Gold on the Rise: A Shining Year for the Coveted Metal

In a year that amazes investors, gold is experiencing its best performance since 1979. The SPDR Gold Trust (NYSEMKT: GLD) recorded an impressive increase of over 32%, surpassing the general market rally. Experts attribute this success to geopolitical tensions in Ukraine and the Middle East, which have fueled global uncertainty. Gold serves not only as a safe haven in times of crisis but also as a hedge against inflation. Additionally, the upcoming presidential elections in the USA cast their shadows ahead. Regardless of whether Kamala Harris or Donald Trump wins the election on November 5th, analysts expect gold to continue its impressive run. In recent weeks, well-known investors like Stanley Druckenmiller and Paul Tudor Jones have drawn attention. Druckenmiller has made substantial bets against U.S. government bonds, while Jones announced on CNBC that “all roads lead to inflation.” These assessments contrast with current economic data, which largely suggest a decline in inflation – albeit not always consistently. Nonetheless, both Druckenmiller and Jones express concerns that the U.S. government might have lost control over its finances. With a looming national debt totaling $36 trillion and an annual deficit of over $1.8 trillion, this seems plausible. With a national debt at 124% of GDP, the U.S. now spends 13% of its budget on interest payments alone. This financial situation worries investors who fear that both Harris and Trump – regardless of the election outcome – might take actions that would fuel inflation and further exacerbate the financial situation. According to the bipartisan evaluation by the Committee for a Responsible Budget, Harris would increase the national debt by $3.5 trillion by 2035, while Trump would cause an increase of $7.5 trillion. The Wharton Budget Model from the University of Pennsylvania forecasts that the U.S. debt ratio must not exceed 200% of GDP. A value beyond that could lead to an unprecedented sovereign default, against which even tax increases or drastic spending cuts could not provide relief.