So pathetic how these powerful financial institutions are switching to gold instead of, you know, calling the White House to tell them how stupid their economic policies are. Then they wouldn’t have to scramble into all these alternative investment strategies. American big business has been cowardly and pathetic under Trump.
The Billionaires who never missed a chance to scream about the "damage" Obama or Biden's (just to the right of Nixon's) economic policies were doing to the economy are now dead silent. The folks who howled about creeping socialism in the Inflation Reduction Act, utter not a peep as the administration extorts equity stakes in companies in return for tariff relief. These corporate "leaders" are gutless worms and vile hypocrites. In the future, when orange Mussolini is driven from office, these oligarchs should have zero say in the restructuring of the US economy.
Voting with their feet. Not that the current White House would listen though one would think continued fall of the dollar and lower participation in Treasury auctions would set off alarms ... hmmm but they're not really keeping track these days.
What if the falling dollar is the desired outcome? Hasn't Professor Krugman said in the past that countries who hold debt in their own currency can always devalue said currency and thereby repay the debt with cheaper cudrrency?
trump & crew want weak dollar cuz then exports up & imports down. what they don't want is inflation up & demand down, aka stagflation, which is probably gonna be what they (& rest of us...) actually get
Not all institutions. Since Russia invaded Ukraine, you could always see when the Russians sold gold and platinum in those futures markets and the ruble price. It has been a few months since such a sale. This boosts the price of gold and platinum. It means either a)the Russians have stabilized their finances or b) they've run out of abundant gold and platinum to sell. You can also see when the Russians sell oil to India by the plunging Indian rupee.
They can make money either way so they don't really care. Their computer models just don't have to be very good to make money in a stable, growing economy. Chaos just makes it more difficult, not impossible.
I doubt if they’re selling. (And if they were, the price of gold would fall, right?) Nah, they’re just watching the price of their magic asset rise with glee, not understanding it’s barely liquid.
There’s not enough gold in those things for the market price to fall due to some coin collectors cashing in. And it’s not *that* illiquid, there are always places that buy gold (of course they take a fee, and those coins were sold at a premium back in the day, but I suppose it’s possible to still come out ahead when prices are this high).
LOL My Dad was a coin collector (but not a 'gold bug,' per se). The old $20 gold eagles are beautiful coins to hold and look at. But I do get some quiet satisfaction from the "easy marks" getting their payday.
How sad is that? In a few short months, Trump and MAGA have destroyed the post-war system and pax Americana that had prevailed for 80 years since 1945.
Professor Krugman: Gawd, Guns and Gold, is the old saying. presumably, having a lot of gold is "good" for fleeing one country and relocating to another, where a person might set up house. (that's what i was always told.)
but gold is actually quite useless. can't eat it. it's really heavy, so can't carry much. lots of demented people want to steal it (why?) from the holder. and unless society has completely collapsed, how much might a loaf of bread possibly cost? an entire ingot?? the only thing that gold is useful for is pouring molten gold over the heads of greedy white male sex pests, in my opinion.
Silver’s high electrical conductivity enabled its use in the Manhattan Project to replace scarce copper in the windings of electromagnets used in the separation of fissile U-235 from nonfissile U-238. The amount of silver “borrowed” from the US Treasury was large, 14,700 tons, but essentially all of it was returned after the war. See: https://www.osti.gov/opennet/manhattan-project-history/Places/OakRidge/oak-ridge-y12-silver.html
Well, there are occasional shortages, for one reason or another. One shortage in the '60s resulted in the use of aluminum wiring in houses. The early fixture designs resulted in quite a few house fires.
It's not useless. Gold is real money which has maintained its value over millennia. You can't debase it and you can't print it out of thin air, like governments do with their currencies.
With Trump now at the controls of the USA and our national debt at nearly $38 trillion and rapidly increasing, what happens next? That's what Krugman is saying above. That's why people are buying gold.
It seems the only logical way out of such an immense debt is to monetize it (quantitative easing) and to inflate it away, as has been happening of late. Or maybe Trump does something even wilder and more shocking, as he often tends to do.
Meaning, the value and purchasing power of the dollar will continue to decline. That's why you're seeing gold going up: people are trying to preserve their savings while central banks are diversifying away from the dollar for their reserves.
And if you look at gold's chart, you see how Trump 2.0 has accelerated all of this.
Gold isn’t real money. The only thing that is real money is what a society says is real money. If I was to hack into your bank account and rob you blind, there wouldn’t be a microgram of gold involved but you would be shit out of luck. The real reason people obsess about gold is because it’s shiny. That puts us on the level of crows.
Good luck with that. Per government CPI statistics, the purchasing power of the U.S. dollar has gone down nearly 90% since Nixon took it off the gold standard in August 1971... Gold meanwhile has gone up 115X since that time, while the stock market (S&P 500) has gone up 68X.
Most investors don't actually have the metal. They buy certificates stating that they own gold kept in a "safe" location. There are also Gold ETFs available. Of course, someone planning to flee the country might be able to cash out their certificates in their new residence.
Yep...back in the day I invested in several hundred worth of pure silver dimes and quarters - those would be much more useful when the crunch comes LOL
Gold is very far from “quite useless.” Paul has debunked its use as a store of value, but gold (and its compounds) have many other important uses. One could debate its use in jewellery, of course, but most of these other uses are nontrivial.
Gold having "inherent value" (whatever that is) is not really important, at least in modern times. What IS important is what type of money has little to no counterparty risk.
Recommended just for the title alone, a brilliant bon mot! The substance of this piece is also quite compelling. I read elsewhere that roughly 75% of the surge in demand for gold comes from foreign central banks seeking to up their reserves, and not from private or institutional investors. If that statistic is true, it would seem to offer support for Mr. Krugman's hypothesis (at least among foreign central bankers).
Silver reached $50 an ounce in 1980 when the Hunt brothers attempted to corner the market. Silver hasn't reached that level since, which is why it's not drawing much attention.
But...the ratio of the price of gold to silver is higher than usual, leading many to believe that silver will rise in price fairly soon.
A number of trump voters appear to have buyers remorse.Their elected representatives don't seem concerned, though the problems with things like air traffic control do seem to require their attention.
I agree and they also exhibit Sunken Cost Fallacy thinking, not wanting to acknowledge that they put their faith and trust into a big loser. If only someone had warned them!!
I wonder what type of event it would take to overwhelm their Sunken Cost Fallacy position, which I do observe in the few MAGAs I know. I keep waiting . . .
We'll find out if they truly have buyers remorse in November of 2026. It may be our last chance. Trump will use the Federal government to suppress votes in Democratic areas. Voters need to be ready for this.
2025. The year of magical thinking. The chances of those elections even taking place (let alone providing an escape from this nightmare) are plummeting —if not gone. Unless you think installing armed forces into blue cities and that big military get-together last week are just normal, run of mill, nothing to see here folks kinda things every president does.
Yes, I feel that's the point of the troop incursions. It will escalate until all Blue States are under Marshall Law! I always vote by mail but not sure it will help...
TX Abbott will place the TX National Guard in Dallas & Harris (Houston) counties. In 2020, Abbott decreed "only one drop box" per county. See?? My county in Metro Denver has about 500,000 residents & has 248 drop boxes for mail-in ballots.
I saw Larry Sabato talking about this on TV yesterday and he is no flaming Leftist. We need to start talking about this so that everyone has a plan to make sure their vote is counted. We also need to expose what he and Project 2025 are up to.
Sane? I’m not sure he’s actually a human being. He’s so defective he needs to be kept somewhere so he can’t hurt people. Trump, Vance, Noem, Hegseth, Bondi, Musk, Thiel… They’re not persons, they’re pathologies.
And he also falsely stated that the cities are ‘very unsafe places and we're going to straighten them out one by one, (adding that) it would be a major part for some of the people in this room’. Poor grammar aside, when dictators tell you something about their future plans for martial law, you should believe them.
There is ample reason for pessimism. I think it could democracy's last chance we need to give it all we can or our grandkids will have to try to regain it 40 or 50 years fron now.
Governments like China, India, Russia are holders and buyers of gold. Is this a way to ultimately crush the US dollars global dominance for trade and to effectively skirt around sanctions?
During the last big run-up of gold (in recent time) during the oil embargo against Iran,-it turned out that India was a big buyer of gold because the India govt was paying Iran for oil with gold.
India Traditionally Gold is known to be an asset since Millinium not because of recent hoarding by Central Bank recently as you think. Our Gold were kept in Safe Custody all these years abroad and now with fear of American Hegemony and Trump's Tariffs across (Megalomanic Trump forgets it is ultimately the Americans are going to pay for it) brought back and it is because the World lost it faith in USA due to their Hegemony and Domination attitude of World when 40-45% of Goods are supplied by 40% of Non American Manufacturers ..
I completely get what you are saying about gold as an asset and American Hegemony. I happened to live in India for a number of years and then travel there for work. I love the country and am familiar with the traditions and views on gold. Having gold to protect the country's trade from US tariffs isn't a bad thing. The US along with some middle eastern countries have also had too much pricing power when it comes to oil. Wishing you well.
I'm not saying you're incorrect, but how did that exchange work in practice? Is there an Indian equivalent of the Federal Reserve Bank of New York where bank officials could simply move gold ingots from the India pile to the Iran pile upon delivery of Iranian oil?
That is a really good question. I am not sure but that was reported in 2012 and then in 2018 it was reported that India was using Rupees to buy Iranian oil. If you can transport oil, you can transport gold. I guess through Pakistan or Afghanistan. I would guess that Afghanistan was more likely. And yes, the India Reserve Bank works like the Fed. although their mandate may be different.
I would say the Indians got the better of that exchange, because you cannot eat gold but you can use refined oil to power farm equipment to raise crops to eat.
That would only make sense. Again, then, the Iranians would have gotten the better of that hypothetical exchange with the Russian Federation, since gold is for all intents and purposes useless.
Not quite as useless as bitcoin and other crypto flim-flams, mind you, because at least with gold one can make beautiful art and jewelry. In older times, gold was used for dental prosthetics also, although I think that has largely gone out of fashion in a day and age of dental implants and what-not.
It will be interesting to see how gold is used to mess up the dominance of the US dollar in global trade. I am not convinced that gold is useless. I am not a gold bug by any means but I think that gold is perceived by many countries as worth owning..
Everything Trump does is a gift to Putin. It’s the only theory with no holes. Or, to invert the logic; “If Trump were a true Russian agent, what would he be doing differently?”
If Trump were a true Russian agent he wouldn't be doing anywhere near the amount of damage to the US that he is currently doing. It would be too obvious and cause people to start asking questions. In addition, the Russians don't have the imagination to come up with some of the stunts Trump's pulled. Unleashing a drug addled Musk on the government, WTF. In truth, Putin and Xi are looking at the rapid process of self inflicted destruction of the US in wonder. They're actually probably worried, as a slow decline would be their preference. This is especially ironic for Putin. After the US collapses, as did the USSR, there's no way that an international coalition will be able to persuade the new confederate states to give up their nukes. The Ukraine example guarantees that won't happen.
“Cause people to start asking questions”? We have blown way past that scenario. And that doesn’t threaten them at all, judging by their continuing machinations.
But I do think Trump is just a Putin-loving useful idiot. This administration has a fair number of Russia-philes in it. Even Russian state TV refers to Tulsi Gabbard as an “asset”.
Trump himself doesn’t have the imagination to pull off the stunts you refer to. Trump is a useful idiot for many smarter determined fascists, including Miller and Vought - and even they are probably surprised that a figure like Trump became the vessel of their coup against the Constitution.
Trump's in a class by himself. An orange Dr Evil buffonery wise. He's well into senility now though, ready to pull a King Lear imitation handing the country over, to be destroyed, by the sycophants who best pander to him. There will be no Ophelia in this version, or poetry, only tragedy and madness.
Yes, the assumption in the "mainstream" media seems to be that they'll just ignore the problem, since it's Trump being Trump. The problem with this abdication of any responsibility to report the "big picture" is that the US, and the world, is now facing a situation where the leader of the biggest nuclear power in the world, and de facto operator of the world's financial system, is senile, paranoid, and declining rapidly, all while surrounded by sycophants and psychopaths. This situation is literally unprecedented. Roosevelt and Reagan were "out of it" at the end of their terms, but they weren't surrounded by a cabinet that may have well have been picked by Pol Pot, Idi Amin, and the grand dragon of the KKK. Furthermore, congress has revealed themselves to be utterly feckless and corrupt. This will end very poorly.
There was a good recent interview with Mark Dow in which he makes the following simple but telling point: The US treasury market is huge compared to the total gold market, so even a small outflow from treasuries into gold can cause a massive bump in the gold price.
For one thing so many working people are misled and misinformed by FOX, Sinclair, and other right-wing media. Racial/cultural/religious antagonism is used to distract and divide and the people who use hate and division now control the Congress, WH, and the Supreme Court.
But it is not only ordinary people who are misled but the very wealthiest people in our society. A good example is Ken Griffin. Very wealthy people and corporations fund the Heritage Foundation, Federalist Society, Alliance for Freedom, and so forth and these groups are taking control of the federal courts and federal government in order to take us back to the 1700's in terms of federal government, law, politics, society, and so forth.
They don't seem to understand that American society in 1780 was much different from society in 2025. In 1780, there were no corporations with giant factories or mines which put out pollutants. We have an EPA because we need it, but the right wants to get rid of the EPA. Does anyone want to breath dirty air and drink sewage?
People like Ken Griffin hated President Obama and called him a radical. But I always thought that President Obama was really a moderate republican. Obama was not going to stop people like Ken Griffin from making money, any more than Kamala Harris was.
Thanks to the Good Professor for his insightful messages.
What we have in people like Ken Griffin and others who support the Heritage Foundation, Federalist Society, and so forth, are people who are willing to destroy the country so that they can have low taxes and no regulations of business and industry.
What the Democrats don't understand is that the Supreme Court is just as much their adversary as Donald and MAGA are. The MAGA majority on the Supreme Court backs up Donald and Project 2025, the Heritage Foundation, Federalist Society, and so forth. Until the Democrats take on the Supreme Court they will not get anywhere.
Yes. Griffin moved his office and residence from Chicago to Florida near Trumpy because he and his financed Black republican candidate for governor were out-maneuvered by also-wealthy JB Pritzker, sitting democratic governor of Illinois, who financed the rural Trump republican candidate during the republican primary, diluting the republican vote, ensuring that Pritzker remained governor by the general election. Pritzker doesn't seem to have a problem with the higher taxes in Illinois, but Griffin did (as well as many others who probably head for The Villages down in FL, once retired from their highly-compensated union IL jobs as teachers and cops with top-notch pensions). Griffin claims he moved due to the high crime. I like how JB Pritzker stands up to Trump and apparently so do leaders of Hispanic organizations, I'm reading.
The goldbugs I know are all doomsday seers. Everything--EVERYTHING--is a sign of the impending collapse when gold will be the only thing of any value.
When Clinton was elected, buy gold because he's going to destroy the economy! When the economy boomed with dot-com fever, buy gold because it's not ephemeral like those stocks! When Bush was installed, buy gold because the Leftists are going to riot! When 9-11 happened, buy gold because it's global religious war! Obama won? Buy gold! Trump won? Buy gold! Biden won? Buy gold! Trump won again? Buy gold!
So I don't put much stock (ha-ha) in what the goldbugs are nattering on about today. Maybe this guy knows something . . . or maybe he's just the same ignoramus who supported Trump until he didn't.
That's an interesting point. As far as I'm concerned, the 'goldbugs' can have it all. If we are facing imminent collapse, I'm going to buy food, medical supplies, and potable water! Maybe a gun too, even though I hate guns.
MREs last ten years. If you have land, drilling a well might be a better idea than bottled water. Both diesel and gasoline have a safe life in the drum of two years before they start to degrade, so maybe a small steam engine would be a better source of power. If you buy a gun, keep in mind that a .22 will bring down most game in the US and is relatively quiet. That last item will reduce unwanted competition for your kills. Take training in how to hit what you aim at. Also invest in hand tools; that steam engine won't be much good if you don't have something to cut wood. If you plan to grow crops, buy heritage seed varieties; the varieties normally sold won't breed true. You can get much more info from survivalist publications.
I transferred my retirement savings away from the stock market earlier this year. I may have missed some peaks but overall I sleep much better. These morons are intent on crashing the economy.
Also, I closed my investment accounts with a Trump-admiring financial advisor. This was a very difficult decision because that same individual guided me through the gauntlet of having a dying spouse before the 'magic age' of 59.5 -- after which the rules for surviving spouses and their assets are quite different, but that's another long story. I could not stand hearing the assurances from this advisor that Trump 2.0 would be OK, and it made me seriously doubt his advice about everything.
What did you transfer to? As an example, I am gradually transitioning my investments from U.S. stocks to foreign stocks in the developed world. Am also cutting my investments in U.S. corporate and government bonds and transferring some to non-U.S. corporate and government bonds. In other words, I am trying to diversify against the risks of Trump\MAGA insanity. I have not purchased gold and have no plans to do so.
Kudos to you! I too sold my entire stake in the S&P 500 Index fund, as I got sick and tired of hearing about all the corrupt deals companies like Intel and Nvidia were agreeing to with the Trump administration. I am not a financial advisor, but I did want to pass along something my financial advisor told me which is that holding cash carries its own form of risk, in the form of inflation decreasing one's future purchasing power. Taking his advice to heart -- he's just as opposed to what Trump is doing to the economy as I am -- but resolved not to invest in stocks of companies that Trump is making these sweetheart deals with, I decided to start buying stocks and bonds in non-U.S. developed countries, thereby keeping my "cash at work" (his words) but quarantining the U.S. This is a gradual process and is nowhere near complete yet. But I hope if Trump is not removed from office to have removed myself entirely from the U.S. equity and debt markets by the end of 2025 or first quarter of 2026.
Cook and Apple will cave to Trump, just as surely as Nvidia and Intel have.
One of the newer entries to the S&P 500, Coinbase, was the subject of an SEC inquiry into fraud in the latter days of the Biden administration. Trump's SEC killed off that inquiry without resolving the underlying allegations. So, in my opinion, the S&P 500 now has at least one component that is possibly defrauding its investors.
Psychology. 5,000 years. Time. Gold. As I've hinted at in several other comments here, the 'value' of Gold is buried deep in the human psyche. History has shown -- repeatedly -- how easy it is for frail humans to debase and corrupt any economic system they invent. Even the founding fathers admitted to this -- they did the best they could.
Now, that system too is being (has been since the Reagan years) debased.
Yes, I hold paper in my pocket to buy groceries and keep the lights on but...
An ounce of Gold I bought 40 years ago would, then, have bought me a handsome bespoke suit on Saville Row. Guess what? That very same ounce buys that very same suit today!
A final irony: Now playing on PBS, the BBC series "The Gold" about the largest robbery in human history -- The Brinks-Mat gold heist of 26 million British pounds (3 tons of gold) in 1983.
So pathetic how these powerful financial institutions are switching to gold instead of, you know, calling the White House to tell them how stupid their economic policies are. Then they wouldn’t have to scramble into all these alternative investment strategies. American big business has been cowardly and pathetic under Trump.
The Billionaires who never missed a chance to scream about the "damage" Obama or Biden's (just to the right of Nixon's) economic policies were doing to the economy are now dead silent. The folks who howled about creeping socialism in the Inflation Reduction Act, utter not a peep as the administration extorts equity stakes in companies in return for tariff relief. These corporate "leaders" are gutless worms and vile hypocrites. In the future, when orange Mussolini is driven from office, these oligarchs should have zero say in the restructuring of the US economy.
Because they think that, if they remain supportive, he will cut them in on the grift. It’s always about the money.
Could not agree more with your post.
Voting with their feet. Not that the current White House would listen though one would think continued fall of the dollar and lower participation in Treasury auctions would set off alarms ... hmmm but they're not really keeping track these days.
What if the falling dollar is the desired outcome? Hasn't Professor Krugman said in the past that countries who hold debt in their own currency can always devalue said currency and thereby repay the debt with cheaper cudrrency?
trump & crew want weak dollar cuz then exports up & imports down. what they don't want is inflation up & demand down, aka stagflation, which is probably gonna be what they (& rest of us...) actually get
Here's the BBC's article on it. Note that most of the "institutions" investing in gold are not in the United States. https://www.bbc.com/news/articles/c8ex3wgjlexo?utm_source=firefox-newtab-en-us
Not all institutions. Since Russia invaded Ukraine, you could always see when the Russians sold gold and platinum in those futures markets and the ruble price. It has been a few months since such a sale. This boosts the price of gold and platinum. It means either a)the Russians have stabilized their finances or b) they've run out of abundant gold and platinum to sell. You can also see when the Russians sell oil to India by the plunging Indian rupee.
A classic example of 'be careful of what you wish for - you may get it'.
💯
They can make money either way so they don't really care. Their computer models just don't have to be very good to make money in a stable, growing economy. Chaos just makes it more difficult, not impossible.
Perhaps they tried but let’s face it, they are the ones who instigated this.
Are you actually surprised by that ??
I doubt if they’re selling. (And if they were, the price of gold would fall, right?) Nah, they’re just watching the price of their magic asset rise with glee, not understanding it’s barely liquid.
There’s not enough gold in those things for the market price to fall due to some coin collectors cashing in. And it’s not *that* illiquid, there are always places that buy gold (of course they take a fee, and those coins were sold at a premium back in the day, but I suppose it’s possible to still come out ahead when prices are this high).
LOL My Dad was a coin collector (but not a 'gold bug,' per se). The old $20 gold eagles are beautiful coins to hold and look at. But I do get some quiet satisfaction from the "easy marks" getting their payday.
Retail is not moving the price government reserves are. Since the seizure of Russias FX reserves no central bank can feel safe in US Treasury assets.
How sad is that? In a few short months, Trump and MAGA have destroyed the post-war system and pax Americana that had prevailed for 80 years since 1945.
Steve Bannon is just rolling in it.
Gold… Or some other effluent?
Both.
“ Follow the yellow brick road “
It ends in the Oval Office.
No, the inmates of the White House took all the bricks. It's a muddy cow track now.
Professor Krugman: Gawd, Guns and Gold, is the old saying. presumably, having a lot of gold is "good" for fleeing one country and relocating to another, where a person might set up house. (that's what i was always told.)
but gold is actually quite useless. can't eat it. it's really heavy, so can't carry much. lots of demented people want to steal it (why?) from the holder. and unless society has completely collapsed, how much might a loaf of bread possibly cost? an entire ingot?? the only thing that gold is useful for is pouring molten gold over the heads of greedy white male sex pests, in my opinion.
I don't know, but I been told
It's hard to run with the weight of gold.
Other hand, I've heard it said
It's just as hard with the weight of lead.
Speedway Boogie, The Grateful Dead
I won’t slave for bankers pay, likewise gold and jewels,
But I would slave to find a way to sink this ship of fools
wisdom of the ages
Rhymes, too!
So much wisdom in the Dead's lyrics. Is this govt Casey Jones?
They do seem to be getting a little ahead of themselves. The problem with stupid is it has trouble noticing when it overreaches.
He wrote "weight", not volume.
I'm also pretty sure he was referring to bullets (as in, hard to run when you've been shot).
Aside from its aesthetic qualities - when not grossly overused like Trumpkopf does - it's a great conductor.
Not as great as ordinary old copper or “the greatest” - silver (https://www.alfa-chemistry.com/resources/reference-table-of-elemental-electrical-conductivity.html).
Silver’s high electrical conductivity enabled its use in the Manhattan Project to replace scarce copper in the windings of electromagnets used in the separation of fissile U-235 from nonfissile U-238. The amount of silver “borrowed” from the US Treasury was large, 14,700 tons, but essentially all of it was returned after the war. See: https://www.osti.gov/opennet/manhattan-project-history/Places/OakRidge/oak-ridge-y12-silver.html
It took many years for it to be returned. I was told by people who worked there that the silver bus bars were still in use in the early 1960s.
Fewer concerns with corrosion too. No need to clad the bus bars, etc.
True, but together with silver and copper, it's one of the top three.
Well, there are occasional shortages, for one reason or another. One shortage in the '60s resulted in the use of aluminum wiring in houses. The early fixture designs resulted in quite a few house fires.
Tons of which is used in NYC rooftops.
And look at the price of silver
Useful for dentistry too. Though enamel is replacing it.
Ingots we trust
Thats a good one
"it's really heavy, so can't carry much."
Actually, gold is less heavy than US cash, regardless of denomination:
You'd need ~ 1.28 troy ounces of $100 notes to buy 1.0 troy ounce of gold, currently.
It's not useless. Gold is real money which has maintained its value over millennia. You can't debase it and you can't print it out of thin air, like governments do with their currencies.
With Trump now at the controls of the USA and our national debt at nearly $38 trillion and rapidly increasing, what happens next? That's what Krugman is saying above. That's why people are buying gold.
It seems the only logical way out of such an immense debt is to monetize it (quantitative easing) and to inflate it away, as has been happening of late. Or maybe Trump does something even wilder and more shocking, as he often tends to do.
Meaning, the value and purchasing power of the dollar will continue to decline. That's why you're seeing gold going up: people are trying to preserve their savings while central banks are diversifying away from the dollar for their reserves.
And if you look at gold's chart, you see how Trump 2.0 has accelerated all of this.
Gold isn’t real money. The only thing that is real money is what a society says is real money. If I was to hack into your bank account and rob you blind, there wouldn’t be a microgram of gold involved but you would be shit out of luck. The real reason people obsess about gold is because it’s shiny. That puts us on the level of crows.
Crows are actually pretty smart.
Unlike some people. Not a reference to you, by the way.
Real money has no counterparty risk. Gold has no counterparty risk. When a society is properly informed, it will agree.
Good luck with that. Per government CPI statistics, the purchasing power of the U.S. dollar has gone down nearly 90% since Nixon took it off the gold standard in August 1971... Gold meanwhile has gone up 115X since that time, while the stock market (S&P 500) has gone up 68X.
same can be said for dollars
Most investors don't actually have the metal. They buy certificates stating that they own gold kept in a "safe" location. There are also Gold ETFs available. Of course, someone planning to flee the country might be able to cash out their certificates in their new residence.
Yep...back in the day I invested in several hundred worth of pure silver dimes and quarters - those would be much more useful when the crunch comes LOL
Food is the best investment for a collapse of society.
Gold is very far from “quite useless.” Paul has debunked its use as a store of value, but gold (and its compounds) have many other important uses. One could debate its use in jewellery, of course, but most of these other uses are nontrivial.
“Gold - Other Applications”
https://en.wikipedia.org/wiki/Gold?wprov=sfti1#Other_applications
https://en.wikipedia.org/wiki/Edible_gold 😆
Gold having "inherent value" (whatever that is) is not really important, at least in modern times. What IS important is what type of money has little to no counterparty risk.
Even the Nazis knew not to mess with business conditions (excepting Jewish interests, of course). This regime is the stupid fascists.
The problem is, the rest of the country is more stupid. Otherwise I’d see Trumpian stupidity as a weakness to be exploited.
Recommended just for the title alone, a brilliant bon mot! The substance of this piece is also quite compelling. I read elsewhere that roughly 75% of the surge in demand for gold comes from foreign central banks seeking to up their reserves, and not from private or institutional investors. If that statistic is true, it would seem to offer support for Mr. Krugman's hypothesis (at least among foreign central bankers).
The world is losing faith in America? No disrespect, but... ya think?
And--sadly--about time.
I do not understand which point you are trying to make here.
Yup, that ship has already sailed
It's not just gold. Also silver.
Silver and gold are the traditional hedges against calamity.
And calamity is what we confront.
But at less than $50 an ounce (the price early 10/8/2025), silver doesn't make headlines.
Silver reached $50 an ounce in 1980 when the Hunt brothers attempted to corner the market. Silver hasn't reached that level since, which is why it's not drawing much attention.
But...the ratio of the price of gold to silver is higher than usual, leading many to believe that silver will rise in price fairly soon.
A number of trump voters appear to have buyers remorse.Their elected representatives don't seem concerned, though the problems with things like air traffic control do seem to require their attention.
I agree and they also exhibit Sunken Cost Fallacy thinking, not wanting to acknowledge that they put their faith and trust into a big loser. If only someone had warned them!!
I wonder what type of event it would take to overwhelm their Sunken Cost Fallacy position, which I do observe in the few MAGAs I know. I keep waiting . . .
We'll find out if they truly have buyers remorse in November of 2026. It may be our last chance. Trump will use the Federal government to suppress votes in Democratic areas. Voters need to be ready for this.
2025. The year of magical thinking. The chances of those elections even taking place (let alone providing an escape from this nightmare) are plummeting —if not gone. Unless you think installing armed forces into blue cities and that big military get-together last week are just normal, run of mill, nothing to see here folks kinda things every president does.
Yes, I feel that's the point of the troop incursions. It will escalate until all Blue States are under Marshall Law! I always vote by mail but not sure it will help...
TX Abbott will place the TX National Guard in Dallas & Harris (Houston) counties. In 2020, Abbott decreed "only one drop box" per county. See?? My county in Metro Denver has about 500,000 residents & has 248 drop boxes for mail-in ballots.
Harris County had ONE for 4,000,000 residents🤬
I saw Larry Sabato talking about this on TV yesterday and he is no flaming Leftist. We need to start talking about this so that everyone has a plan to make sure their vote is counted. We also need to expose what he and Project 2025 are up to.
Voigt is the one driving Project 2025 and he is scarily sane.
Sane? I’m not sure he’s actually a human being. He’s so defective he needs to be kept somewhere so he can’t hurt people. Trump, Vance, Noem, Hegseth, Bondi, Musk, Thiel… They’re not persons, they’re pathologies.
He's nuts, but he's smart.
In his recent talk to the rank & file at Norfolk, he said that the Democrats are "a tiny gnat on our shoulders" that we will "get rid of soon."
And he also falsely stated that the cities are ‘very unsafe places and we're going to straighten them out one by one, (adding that) it would be a major part for some of the people in this room’. Poor grammar aside, when dictators tell you something about their future plans for martial law, you should believe them.
That's what the NYT was saying for a couple years before the election.
I have zero faith in the 2026 elections being fair, or even happening at all.
There is ample reason for pessimism. I think it could democracy's last chance we need to give it all we can or our grandkids will have to try to regain it 40 or 50 years fron now.
Governments like China, India, Russia are holders and buyers of gold. Is this a way to ultimately crush the US dollars global dominance for trade and to effectively skirt around sanctions?
During the last big run-up of gold (in recent time) during the oil embargo against Iran,-it turned out that India was a big buyer of gold because the India govt was paying Iran for oil with gold.
India Traditionally Gold is known to be an asset since Millinium not because of recent hoarding by Central Bank recently as you think. Our Gold were kept in Safe Custody all these years abroad and now with fear of American Hegemony and Trump's Tariffs across (Megalomanic Trump forgets it is ultimately the Americans are going to pay for it) brought back and it is because the World lost it faith in USA due to their Hegemony and Domination attitude of World when 40-45% of Goods are supplied by 40% of Non American Manufacturers ..
Gone are the days of American Hegemony
Hi Sivaswami,
I completely get what you are saying about gold as an asset and American Hegemony. I happened to live in India for a number of years and then travel there for work. I love the country and am familiar with the traditions and views on gold. Having gold to protect the country's trade from US tariffs isn't a bad thing. The US along with some middle eastern countries have also had too much pricing power when it comes to oil. Wishing you well.
I'm not saying you're incorrect, but how did that exchange work in practice? Is there an Indian equivalent of the Federal Reserve Bank of New York where bank officials could simply move gold ingots from the India pile to the Iran pile upon delivery of Iranian oil?
That is a really good question. I am not sure but that was reported in 2012 and then in 2018 it was reported that India was using Rupees to buy Iranian oil. If you can transport oil, you can transport gold. I guess through Pakistan or Afghanistan. I would guess that Afghanistan was more likely. And yes, the India Reserve Bank works like the Fed. although their mandate may be different.
I would say the Indians got the better of that exchange, because you cannot eat gold but you can use refined oil to power farm equipment to raise crops to eat.
I assume the Iranians traded gold on the black market-let's say with Russia, to buy other things that they needed.
That would only make sense. Again, then, the Iranians would have gotten the better of that hypothetical exchange with the Russian Federation, since gold is for all intents and purposes useless.
Not quite as useless as bitcoin and other crypto flim-flams, mind you, because at least with gold one can make beautiful art and jewelry. In older times, gold was used for dental prosthetics also, although I think that has largely gone out of fashion in a day and age of dental implants and what-not.
But isn't gold the preferred building material of the Trump Administration?
Gold is used in electronics too.
It will be interesting to see how gold is used to mess up the dominance of the US dollar in global trade. I am not convinced that gold is useless. I am not a gold bug by any means but I think that gold is perceived by many countries as worth owning..
Putin’s dream: America destroys itself.
Everything Trump does is a gift to Putin. It’s the only theory with no holes. Or, to invert the logic; “If Trump were a true Russian agent, what would he be doing differently?”
If Trump were a true Russian agent he wouldn't be doing anywhere near the amount of damage to the US that he is currently doing. It would be too obvious and cause people to start asking questions. In addition, the Russians don't have the imagination to come up with some of the stunts Trump's pulled. Unleashing a drug addled Musk on the government, WTF. In truth, Putin and Xi are looking at the rapid process of self inflicted destruction of the US in wonder. They're actually probably worried, as a slow decline would be their preference. This is especially ironic for Putin. After the US collapses, as did the USSR, there's no way that an international coalition will be able to persuade the new confederate states to give up their nukes. The Ukraine example guarantees that won't happen.
“Cause people to start asking questions”? We have blown way past that scenario. And that doesn’t threaten them at all, judging by their continuing machinations.
But I do think Trump is just a Putin-loving useful idiot. This administration has a fair number of Russia-philes in it. Even Russian state TV refers to Tulsi Gabbard as an “asset”.
Trump himself doesn’t have the imagination to pull off the stunts you refer to. Trump is a useful idiot for many smarter determined fascists, including Miller and Vought - and even they are probably surprised that a figure like Trump became the vessel of their coup against the Constitution.
100% agree that Miller and Vought are running the show.
He’s not an actual Russian agent. But he clearly greatly admires Putin. Probably because he’d like to be an autocrat like him.
Trump's in a class by himself. An orange Dr Evil buffonery wise. He's well into senility now though, ready to pull a King Lear imitation handing the country over, to be destroyed, by the sycophants who best pander to him. There will be no Ophelia in this version, or poetry, only tragedy and madness.
He’s too far in senility to be useful asset to Russia now.
Yes, the assumption in the "mainstream" media seems to be that they'll just ignore the problem, since it's Trump being Trump. The problem with this abdication of any responsibility to report the "big picture" is that the US, and the world, is now facing a situation where the leader of the biggest nuclear power in the world, and de facto operator of the world's financial system, is senile, paranoid, and declining rapidly, all while surrounded by sycophants and psychopaths. This situation is literally unprecedented. Roosevelt and Reagan were "out of it" at the end of their terms, but they weren't surrounded by a cabinet that may have well have been picked by Pol Pot, Idi Amin, and the grand dragon of the KKK. Furthermore, congress has revealed themselves to be utterly feckless and corrupt. This will end very poorly.
100%
There was a good recent interview with Mark Dow in which he makes the following simple but telling point: The US treasury market is huge compared to the total gold market, so even a small outflow from treasuries into gold can cause a massive bump in the gold price.
Ditto the over 130 currencies around the world that are tiny in volume compared to the USD.
Why am I pessimistic about the future of America?
For one thing so many working people are misled and misinformed by FOX, Sinclair, and other right-wing media. Racial/cultural/religious antagonism is used to distract and divide and the people who use hate and division now control the Congress, WH, and the Supreme Court.
But it is not only ordinary people who are misled but the very wealthiest people in our society. A good example is Ken Griffin. Very wealthy people and corporations fund the Heritage Foundation, Federalist Society, Alliance for Freedom, and so forth and these groups are taking control of the federal courts and federal government in order to take us back to the 1700's in terms of federal government, law, politics, society, and so forth.
They don't seem to understand that American society in 1780 was much different from society in 2025. In 1780, there were no corporations with giant factories or mines which put out pollutants. We have an EPA because we need it, but the right wants to get rid of the EPA. Does anyone want to breath dirty air and drink sewage?
People like Ken Griffin hated President Obama and called him a radical. But I always thought that President Obama was really a moderate republican. Obama was not going to stop people like Ken Griffin from making money, any more than Kamala Harris was.
Thanks to the Good Professor for his insightful messages.
Best wishes and have a happy life.
What we have in people like Ken Griffin and others who support the Heritage Foundation, Federalist Society, and so forth, are people who are willing to destroy the country so that they can have low taxes and no regulations of business and industry.
What the Democrats don't understand is that the Supreme Court is just as much their adversary as Donald and MAGA are. The MAGA majority on the Supreme Court backs up Donald and Project 2025, the Heritage Foundation, Federalist Society, and so forth. Until the Democrats take on the Supreme Court they will not get anywhere.
Most people realize that SCOTUS is majority MAGA.
Yes. Griffin moved his office and residence from Chicago to Florida near Trumpy because he and his financed Black republican candidate for governor were out-maneuvered by also-wealthy JB Pritzker, sitting democratic governor of Illinois, who financed the rural Trump republican candidate during the republican primary, diluting the republican vote, ensuring that Pritzker remained governor by the general election. Pritzker doesn't seem to have a problem with the higher taxes in Illinois, but Griffin did (as well as many others who probably head for The Villages down in FL, once retired from their highly-compensated union IL jobs as teachers and cops with top-notch pensions). Griffin claims he moved due to the high crime. I like how JB Pritzker stands up to Trump and apparently so do leaders of Hispanic organizations, I'm reading.
Dear Prof Krugman,
I obviously agree with your point.
Let me try an answer…
Would I rather prefer a gold ingot or $1B Trump Casino fiches?
Elect a clown, get a circus.
The goldbugs I know are all doomsday seers. Everything--EVERYTHING--is a sign of the impending collapse when gold will be the only thing of any value.
When Clinton was elected, buy gold because he's going to destroy the economy! When the economy boomed with dot-com fever, buy gold because it's not ephemeral like those stocks! When Bush was installed, buy gold because the Leftists are going to riot! When 9-11 happened, buy gold because it's global religious war! Obama won? Buy gold! Trump won? Buy gold! Biden won? Buy gold! Trump won again? Buy gold!
So I don't put much stock (ha-ha) in what the goldbugs are nattering on about today. Maybe this guy knows something . . . or maybe he's just the same ignoramus who supported Trump until he didn't.
Gold has always served as a hedge against some sort of financial collapse. The thing of interest here is the rapid rate of change in the price.
That's an interesting point. As far as I'm concerned, the 'goldbugs' can have it all. If we are facing imminent collapse, I'm going to buy food, medical supplies, and potable water! Maybe a gun too, even though I hate guns.
MREs last ten years. If you have land, drilling a well might be a better idea than bottled water. Both diesel and gasoline have a safe life in the drum of two years before they start to degrade, so maybe a small steam engine would be a better source of power. If you buy a gun, keep in mind that a .22 will bring down most game in the US and is relatively quiet. That last item will reduce unwanted competition for your kills. Take training in how to hit what you aim at. Also invest in hand tools; that steam engine won't be much good if you don't have something to cut wood. If you plan to grow crops, buy heritage seed varieties; the varieties normally sold won't breed true. You can get much more info from survivalist publications.
Solar + batteries. Maybe propane for cooking, hot water and heat.
Thank you also, JF!
Thank you George! Very helpful information.
Oh, the goldbugs is know are also heavily armed.
Of course. The better to defend their hoard from the hordes! *see what I did there?*
Comedy gold!
Yep, I know those types too.
Who knew I’d get an education in economics late in life? But having always been a penny-pincher, I really enjoy your take on this topic, Paul.
Maureen Dowd level pun in the title. Well done.
I transferred my retirement savings away from the stock market earlier this year. I may have missed some peaks but overall I sleep much better. These morons are intent on crashing the economy.
Also, I closed my investment accounts with a Trump-admiring financial advisor. This was a very difficult decision because that same individual guided me through the gauntlet of having a dying spouse before the 'magic age' of 59.5 -- after which the rules for surviving spouses and their assets are quite different, but that's another long story. I could not stand hearing the assurances from this advisor that Trump 2.0 would be OK, and it made me seriously doubt his advice about everything.
Did you let him know why you fired him?
What did you transfer to? As an example, I am gradually transitioning my investments from U.S. stocks to foreign stocks in the developed world. Am also cutting my investments in U.S. corporate and government bonds and transferring some to non-U.S. corporate and government bonds. In other words, I am trying to diversify against the risks of Trump\MAGA insanity. I have not purchased gold and have no plans to do so.
My options in the company-sponsored investments are limited, but I sold everything in the S&P and I hold a lot more cash.
Kudos to you! I too sold my entire stake in the S&P 500 Index fund, as I got sick and tired of hearing about all the corrupt deals companies like Intel and Nvidia were agreeing to with the Trump administration. I am not a financial advisor, but I did want to pass along something my financial advisor told me which is that holding cash carries its own form of risk, in the form of inflation decreasing one's future purchasing power. Taking his advice to heart -- he's just as opposed to what Trump is doing to the economy as I am -- but resolved not to invest in stocks of companies that Trump is making these sweetheart deals with, I decided to start buying stocks and bonds in non-U.S. developed countries, thereby keeping my "cash at work" (his words) but quarantining the U.S. This is a gradual process and is nowhere near complete yet. But I hope if Trump is not removed from office to have removed myself entirely from the U.S. equity and debt markets by the end of 2025 or first quarter of 2026.
I still have a little bit of Apple but I will sell it because Tim Cook nauseates me.
Cook and Apple will cave to Trump, just as surely as Nvidia and Intel have.
One of the newer entries to the S&P 500, Coinbase, was the subject of an SEC inquiry into fraud in the latter days of the Biden administration. Trump's SEC killed off that inquiry without resolving the underlying allegations. So, in my opinion, the S&P 500 now has at least one component that is possibly defrauding its investors.
Ingot you Trump
(A golden bridge phrase!)
Psychology. 5,000 years. Time. Gold. As I've hinted at in several other comments here, the 'value' of Gold is buried deep in the human psyche. History has shown -- repeatedly -- how easy it is for frail humans to debase and corrupt any economic system they invent. Even the founding fathers admitted to this -- they did the best they could.
Now, that system too is being (has been since the Reagan years) debased.
Yes, I hold paper in my pocket to buy groceries and keep the lights on but...
An ounce of Gold I bought 40 years ago would, then, have bought me a handsome bespoke suit on Saville Row. Guess what? That very same ounce buys that very same suit today!
A final irony: Now playing on PBS, the BBC series "The Gold" about the largest robbery in human history -- The Brinks-Mat gold heist of 26 million British pounds (3 tons of gold) in 1983.