Gold. It’s — umm — shiny. I’ll say that for it.

Whenever I run out of material or when it’s, say, an under-attended Friday session in the middle of July, I like to fall back on my considerable repertoire of deliberately abrasive gold jokes.

What I enjoy most about picking on gold (there’s a prospector pun there, don’t miss it), is that even when I state, up front, that my sole purpose is to elicit irritable rejoinders, someone invariably takes the bait anyway. Maybe it’ll be different this time.

Anyway, gold’s no more intrinsically valuable than any other thing the supply of which is similarly finite. Its premium above and beyond the monetary value of similarly finite things is attributable solely to tradition, which is to say to man’s long-running fascination with “precious” metals. Gold’s a store of value because we decided it is. If you re-ran history a million times, there’s no guarantee gold would replicate its success in that regard even once, let alone in a majority of the 1 million iterations.

To the extent it remains a mostly uncorrelated asset, gold makes a lot of sense as a portfolio hedge which, in addition to my abiding faith in the notion that mankind will retain its ape-like fascination with shiny objects, is why I hold some of it. As an apocalypse hedge, gold’s a self-evidently ridiculous proposition. If you don’t know that, you’ll find out when you try to barter yours for scarce fuel and food after the world ends.

Here’s the thing, though: The value of fiat money’s an even more subjective phenomenon. It depends entirely on trust. As soon as people stop trusting the issuer, the value collapses. Within a social order, you can sustain the utility of fiat money by demanding that taxes be paid in it, but that becomes a very shaky, and highly combustible situation in the event that’s all the money’s good for.

As a government, you don’t want to get there — to the point where the only reason the public holds the currency is because they’re compelled, under threat of imprisonment, to pay taxes in it. Ideally, you want to build a trust network so strong that the money has value outside your own borders — i.e., it’s valuable to people who don’t pay taxes to you.

Right now, Donald Trump’s eroding trust in America at an astonishing pace, where that means at a rate I certainly didn’t anticipate, and I’m an incorrigible pessimist and a sharp critic of Trump’s. Now, it looks like his OMB chief might actually try to do what analysts and strategists spent the better part of Trump’s first term calmly explaining wasn’t possible: Remove the Fed Chair.

In the event Jerome Powell’s removed or forced to resign, the dollar could suffer a genuine crisis of confidence. If you think the budget deficit’s a problem for Treasurys and the dollar, that’s nothing compared to the impact of the trust deficit Trump would create by orchestrating Powell’s ouster and replacing him with a sycophant.

The figures below are a reminder that, as Deutsche Bank put it earlier this month, “the reassessment of US exceptionalism is real.”

The first half of 2025 was the worst H1 for the dollar since 1973 and the best for gold in nearly half a century.

If you’re like me, you’re inclined to fade those sorts of extreme moves. They tend to partially retrace in the near-term even if they ultimately resume because the fundamentals favor the trade.

Here — and notwithstanding my sarcastic disdain for gold — I think the fundamentals may well continue to favor the barbarous relic with no internal rate of return. The Trump administration’s on the verge of commandeering monetary policy at a time when the US is running up debt to fund a deficit that’s ballooning for no good reason. That’s a pretty challenging setup for the currency.

That said, I still vastly prefer equities over gold. I like to have a claim on something that isn’t an inert rock, and I like being paid regularly (even if those payouts are shrinking) for my trouble. But as anyone who’s ever lived in a nation where the currency experienced hyperinflation will tell you, record high local stock prices are no consolation in the face of a collapsing currency.

And now that you mention it, gold’s actually performed fine versus US stocks since 2000, as shown below.

“Gold remains the standout performer of the 21st century so far,” Deutsche Bank reminded investors. “It’s returned more than 11 times its value from end-1999, with the S&P 500 ‘only’ up 6.8 times.”

I’d note that US equities have experienced three very large drawdowns over that window (the dot-com bust, the GFC crash and the pandemic bear market). That’s not an attempt to explain away gold’s outperformance, it just feels like an obligatory footnote.

In the same slide deck, Deutsche Bank noted that “over the long run, virtually all commodities struggle to outperform inflation” but gold’s back near record highs in real terms after two straight years of escalatory gains.

Does this mean I’ll be loading up on gold in anticipation of a dollar collapse tied to Trump’s boundless penchant for risk-taking? No. No, I won’t. I’ll go down with the dollar ship precisely because if that ship is indeed sinking, gold’s not going to save us.