Gold Keeps Rising As Nagging Worries Endure Over Debt, Dollar And Credit

Tom Burroughes

21 October 2025

Gold prices have pushed above $4,300 an ounce – surging by 58 per cent from 12 months’ before. As far as some analysts are concerned, this isn’t just a speculative rally or a reaction to specific worries. Assumptions about money are changing, an investment industry figure says.

Strikingly, gold is rising while equities have also risen, and this is unusual. The MSCI World Index of developed countries’ equities is up 15.7 per cent (in dollars, not including reinvested dividends).

“Gold’s rise…may be more than just a commodity story; it is a silent vote of no confidence in how modern finance is conducted,” Gary Dugan, CEO and founder of the Global CIO Office, said in a note yesterday. “When investors buy gold, they are not expecting a crisis, they are acknowledging the slow erosion of trust. The banking system is showing cracks, monetary policy is trapped between inflation and fragility, and fiscal restraint has all but disappeared. In such an environment, it is no wonder that gold – inert, ancient, and incorruptible – keeps attracting capital.”

A question is how much higher can the yellow metal go?

Dugan said the link between gold and the global money supply, or “M2 framework,” suggests that there is still “considerable upside.”

Central bank fiat money has expanded much faster than the underlying real economy, undermining purchasing power. With gold, it cannot be printed, he said.

“Were gold to align fully with the growth in global M2 since the early 2000s, its theoretical value could approach $11,000 an ounce, reflecting a ratio that is more akin to where we were in 1980,” Dugan continued. “That is not necessarily a forecast, but it does show how detached our monetary system has become from tangible value. With central banks creating unprecedented liquidity, governments locked into chronic deficits, and real yields still negative in much of the world, it would be surprising if gold did not continue to rise.”

The rally in gold during 2025 chimes with the idea that the metal is part of a "vibe shift" in assumptions about the monetary system since the global financial crisis of 2008. Several wealth managers such as UBS and Pictet in Switzerland, and DWS, have been positive on gold in recent months.

Gold’s rise has not been without hiccups. Comments by President Donald Trump late last week that US-China trade tensions were “unsustainable” triggered a selloff to gold and certain other precious metals.

Carsten Menke, head of next generation research at , said gold nevertheless has the most favourable fundamentals.” Gold benefits from a “strong mix of safe-haven demand and central bank buying, paired with the outlook for lower US interest rates and a weaker US dollar.”

“We see safe-haven demand as a cyclical factor which could become structural should the current concerns about the status of the US dollar and the independence of the US Federal Reserve be confirmed. Central-bank buying is a structural factor, reflecting the desire of emerging market countries to be less dependent on the US dollar as a reserve currency and – in an extreme case – less susceptible to US sanctions,” Menke said.

Old assumptions tested
Dugan also reflected on why gold is rising alongside equities – not a typical relationship.

“However, what makes gold’s current run so striking is that it has outperformed global equities by around 40 per cent per over the past year, one of the strongest relative performances in decades, yet equity markets have remained buoyant. It is a quiet but powerful rebellion on the part of equities. Evidence suggests that such outperformance has occurred only twice before in the modern era, and on both occasions, it coincided with equity market declines, not advances,” Dugan said.

Foundations in question
Dugan argued that gold is regaining its status as a measure of stability when monetary systems are stressed.

“While the companies at the heart of the current failures are relatively small, those at the receiving end are not. Jefferies and UBS, for instance, have both disclosed meaningful exposures within their private credit portfolios, suggesting that asset managers may have relaxed risk controls as the asset class enjoyed its bull run,” Dugan continued.

“A cluster of corporate bankruptcies, including Tricolor, a large sub-prime auto lender, and First Brands, has already resulted in notable write-downs across regional banks and investment houses. Fifth Third reported a $178 million charge tied to Tricolor’s collapse, while Zions Bancorp admitted to losses linked to fraudulent commercial loans. These are not isolated incidents; they expose weaknesses in underwriting and internal controls that were dulled by years of cheap liquidity,” he said. (This publication referred to these issues in this article.)

Dugan also noted that high-yield credit spreads have finally moved to discount less benign conditions in the future.