So the government shut down at midnight last night. Cue the dramatic music, right? Wrong.
While everyone’s freaking out about locked Congress doors and potential travel delays, the markets are basically shrugging and saying “been there, done that.” And honestly? They’ve got a point.
Here’s the thing about government shutdowns: they’re like that friend who threatens to leave the party but never actually does. Since 1990, we’ve had six shutdowns, and guess what happened to the S&P 500? It went UP 1% on average. The 2018 shutdown? Markets jumped 5%. It’s almost like Wall Street has commitment issues with caring about political drama.
But while stocks are playing it cool, there’s one asset that’s absolutely crushing it right now: gold. And I mean CRUSHING it. We’re talking fresh all-time highs of $3,900 per ounce. Gold is basically doing victory laps around every other investment right now.
Now here’s where it gets interesting (and a little nerdy, but stick with me). When gold hits a new record high, what usually happens next? More records. It’s like that overachiever friend who can’t stop winning.
Since 1980, every time gold has hit a new peak, it’s kept climbing for the next two years. We’re talking 19% returns in year one and another 12% in year two. Compare that to stocks, which typically return about 10% after hitting new highs. Gold is basically showing off at this point.
Why is this happening? Well, it’s not just the shutdown drama (though that doesn’t hurt). Central banks are hoarding gold like it’s the last slice of pizza at a college party. They’re expected to buy 900 tons this year – double what they bought between 2016-2021. Even China’s been on a nine-month gold shopping spree.
And here’s the kicker: while America keeps having these budget showdowns every few months (seriously, we’re already looking at another one on November 21), other countries are getting tired of our financial soap opera. They’re diversifying away from dollars and into gold faster than you can say “debt ceiling.”
Now, I’m not saying gold is going to the moon tomorrow. It’s already up 34% since January, which is pretty impressive for something that’s supposed to be “boring.” There could be some profit-taking ahead – we already saw a little dip on Tuesday when people decided to cash in some chips.
But here’s the thing about uncertain times: it’s better to have some gold in your portfolio than to wish you did when things get really weird. Think of it as insurance for your investments – you hope you never need it, but you’re glad it’s there when your government decides to play chicken with the budget again.
The bottom line? While politicians are busy pointing fingers and making dramatic speeches, gold is quietly doing what it does best: being the ultimate “I told you so” investment. And with the way things are going, it might just keep having the last laugh.