100 Days In: Trump’s ‘Strategic Uncertainty’ on Tariffs Leaves Markets Guessing

Research by Duke University’s Campbell Harvey and former TCW manager Claude Erb suggests gold’s current rally may be setting up investors for disappointment. Their analysis shows gold’s price-to-CPI ratio is now at 9-to-1, even higher than the 7-to-1 ratio that preceded gold’s 50% price drop after 2012. The researchers challenge two popular arguments for gold investment: its effectiveness as an inflation hedge and its role as protection against geopolitical risks. While gold has outperformed inflation for the past 20 years, the study found that gold only maintains its purchasing power over very long periods – perhaps a century – and

Markets are grappling with renewed stagflation fears as stubborn 3% inflation combines with concerns over President Trump’s aggressive trade policies. While investors remain generally optimistic about Trump’s pro-growth agenda, a Bank of America survey shows fund manager worry about stagflation has reached a seven-month high. The threat of new tariffs on autos, semiconductors, and pharmaceuticals, along with existing trade measures, could simultaneously slow growth and fuel inflation, creating conditions reminiscent of the 1970s economic challenge.

JP Morgan forecasts gold prices will reach $3000 per ounce in 2025, driven primarily by continued central bank purchases and ETF inflows. Following a 27% rally in 2024, the outlook remains strong with central bank buying up 54% year-over-year in late 2024, including renewed purchasing by China’s central bank. The bank identifies two scenarios – either increased trade tensions and inflation, or a Federal Reserve easing cycle – both of which could push gold prices higher. Adding to the bullish outlook, JP Morgan notes that with over $6 trillion currently in money market funds and ETF holdings 6% below 2020