does not believe the Fed is under control, Congress is under control, budget deficits are under control, or Trump is under control.

And neither do I.

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