Macro Economic Drivers - Newspaper Summary

 The sources indicate that The Debasement Trade is the new buzzword in financial markets, reflecting the view that structural macroeconomic factors are driving the surge in gold. Key drivers supporting this trade include persistent inflation, unsustainable government fiscal spending, and elevated geopolitical tensions, leading investors and analysts to advocate for increased allocation to gold as the "safest money".

The sources provide the following details regarding Gold and its Macro Economic Drivers in the context of Financial & Market Analysis for October–November 2025:

The Debasement Trade and Structural Drivers

• Definition and Investor Sentiment: The term "The Debasement Trade" is prominent, with influential investors shifting views toward gold. Ray Dalio, founder of Bridgewater Associates, recently called gold the "safest money" and noted that current times are like the early 1970s, recommending investors hold more gold than usual. Morgan Stanley's CIO Mike Wilson also prefers a portfolio allocation of 20% to gold, calling it the "anti-fragile asset to own, rather than Treasuries".
• Monetary and Fiscal Drivers: The structural factors driving gold's surge are tied to money printing and economic uncertainty. In the current decade, gold's outperformance is largely driven by inflation sustaining above developed market central bank targets following post-Covid fiscal profligacy and ultra-loose central bank policies. The US Federal Reserve is seen as having failed in its monetary policies, similar to what occurred in the 1970s.
• Unsustainable Spending: The path of US government spending is deemed unsustainable, evidenced by a fiscal deficit of 6-7% when debt to GDP stands at 127%. For the current gold bull-run to end, governments and central banks would need to return to responsible actions like those seen in the 1980s (Paul Volcker/Ronald Reagan) or 1990s (Bill Clinton balancing the budget).
• Geopolitics: Geopolitics being at their "most uncomfortable levels" in the post-Cold War era is cited as a key factor pushing central banks in countries like China and Russia to increase their gold holdings.
• Performance Outlook: The sources view the significant year-to-date run-up in gold (53% in USD following 48% upside in 2024) as largely rational. The outlook remains rosy, and the case exists for gold to likely outperform equities over a two-to-three-year perspective, suggesting investors should consider increasing allocation to gold compared to equities.

Financial & Market Analysis (Week ending October 31, 2025)

• ETF Performance (as of Oct 31, 2025): Gold Exchange Traded Funds (ETFs) showed minimal weekly movement; the Axis Gold ETF was up 0.1%, while the HDFC Gold ETF showed a weekly change of -0.1%, and Angel One Gold ETF saw a -0.2% change. Historically, the HDFC Gold ETF showed strong long-term returns, reporting a 50.2% 1-year CAGR as of June 30, 2025.
• Commodity Futures Positioning (as of Oct 31, 2025): Despite the strong macro narrative, gold commodity futures showed signs of market weakness in the last week of October 2025:
  • GOLD (Dec 5 expiry) saw a -1.8% weekly price change, indicating a Short build-up.
  • GOLDGUINEA and GOLDM also recorded weekly price declines (-1.4% and -1.8%, respectively) and reflected a Short build-up in open interest.
  • GOLDPETAL saw a -1.6% weekly price change and a Short build-up.