How does a gold rush end?

Katie Martin (0:09)

Gold and silver have gone absolutely bananas. There's really no other term for it. These precious metals have been on the up for some time with some really big gains in price over 2025 But at the start of this year, kaboom. Proper old school rip your face off rallies. There just seems to be no limit to these things. Silver is now trading well above $100 an ounce. It jumped 12% or so just on Monday. And gold is well into the $5,000. If that all feels like too much too fast to you, then I'm minded to agree. But at the same time, you stand in the way of this thing at your peril. Today on the show, are precious metals close to the top? Or are we just getting going? This is Unhedged, the markets and finance podcast from the Financial Times. I'm Pushkin. I'm Katie Martin, a markets columnist at the FT in very soggy London, raining all the time. And I'm joined down the line from super chilly New York City by Mr. Robert Armstrong of the Unhedged newsletter. Rob, this sounds bad, but what are you wearing?

Robert Armstrong (1:22)

Well, it's funny. I am wearing a jacket and tie, but I'm also wearing hiking boots because of the snow, which may sound like an awkward combination. Were it not that, that had been made fashionable by one of the most fashionable men in the 20th century, Gianni Angelli, who famously wore hiking boots with a suit after he twisted his ankle skiing, and it became a fashionable thing to do because of that. So I'm just rocking that style today.

Katie Martin (1:51)

So Rob, since you said in September last year that you were short gold, it has doubled in price. So listeners, when we say this show is not investment advice, we mean it is not investment advice.

Robert Armstrong (2:09)

We ought to put up a plaque in the FT offices to how wrong I have been about gold. There ought to be like an interactive exhibit of how incredibly incorrect I have been about this asset. So, you know, I'm just, I don't know. Sometimes you get things wrong. I got this one as wrong as you can possibly get something wrong. The thing, Katie, is like, it's still a head scratcher for me. I still don't quite get it, but I'm starting to get it. I mean, there are there are arguments that I find a bit more convincing.

Katie Martin (2:45)

So let's get stuck in. And like, to a large extent, this is like a visual story. So if you're listening, pull up a chart, right, punch it into a search engine, and ask for like a gold chart, a silver chart, you will see what we're talking about. So scores on the doors are as follows. Gold had a good year last year. It was up 65%. That is a lot. So far this year, it's up another 16%, one six. So it's trading at about $5,100 an ounce. Silver, meanwhile, has been like really boring forever. It's basically traded at $20 to $30 an ounce for like forever. In 2025, it added 150%. So that's like serious money. But so far in 2026, and January is not even out yet as we record this, it's added another 50%.

It's well over $100 an ounce. It's about $111 an ounce last time I checked. This is not normal. Rob, to the extent that you are getting your head around this stuff, what do you think is going on here? Because you can paint your own adventure onto precious metals. What do you think is going on?

Robert Armstrong (3:58)

Can I just say what I think it isn't, Katie, as a way to start?

Katie Martin (4:02)

That's a good place to start.

Robert Armstrong (4:03)

It is not debasement. And debasement is not the lowest floor of your house. It is the idea that because governments are wildly indebted, they will ultimately be forced to print currency and devalue everything in order to get out of their debt problems. So you better own gold or silver or real estate or this or that. The problem with the debasement thesis is that there is no sign of it in the bond market. And if we were in a global panic about bonds, I think you would see something in the bond or the currency markets. And I just don't see it. I don't think that the fall in the dollar is actually that big a deal in historical terms. Market-based measures of future inflation are absolutely placid. Long bond yields are a little higher, but not much. You just don't see it.