Gold Prices Top $4k for First Time | Hacker News Reader

Gold Prices Top $4k for First Time

wsj.com

115 pointsthm134 comments

Background: I’m a full-time rare coin dealer (and software engineer, which is why I’m here haha).

One of the fascinating things happening in this market is that there’s a massive disconnect between the spot price of gold ($4000), which is driven and set by massive trades and hedges on international commodities exchanges, and the supply and demand for actual physical gold - the kind that’s sold at Costco in bars or by the US mint in 1oz coins.

Since so much activity is driven by futures contracts online (without physical settlement), this disconnect means that the average consumer more or less is either holding physical gold they already have or selling physical gold they already have to cash out at these historic levels. There just aren’t a lot of regular people out there who are saying “yeah I want lots of gold at $4000/oz”.

So brick and mortar dealers are being flooded with gold in their shops these days, and the supply chain looks pretty wild - tons of that physical gold is going to refineries who are melting it down and shipping it off as physical collateral for the futures contracts - but the big buyers out there don’t actually want or need all this expensive physical gold. The price spike isn’t because all of a sudden there’s increased demand for physical gold - it’s just a financial instrument at this point that happens to have a physical counterpart.

None of this is to say there’s a problem with this - it’s just fascinating that net result of this huge spike is lots of jewelry and old coins being melted into bricks of gold that will sit quietly in secure warehouses and vaults around the world.

Isn’t it just inflation. As time passes there is more fiat in circulation, which means fiat is worth less, which means you need more fiat to buy the same amount of gold.

That’s certainly part of it (and the argument most gold bugs make as to why we should all be buying gold), but gold has gone up 133% in the last 3 years which is wayyyyy beyond inflation tracking.

Gold can be an asset. But the way it functions as a financial instrument is more like a short against fiat currency. That is, when inflation starts (or at least when it comes to peoples' attention), gold will move by more than the amount of inflation. When peoples' awareness of inflation goes down, gold goes down, even if inflation is still greater than zero.

Note well: This is my impression. I have not tested this hypothesis against historical data.

If Gold kept pace with inflation (roughly $35 an ounce in 1970 dollars) it would be ~$279.98 an ounce in 2025 dollars.

So inflation has almost nothing to do with the current price of gold and the grandparent post’s speculation about the futures market running hot is far more likely. The price of gold isn’t attached to the dollar and hasn’t been for over 50 years.

The retail price index probably understates the effect of inflation. The amount of gold to buy a house say has remained fairly constant over time.

I would like to see that chart because houses have also spiked significantly in price especially since 2008. That maintaining a consistent ratio would at least eliminate the dollar from the equation showing value not just dollars.

A quick sanity check of my own house would show that it would cost something like 75 ounces of gold. It was built in the 70’s and originally sold for 45,000, or well over 250 ounces of gold in gold prices from around then. Doesn’t seem right…

There's a chart here for the UK https://auronum.co.uk/gold-vs-bricks-how-many-ounces-you-nee...

It fluctuates a fair bit but starts and ends at ~150oz/house

And the US https://www.longtermtrends.net/real-estate-gold-ratio/

The other way to think about it is that the price of many other things may have gotten cheaper (in terms of labor/capital) at the same time as fiat inflation.

But how can you untangle an objective production price from the fiat / economy it's produced out of?

If that were the case, you'd expect scarce but still produced assets (e.g. housing) to have both increased in price (due to fiat inflation) and decreased in price (due to production technology efficiencies).

Which one dominates to what degree likely depends on the asset.

Inflation has been masked and understated for decades. Some of the inflation was concealed by getting rid of domestic production in favor of cheap imports. These chickens are coming home to roost.

The fed doesn't even publish M3 anymore (which is what tells us how much fiat there is in circulation). So we really don't know. We do know that as of 2020 America no longer uses fractional reserve banking. The collateral requirements for banks are now zero. There's more kinds of inflation than just M3 growth. There's also loss of faith in the dollar. Loss of creditworthiness of the USG. But most importantly, the loss of people willing and able to work. Gold measures all of them. The value proposition of treasuries is they pay yields which means you can extract surplus value from American labor. However with such a sickly aged population, it's more of a risk that Americans will exploit the dollar to fund their own retirements instead. Goldman Sachs said a month ago when gold was $3500 that if just 1% of treasury holders decide that a rock which doesn't do anything is a safer better investment than the American people, then gold is going to go to $5000.

There are also more economically active people in the world sharing (I assume) the same amount of gold.

It seems that way to me, plus Trump's erratic tariffs behavior specifically targeting swiss imports and gold specifically was in the spotlight - the US seems likely in a gold bubble partly from that chaos.

isn't this inflation?

> Isn’t it just inflation. As time passes there is more fiat in circulation, which means fiat is worth less, which means you need more fiat to buy the same amount of gold.

Gold was absolutely flat between 2012 and 2022:

* https://www.apmex.com/gold-price

but USD money supply was increasing during that decade:

* https://fred.stlouisfed.org/series/M2SL

See also flatness of gold prices from 1982 to 2002 with an increasing money supply. An older article:

> Sure, there were periods when gold was rising in tandem with the money supply, e.g. in the 1970s and 2000s. However, the yellow metal was in a bear market during the 1980s, 1990s and since 2011, despite the rising money supply (as indicated by the orange rectangles). The price of gold has fallen since 2011 by more than one-third, while the monetary base has increased by half and the M2 supply has risen by more than 25 percent.

* https://www.goldpriceforecast.com/explanations/gold-money-su...

There is little correlation between the two.

I think you may have misread "fiat" as "flat" :)

Hmm, even the kerning on my browser makes them look fairly similar.

F-I-A-T versus F-L-A-T

Hope this helps!

> I think you may have misread "fiat" [with-i] as "flat" [with-l] :)

I did not. The data I linked to shows that there is no historical, long-term correlation between M2 and gold prices.

I'm surprised that no one is mentioning the direct effect of petrodollar (or lack thereof).

The gold price drastic increase and USD worst decline is to be be expected, and it's mainly due to the end of petrodollar agreement discussed on HN last year [1]. Somehow the Nasdaq news link is dead now but the Firstpost news is a similar one [2]. The top comment is a golden example of denial (pardon the pun), "This is itself inconsequential" [3]. This can be another Dropbox comment moment of HN. The comment also predicted that "Things will keep running as today probably for the next 20 years", and here we are in just after a year.

The negative effect to USD due to the end of petrodollar is imminent and the writing is on the wall for the gold price to increase sharply when there is no more petrodollar.

[1] U.S.-Saudi petrodollar pact ends after 50 years (325 comments):

https://news.ycombinator.com/item?id=40673567

[2] What was the US-Saudi petrodollar deal that lapsed after 50 years?

https://www.firstpost.com/explainers/what-was-the-us-saudi-p...

[3] U.S.-Saudi petrodollar pact ends after 50 years (top comment):

https://news.ycombinator.com/item?id=40674911

> As time passes there is more fiat in circulation, which means fiat is worth less

This isn’t always true. For one thing, the amount of fiat in ‘circulation’ isn’t just a matter of “count up all the bills printed”, but is affected by how much leverage exists in the world and many other things.

Second, even how much a fiat dollar is worth is also a factor of how much productivity there is in the world. To understand what I mean, let’s imagine a super simple economy with only fiat dollars and wheat. Every dollar is only used to buy wheat.

Say there is $1000 in bills and 1000 pounds of wheat. Each dollar is worth 1 pound of wheat. Then, we print an extra $1000 in bills; that would be inflation, and now you can only buy 1/2 pound of wheat for a dollar. That is what people imagine when we talk about printing more money causes inflation.

But what if new technology gains means we are able to produce 4000 pounds of wheat for the same amount of work; now, each $1 can buy 2 pounds of wheat. Even though we printed more money, the economy grew even faster than we printed extra money, so we didn’t get inflation and instead prices went down.

Inflation is always (generally) about the ratio between currency production and economic output growth. You can’t just look at one side of the equation.

Of course it is inflation. Has all stocks in the world and all commodities in the world and all real estate in the world increased in price? Or is it the currency that has reduced in price.

Massive inflation has reduced the value of all currencies, giving the illusion that everything has gone up in price. Well everything except for salaries that is.

It's also the weakening of the dollar. If the dollar is 10% weaker, an international gold seller now needs 10% more dollars to be willing to give you their gold -- which means the "value" in dollar terms is 10% higher.

There's a simple counterpoint to your argument: there are places that were selling physical gold for $2000 a decade ago, that were selling it for $3000 back in 2024, and that are now selling it for $4000. I don't see any of them going out of business. Online, Apmex and dozens of others seem to be doing just fine.

So evidently, there is healthy retail demand for gold at these price points. Futures markets can get weird, but they're ultimately rooted in demand for commodities. I can't sell you futures on something that no one is willing to buy.

Oh for sure - APMEX is selling plenty of gold and they're doing great. But they buy gold too and ship it off to refiners just like any dealer. And yes there is plenty of demand for gold - but my only point is that demand right now is for Gold The Commodity (eg a hedge fund / government / etc.) who just want the financial instrument (that happens to be backed by physical bricks in a warehouse...they hope lol) as opposed to the retail buyer who wants gold the way they want Crypto or Pokemon cards.

For example, one dealer I know last month sold $5m in physical gold coins (to consumers who wants gold) but they bought $30m in physical gold coins to be shipped off and melted. They, like APMEX, make money on both sides so they're plenty happy. But a 6:1 buy:sell ratio is pretty wild.

It’s wild, but couldn’t we also explain this with a theory like “people have more trust in the institutions holding gold, and want better rates when they buy/sell?” Older generations seemed, to me at least, that they had some distrust in financial institutions, and maybe the newer gold buyers trust that their gold deposits work but don’t trust dollars or stocks as much.

Well gold is a healthy market and when there are opportunities for arbitrage people are happily taking them. There is not a disconnect if you can go to a physical dealer and get small margins on physical buying and selling compared to the spot price.

Surely it is a problem though, since jewelry is at least some kind of 'use' and since this speculation competes with use?

> it’s just fascinating that net result of this huge spike is lots of jewelry and old coins being melted into bricks of gold that will sit quietly in secure warehouses and vaults around the world.

The next logical step in that process would then be for the price to further increase as the actual amount in circulation decreases, right? Doesn't this create a sort of vicious cycle?

Technically the gold is still in circulation, it's just in contracts on the market instead of in people's closets. If anything, this move probably increases gold market liquidity.

At any time someone could take delivery on their futures contracts and receive a shipment of the gold from the warehouses it is stored at.

Your observations are also a bullish signal for Bitcoin, as it sort of functions as a "digital gold". Cheaper to transmit, cheaper to custody, basically instantly auditable/verifiable, as a financial instrument. No need to inspect, ship and melt down to store in warehouses.

I chose Costco over Coinbase, and I'm happy with my choice. I trust Costco.

That's great. I also enjoy taking custody of my data and property.

Bitcoin mostly follows the S&P 500 now. No one actually cares about the technical merits. If they did, it'd probably be worth nothing because it's worse than our current financial system in every way: slow, irreversible transactions on a public ledger.

And how does it compare to gold?

Gold is a shiny, tangible thing that doesn't require electricity and it doesn't put all your transactions on a public ledger. Oh, and it lasts basically forever plus it's malleable so you can get it down to quite small denominations.

Ah, so gold is a shiny rock that doesn't have a decentralized transmission network (the internet).

Mining and smelting gold requires quite a bit of electricity. But Bitcoin the network undoubtedly uses more.

As for small denominations, Bitcoin goes down to a single unit of Satoshi (1/100 millionth of a btc) and since its digital, subdivision is trivial.

So despite this, there are far more retail and commercial opportunities to exchange your btc for goods and services, where as I don't know of any place I can trade gold coins for things.

Gold is the best thing which has ever existed in the universe, mind your tongue.

Gold has the issue that you can mine a lot more of it. The supply of bitcoin is capped.

The supply of Gold is capped too, it's just further out.

The cynical question then becomes: what part of the market is bearing the security costs of all that gold being shipped around as collateral? That's a transaction friction that doesn't show up in a commodities trade balance sheet.

A creative thief (or, y'know, scriptwriter) must be thinking about how to exploit that disconnect. If it's never been a better time to "own" gold, but not to "hold" gold... then surely this is also the best time to steal gold?

You pay a premium for futures. If you can't accept delivery, then you must sell before the contract settles. That's essentially the price for holding the gold.

What's the mechanism for getting that premium into the hands of the person operating the gold fortress, though? I get that there's a loss in the market, I don't see the closed part of the loop. Derivative markets are only efficient if you assume that the friction costs are actually borne by an underlying market of real goods. And as the upthread comment points out, there really is no such market. No one is consuming gold (for PCB contacts or jewelry, which are almost the only applications) in anything like the amount being traded by speculators. So there's no entity that naturally bears that cost.

And I'm further supposing that in such a situation, the people who end up with the actual junk to be stored are probably going to find ways to cheat and store it poorly, in e.g. a warehouse and not a fortress.

Most of the gold market is “paper” gold, with the physical quantities being stored in a handful of large vaults around the world. The physical retail market is tiny compared to the massive paper market and the hoards of physical gold (owned by nations and large financial institutions) that sit in these vaults. I believe the operators are paid for storage.

Much of the gold in vaults doesn’t even move once it gets there, even through multiple successive owners. China takes physical ownership of its gold, though, so recently there has been a lot of gold moving overseas.

Germany and Italy have recently considered repatriating their physical gold, as they are no longer sure about leaving it in overseas vaults: https://www.ft.com/content/e39390cc-ea02-4197-843a-1e4c24242...

> I believe the operators are paid for storage.

Which is to say, you don't know either. What I'm saying is that this huge boom in gold value has not been matched by an equivalent change in gold storage paradigms. And that... probably has some bad externalities.

We actually saw this in the 1990's. Intel had built its business on the back of regular shipping practices, sending pallets of chips to a small list of electronics manufacturers as needed on commercial vehicles. But as the PC market matured and the parts became more easily liquidated on a global gray market, people suddenly realized that you could hijack a truckload of 486's and dump the multi-million-dollar cargo into Taiwan at almost no risk. And there was a rash of chip pirates for a while.

This smells similar.

I am fairly certain that large amounts of gold in transit have extremely high security, as do the major vaults. If you’re talking about theft risk, smaller gold businesses or the couriers that transport for them are probably most at risk as prices rise, as they may not have the scale and resources to deal with sudden changes in the risk environment. But as dollar value increases I’m sure that insurance will require a commensurate increase in security. Basically, robbing banks (or anything similar to a bank) is never a good idea.

It’s not like the quantity of gold available has increased. With China buying and repatriating large amounts of gold, the big secure vaults surely have more space than usual. Some retail gold traders are concerned about issues in the paper gold market, as the total dollars traded is much higher than the total amount in existence, but this concern is just a misunderstanding about how the futures market works. Even so, to me it seems more realistic to worry about some kind of shenanigans in this often opaque “paper gold” market than a sudden outbreak of gold piracy.

I highly doubt the rare coiners and Costco bars can move a market this big. This is also not a US-only thing; it's happening worldwide.

> but the big buyers out there don’t actually want or need all this expensive physical gold. The price spike isn’t because all of a sudden there’s increased demand for physical gold - it’s just a financial instrument at this point that happens to have a physical counterpart.

The reason is well understood: Central banks around the world are increasing their supply of Gold. In particular, the one in China: https://tradingeconomics.com/china/gold-reserves

And no, big buyers expect deliveries: https://www.ft.com/content/86a5fafd-603e-4ee1-9620-39b5f4465...

Here in Bangkok literally every gold shop is out of physical gold. I went and bought 80% of one shop that had some, and the rest got bought immediately by other customers. If there is sell pressure you would see Thai people line up at gold shops and dump their gold. It's one of the main investment instruments here and I don't hear of any wide spread selling.

I think whats happening is china is buying up all the physical supply in the global markets.

> the kind that’s sold at Costco in bars

Sorry, what? I don't shop at Costco because I don't really need anything in the volume they sell it at... but is this a real thing?

1oz bars IIRC, not like the bars you see in movies

Oh, yeah... that's definitely not what I had in mind lol. I don't own any gold, but I do have a single silver 1oz coin and imagining that in bar form only brings to mind Zoolander jokes.

https://www.costco.com/precious-metals.html

The only real use case for these is occasional chemistry usages.

But very very very very ignorant people still insist gold is some sort of useful store of value for the apocalypse or something.

People with large gold reserves in 1930s Germany did no better than any other Germans in an environment with failing fiat currency. Primarily because they were being put into camps and their gold was confiscated by a criminal regime.

I think some people like it for churning credit card bonuses, since you can buy it and then resell it for not that much less.

The way you hedge against collapse is with guns, mountain house, and medical supplies.

Then you provide protection, nourishment, and medicine to all the people in your community who have costco gold and jewelry.

> None of this is to say there’s a problem with this - it’s just fascinating that net result of this huge spike is lots of jewelry and old coins being melted into bricks of gold that will sit quietly in secure warehouses and vaults around the world.

Not really "around the world". There's been a huge influx of physical Gold from the rest of the world into the US this year. It kind of fucked over Switzerland, because the gold refining capacity of the world is really concentrated there. So they've been working 24/7 on the not particularly appealing business of importing gold in one size from London, re-casting it as bars of a different size, and exporting to the US.

And why is this a problem? Because this anomaly single-handedly made it look like Switzerland had a massive trade surplus with US, so they got punished for being the middle-man on the Gold exports with crushing tariffs on everything else.

> 1oz coins.

Amateurs:

* https://www.mint.ca/en/shop/coins/2025/lunar-year-of-the-hor...

* https://www.mint.ca/en/shop/coins/2025/heart-diamond-pure-go...

More 'pedestrian' items are available as well:

* https://www.mint.ca/en/shop/categories/gold

Whenever the ruling class is threatened, the first thing they do is force their own people to give up their gold.

- In 217 BC, to survive the Second Punic War after Cannae, Rome passed the Lex Oppia requiring citizens to surrender gold and jewelry to the state treasury.

- In 1307, to survive debts from the Flemish War, Philip IV of France arrested the Knights Templar and seized their treasury, disrupting credit networks used by merchants and pilgrims.

- In 1536, to survive the Great Matter (his divorce) and break with Rome, Henry VIII dissolved the monasteries in order to melt down their gold and silver chalices, crosses, and shrines.

- In 1666, to survive the Second Anglo-Dutch War costs, Charles II "borrowed" gold deposits from London goldsmiths through the Stop of the Exchequer and never returned them.

- In 1797, to survive the French Revolutionary Wars, Pitt the Younger demanded "voluntary" Loyalty Loan gold contributions from British citizens, backed by threat of forced requisition.

- In 1917, to survive WWI and the October Revolution, Lenin's Decree on Gold confiscated all gold coins, bullion, and objects from "non-working classes."

- In 1933, to survive the Great Depression banking crisis, FDR signed Executive Order 6102 requiring all Americans to give up their gold.

- In 1934, to survive monetary reform, the Gold Reserve Act let the US Treasury profit $2.8 billion by revaluing confiscated gold from $20.67 to $35/oz (basically stealing 41% of the value)

- In 1959, to survive the US trade embargo, Castro's Revolutionary Government Law 851 seized all private gold holdings in Cuba, including jewelry and coins.

- In 1966, to survive foreign exchange crisis, India's Gold Control Act under Indira Gandhi banned private gold ownership above tiny amounts, forcing surrender to the state.

It's a wonder of our modern age that this classic form of expropriation is now happening through voluntary means: high paper prices drawing physical gold from millions of small holders into the vaults of institutions, without any guns, goons, or executive orders required.

You have ommited many other occurences I know of - in Roman Republic, Venice Republic etc. Most of these republics were oligarchic in nature and charged richest citizen substantial extra tax when in need or in danger. Roof tax in Rome is one example.

Upper classes paying for unusual/emergency expenses of the state. Unthinkable now.

Some notable examples, and likely many others exist throughout history.

Retail does not have the financial power to move any large market. The responsible parties, in either direction are institutional buyers. So your final point is worth consideration. Could it simply be diversification from US Treasuries? Or are there other geopolitical factors?

Yes that's a big part of it. Goldman said last month (when gold was at $3500):

> “We estimate that if 1% of the privately owned US Treasury market were to flow into gold, the gold price would rise to nearly $5,000 an ounce, assuming everything else constant,” the analysts said. “As a result, gold remains our highest-conviction long recommendation in the commodities space.” https://archive.is/2WjSc#selection-1491.0-1494.0

In terms of geopolitics, a lot of the demand has been driven by Asia, such as the Reserve Bank of India. The end of the petrodollar pact with Arabia hurt. https://archive.is/t2Ttm When USD went off the gold standard, that pact gave it oil as a leg to stand on. Now that's gone as of 2024. In 2020 the fractional reserve requirements for banks went to zero too. The only thing that gives the USD value is a faith in the American people, which is aged population that flouts its fiduciary duty to debt holders by debasing everyone's currency to fund their own retirements.

Four things are happening (and one of them is gold) that make a terrifying situation.

Facts:

- Gold has reached all time highs

- US debt (ie T-bills) selling at all time lows

- US equities are at all time highs

- USD falling day over day, month over month, year over year

All 4 of those facts cannot remain true indefinitely. The all time high equity prices are because it requires more USD(which is decreasing in value) to purchase them. Gold is at all time highs because USD is decreasing in value, and the flight to safety leads people to gold. US debt is falling in value because no one wants to buy it. At some point, equities will give up and crash, or gold will have to crash....and I don't think it's going to be gold crashing.

edit: formatting

In such a climate, what could be good less-risky strategies for holding reserves?

Cash in the bank so you can buy equities at the bottom.

How do in know when that would be?

Well that's the trick isn't it.

Just catch the falling knife and avoid the dead cat bounce

You don’t.

> Cash in the bank so you can buy equities at the bottom.

Cash is a good way to lose money through opportunity cost:

* https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-co...

If you're worried about risk and being able to sleep at night, you can dial back from 100% equities (S&P 500, Russell 3000), and do some bonds. Vanguard (e.g.) has funds that are fixed 80/20, 60/40:

* https://investor.vanguard.com/investment-products/mutual-fun...

This way you don't have to go through the effort of rebalancing yourself.

Or a mixture of cash and gold or another hard asset / inflation hedge considering the US dollar already eroded 10% this year and Trump openly wants the dollar to devalue further.

> Cash in the bank so you can buy equities at the bottom.

JFC, this is the dumbest possible advice given this thread.

If someone thinks equities are overpriced and one thinks the value of USD is decreasing, then 'cash in the bank' is an equally bad answer to 'buy equities now'.

The correct answer, given those beliefs, is 'buy commodities' (or scarce assets).

And sell some puts against assets at good prices to harvest premium in the meantime

Not following your logic here.

The thought seems to be that prices of everything are high, because the dollar itself has lost value. Makes sense. The conclusion then being a crash. But why? If the dollar is worth less and stops devaluing so badly, we'd just expect a stop in growth rather than a crash. Or are you projecting a strengthening of the dollar rather than just stabilization?

https://en.wikipedia.org/wiki/Weimar_Republic#Economic_probl...

I'm still not sure why anyone is surprised by a devaluing of the dollar -- that's literally what the monetary kooks in the current US administration are on record as wanting to cause.*

Thought process goes: (1) devalue dollar, (2a) make basic US industry more globally competitive, (2b) devalue US debt to "solve" it without having to implement austerity, (3) stronger US industry

Given that equity nominal values (read: future profits) will grow (to balance out the decreasing fiat value), purchasing power / wealth holds something close to constant and market numbers go up (which keeps voters from becoming unruly).

The only people who really get fucked are (a) people who aren't invested in the stock market (read: poor), (b) fixed income folks (read: retirees who will be dead before it fully plays out), and (maybe c) labor (if wage growth doesn't keep pace with purchasing power loss).

It's not the worst economic-political plan, other than the fact that no one is being honest with the public about it and some idiot ALSO picked the same time to drastically decrease the domestic labor supply (by sharply decreasing immigration and mildly increasing deportations) and increase tariffs. Both of which make completely offshoring labor more attractive.

* See also why Trump has such a bug up his ass about the Fed, as this becomes a lot harder if they don't play ball. Say, by following their mandate to fight inflation...

Your theory fails to explain why equity prices have to crash.

Was that sarcastic?

Equities can melt up in real terms for a very long period of time, there doesn’t have to be a return to normalcy within in our lifetimes, though I do predict there will be an economic calamity within my lifetime.

The main issue is how will asset prices be maintained when civil unrest makes securing physical assets so expensive that they can no longer yield positive returns. Until then the system is stable as the people with power are able to retain power, the increasing inequality helps intrench the power further.

People see a wealth tax as a way out, but if that happens the state is entirely dependent on the growing the wealth of the mega rich and will act in their interest in effect cementing their power even further.

> but if that happens the state is entirely dependent on the growing the wealth of the mega rich and will act in their interest in effect cementing their power even further.

This is a laughable premise.

A huge amount of government revenue has always come from the wealthy, yet there is consistent pressure to reduce their taxes in the US government. Why? Because the IRS doesn't run the US government, politicians do. Why would a wealth tax based government be any less likely to try and reduce their tax burden?

A rich person's power comes from being rich: From controlling significant resources, things like communication channels, important industry, bribes/kickbacks/whatever you call them

It has nothing to do with government revenue.

I didn’t suggest that the wealthy would want their taxes increased, but that it would increase inequality that would benefit the wealthy.

That said there are many billionaires who advocate for greater taxes, Patriotic Millionaires and Proud to Pay more. Including but not limited to Warren Buffet, Bill Gates, George Soros, and Abigale Disney. Bill Gates, as an example, goes to incredible lengths and uses shady Caribbean methods to minimize the tax he pays.

It’s important to make a distinction of weighting the wealthy by numbers vs wealthy by wealth, the higher the inequality the bigger the difference. The wealth is dominated by an increasingly small minority.

I’m making a prediction of what I strongly believe will happen, not what has happened. There are examples in history where there were unexpected emergent behaviors created out of perverse incentives. One of my favorite is the selling of indulgences by the Catholic Church to pay for St Paul’s cathedral, meant the Catholic Church made more money if people sinned more, which created some problems.

I think they have to, but I agree completely. I don't think it follows from this particular argument.

Instead I think the only argument that matters is that P/E ratios are really high even though interest rates are high and you can see that it's hard to justify the equity prices using present value of dividends and that sort of thing.

Equities don't have to crash. Also gold has no yield. Companies continually produce stuff and a weak dollar generally makes their bottom line better.

> US debt (ie T-bills) selling at all time lows

Debt selling at lower market prices is equivalent to higher interest rates. Peak interest rates for US debt where around 1980, not now.

It all started making more sense to me once I heard Brent Johnson's Milkshake Theory (and understood his point) [1].

[1] https://www.youtube.com/watch?v=da6hMy5sp1M

Watching that video with a couple year's hindsight and cracks are starting to show. The rest of the world is slowly getting rid of their dollars and his points about the international stock market are no longer as valid. International indexes are beating the US market right now.

You should add the introduction/print of trillions of usd into the global economy during the pandemic crisis into your equation. That itself means that prices will increase as the total supply of available USD is greater and can lead to newer standards that don't make sense when not taken into consideration.

> The all time high equity prices are because it requires more USD(which is decreasing in value) to purchase them.

The inflation-adjusted price of equities is still near all time highs. See the Shiller PE Ratio. [0]

[0] https://www.multpl.com/shiller-pe

> Gold has reached all time highs

this is true

> US debt (ie T-bills) selling at all time lows

this is not true unless you’re doing some kind of adjustment. For t bills, us03m yields were much higher 30-40 years ago.

> US equities are at all time highs

this is true

> USD falling day over day, month over month, year over year

if falling means inflation, yes in banal way. If falling means relative to other currencies, that’s the last 9 months or so. Previously the USD was quite strong

> US debt is falling in value because no one wants to buy it

this appears to be the hinge of the argument? It is not true. 10y yields have been down / flat since beginning of 2025 (i.e., price up). also tsy auctions remain well-subscribed / within historical range

If it doesn't crash due to these factors, IMO Boomers aging and dying will crash the economy due to the outsized share of wealth they have locked up. They're going to cash it out as they incur more and more health/assisted living costs. Whatever is left will be sold immediately by their heirs to pay off debts or other forms of spending. I also have a theory that Boomer spending right now is the only thing keeping a lot of business in the black, especially higher end services, food, and tourism.

It's borne out in numbers. [0]

All of inflation-adjusted US spending growth has come from those in the top 20% income bracket ($175k+) and especially the top 3.3%.

So not Boomer spending, but wealthy spending. (Which overlaps but isn't completely the same thing)

[0] https://fortune.com/2025/09/17/economy-reliant-on-wealthy-co...

Dosen't the US have the largest gold reserves?

allegedly

A buddy of mine is retired and managing his own investments, and he's a reasonably savvy investor. He has some guys he follows and like 2.5 years ago they were all predicting the market would crash in the next 3-6 months. We have lunch every 2-3 weeks, and we've been holding their feet to the fire, "Still hasn't crashed". (Not saying it won't, it "feels" over-hot).

I just moved my son's "kid retirement plan" (giving him matching and compounding interest, he can access it at 18) into a custodial account, and put his money into a few stocks and ETFs (including PHYS, a gold ETF). So far in the last week it has gained $140 on $940 investment. I've warned him: This is fun to see these gains, but we can't expect it to always happen, we just need to protect our gains by using stops.

I also had him pick a stock that is something he likes and thinks will go somewhere. He picked Roblox. My FIL had given me the advice to take a little bit of your money, "pocket change", and invest in something you like, to keep it fun. My first investment following that advice went from $7K to $200K, so I was a big fan of that. ;-)

> All 4 of those facts cannot remain true indefinitely.

Why? Is it some law of nature that the USD can't itself crash. It would then be sensible investment to buy both Gold and Equities. I sometimes wonder if we are seeing the USD unfolds on the equities and commodities market before it does for food and transport.

It might also have something to do with Project 2025. There's a plan to return the US to the gold standard.

> All 4 of those facts cannot remain true indefinitely.

What is the root cause of all of this? BRICS has an alternative to SWIFT (not identically but functionally).

If you feel that the multipolar world is a fad, sure, gold will come down. I somehow doubt it.

In a sense, it is not surprising. The surprising part is the apparent overall yawn from.. well, everyone. One could easily argue that the current situation is, to put it mildly, problematic. And I am not just talking fiscal, or financial, or geopolitical. It is somehow all of these and yet, due to some interesting level of crisis fatiue, most are shrugging it off. 4k seems high, but it merely reflects current perpcetions and still does not crazy. My pet theory is that.. there is no safe haven this time so money is all over the place.

edit: I am mostly in bonds with some gambles here and there, but that was my position since the begining of this year.

The fatigue is that everyone keeps telling everyone will crash and it cannot last, for a what, a decade now? But especially the last few years. And then it just doesn't happen. Crypto will crash, gold cannot last, S&P is overheated etc and yet everything I have and other people have is going straight up. It has to go down, but at least when people said in 1998 a bubble is coming and will crash, it only took 2-3 years for it to blow up. Now it just goes and goes and goes. I think that gives fatique. I am spread, including local real estate and companies, but I missed a lot of money listening to people (and my own feelings) to think we were too high. Everything has to actually crash very hard to still not make a good profit and that it won't, at least not when we don't see it coming.

That is fair. I think you are onto something. I did miss out on some things as well, because I played very conservatively ( and at this point I am not that willing to change much ). Still, my own house appreciated a ridiculous amount. I see other assets appreciate as well ( just not as dramatically ).. I don't know how it can stay at these levels without some major re-alignment.

I think this is overall fair/accurate in terms of crash fatigue, but crypto has crashed by 85+% multiple times in the last decade. I'm not sure that's the best proof point in this list of things that don't actually happen.

I am not fan of crypto and dont hold any, not by reference (etfs etc) either, however, all the crypto fans that told me to buy and hodl did win the jackpot so far. But I agree, not the best example for not crashing: I was just, in the particular case of crypto, referring to that many believe(d) it would drop to 0 and dissappear: in case of bitcoin: did not come close in the past 10 years.

there are always people predicting the next crash. when in the bottom of a crash they are saying things will go lower.

you have to be careful about predictions in financial areas.

Remember if people are guarenteed right they would be investing money. In most cases talking about a truth will cause the market to change harming your ability to capitalize on it. Thus anyone talking is unlikely to have insight.

I guess what's happening ever since the housing market bust is that virtually all asset classes are guaranteed to appreciate at rates that outpace inflation, a guarantee paid for largely by workers whose real wages decrease due to inflation.

You would think "that can't go on forever" but so far workers have failed to organize or support reforms that could correct it. The "hack" to maintain this in perpetuity seems to be distracting workers with get rich quick gambling schemes and culture war xenophobia.

Gold price in 1973 was around $60, so if your thesis is that "something must happen", it might be worth asking why the same thing didn't happen when it crossed $200, $500, $1000, $2000, or $3000.

Actually things did happen in 2001 (9-11), 2008 (GFC), 2012-2015 (Eurozone crisis), 2020 (Covid) and 2022 (Russio-Nato war).

Each of these came very close for a major market depression (except 911).

The fact that none did only instilled in lots of people's brain to take an incremental bit more insurance in the form of gold (if you were to replay Covid or GFC today, what odds do you put that it won't lead to a great depression?)

Also you can argue that the gradual rise is tracking almost exactly the gradual geopolitical paradigm shift from unipolarity to multipolrity.

nothing ever happens

Gold's price is only half the story here. The other half of the story is the value of US debt and US currency(USD). When they move in opposite directions - historically - /one/ of those instruments crashes. Choosing a side and putting your money behind it is dangerous, but also lucrative.

Gold's price is of course increasing equally in all currencies in the world, not only USD.

I always wonder why gold going this high is seen as bearish to the dollar as the US currently holds 8,133.46 metric tons of gold, more than the next three top holders combined (Germany, France and Italy) and almost twice as much as China and Russia combined (although no one really knows how much China holds).

So I would be far more concerned on the impact of gold price going high on other currencies that are not backed by as much gold before worrying about the US.

The US dollar is in no way, shape, or form backed by gold.

I know, my point is that it is not directly backed by gold, but indirectly you can make the point there astronomical gold reserve comes into play if gold prices go insanely high.

The US GDP in 2024 was 30+ trillion. A single trillion in gold (8133t) is not an astronomical amount of gold, even though it's more than any other owner. In fact, all the gold ever mined is only ~220000 tonnes, so US GDP is higher than all the gold above ground at $4000/oz troy.

The risk to the dollar is a flight to gold causing an decrease in interest of buyers purchasing treasuries, resulting in higher rates paid to buyers of this debt. To give a sense of scale the US issues something like 1-2 Trillion in new treasuries a year, which is roughly the value of all 8,133.46 tons if sold at current market price.

For example a 2% increase in rate on 1T in 30Y treasury issuance over 30 years is $600B.

Someone tell the 24 hour news channels to change the ads from "We sell gold" to the "Have gold laying around the house? We buy it".

It was done during the pandemic, you gotta let people resupply!

I know little about monetary policy, so this is a genuine question. What’s the non-kooky explanation for why there was a big economic divergence between income and productivity in the U.S. that appears to have started at the same time as the U.S. ended the convertibility of dollars to gold. https://wtfhappenedin1971.com/

You already wrote the answer in your question, but for some reason believe it kooky.

Silver too is also at an interesting nearly $50 for an ounce. It was in the $20 range not that long ago.

But in 2011 and 1979 it was at this level

1979 was because someone cornered the market. Silver fell then when they got a $1 billion margin call. So, that one isn't really comparable (unless something similar is going on now, which would be interesting if anyone has evidence.)

Curious how this is affecting jewelers. Was blown away at how expensive gold earrings have gotten.

Gold hits all time high (goldprice.org)

https://news.ycombinator.com/item?id=45417805

(7 days ago, 88 points, 134 comments)

Time to dump VTI?

it depends on your investment horizon - if you don't expect to cash in any time soon you can just sit this one out, and historically it should get better over time (with some opportunities in the meantime).

Gold has historically underperformed VTI badly. This might just be a small blip. Who knows.

Why? VTI has been hitting ATH since July.

Almost everything is performing well right now, which is why I don't think this is news, particularly.

Tony, Parker and Rick are going to do real well this season...hehehe....

Reminder for anyone outside of the country or not paying attention: there is a non-zero chance that the leader is following a project 25 plan which necessarily involves intentional economic failure to create the necessary conditions for an authoritarian state. Some of the theorization around this desired state of affairs involves possible structural changes to USD or national debt.

It seems like defaulting on the national debt will create the conditions needed to cancel the election at the very least

I've been long on gold since Trump started going crazy with tariffs. You can't tax imports without having its effects percolate throughout the economy eventually. I'm also reacting to what I think is a growing AI asset bubble that will pop at some point (it's not a question of if but when).

Most of my savings was in SPX (S&P 500 ETF), but over the course of the year I've been progressively exchanging more of it for GLD (ETF).

It's been a good strategy for me so far.

> I've been progressively exchanging

Is there a way for a small individual investor to "exchange" shares in stock without doing a "sell A + buy B" for which the sale of A is subject to capital gains tax?

Some cursory googling points me to "exchange funds", but those seem to be designed for accredited investors.

The advice I see for someone like me who wants to "re-balance" is just to change allocations for any new investments, but I'm wondering if there's an effective way to shift existing allocations without incurring a tax penalty...

Most small investors have money only in retirement accounts which don't pay taxes. Now you should mostly not play with that money (just put in good funds which rebalance for you) but taking 5% to play is fine. Just don't lose it all and then take another 5% until it is gone.

outside of that just rebalance only every other year is your best plan - but it means only buying things you can hold that long.

No and that's probably a big reason why a lot of folks are not selling. Why incur a 23.8% tax based on.. feelings?

Either tax-deferred account or tax loss harvesting.

Bitcoin all time high this week also

I am skeptical about the price action of bitcoin due to the influence of a certain michael saylor.

Reply on news.ycombinator.com