A new-ish gold rush and other indicators

Hi. Hello.

And Adrian Ma.

So we are here for our weekly Indicators of the Week segment. And before we get going, we wanted to welcome Adrienne back because you have been away from the show for the past few weeks. And, Adrienne, the floor is yours if you want to say hello and talk about why.

We're glad to have you back.

Yes, we are with you. And we are. It's really nice to be back in the booth.

Whew.

I don't think you have to be funny for, like, a long time.

No. There's no requirement to feel or act normal.

Goth Adrian.

Okay. Emo Adrian, we're here for it.

Waylon, kick us off with your indicator.

My indicator is 513. That is the number of lawmakers in Germany's lower house that voted to approve huge new defense spending plans. These plans, you guys are so big, they required a change in the Constitution to happen. Change in the Constitution requires a two thirds majority in the lower house. And these 513 votes, that was enough. It still has to be voted on by the upper house. But it looks like they will also approve.

They're changing the Constitution. Is that like an amendment here or is this a bigger deal than that?

Well, it is A pretty historic moment for Germany, I will say. The country's constitution has something called a debt break. That's B R a K E and it's a limit on borrowing. And what the lawmakers would a yes on was exempting most defense spending from this limit.

here unto your butts? There is talk of up to 1 trillion euros, which honestly a staggering amount. And this will go into military and infrastructure. Like part of these plans is a 500 billion euro fund to modernize hospitals, schools, roads, that kind of thing. A chunk of this fund will also go toward climate related spending. This is something that Germany's Green Party insisted on and the other two political parties, you know, they needed support from the Greens, as they're called, to get all of these votes.

Okay, Money for climate, for infrastructure, but also a lot, a lot of money for the military. Right. Because it seems like European defense is a very hot topic right now. Y' all have done a couple episodes on it.

We have.

Everybody indicator has done a couple episodes on it.

It's obviously a huge change to be talking about German rearmament. This is a very sensitive subject. The country, you might remember had to demilitarize after World War II and then it wasn't until the Cold war in the 50s that it is allowed to build up its military again and join NATO. But you know, we have war in Ukraine, we have nervousness about Russia's moves in Europe. We have rapidly deteriorating relationships between the US and its allies in Europe. So this vote in Germany fits into this bigger geopolitical shift we're seeing. And we'll have more on that in an episode next week.

That's exciting. I can't wait to learn more. Adrian, what do you got?

Yes, it seems pretty obvious we are in a trade war. There's all the back and forth of Mexico and Canada. There's tariffs on China, the European Union, Japan. And the White House is promising more to come.

Yeah. And like, if you have officials in the Trump administration saying, like, maybe we'll have a recession. Yeah. I mean, then you don't want to hire, you don't want to spend money, you don't want to buy a factory.

Well, Adrienne, speaking of business uncertainty rippling.

My indicator of the week, I'm pleased to announce, is 3,000. As in dollars, as in that's how much you'll need for one troy ounce of gold.

What's a troy ounce? I've never known. What a trout.

Me neither. I'm so glad you asked, because I did Google it. It is an ancient way from the middle ages that we measure precious metals. And supposedly it originates from Troyes, France. So I guess it could be a troy ounce. It is a little bit more than a normal ounce. It's 31.1 grams for a troy ounce versus 28.35 grams for a regular ounce.

That's very specific.

The price for gold per troy ounce has risen 14% this year alone.

That is like the opposite direction as the stock market, which has dropped, I think, like 10% this year.

Yes, it dropped 10% from its peak in February, although it has clawed some of that back. But as you know, and as Adrian just relayed, there is a lot of uncertainty, a lot of fear.

That's exactly right. And it just so happens that I saw this in real life the other day. So I was coming home from New York and I took a lift from the train station. And the guy who drove me, his name was David. Super nice guy. David, if you're listening. Hello. He asked what my job was. I told him. He was like, oh, so what do you think of this gold rush?

He just got it right down to business.

He did, because he is out there buying gold. And I'm paraphrasing, but he basically thinks that the world order has been upended. Is Being upended governments around the world in upheaval without exception. He wants a store of value. I think part of it is like gold is this traditional and trusted and, you know, ancient way of opting out of financial markets in a way, because even if you hold cash, you're still kind of playing in the arena because you got to pick which currency to hold.

No. Yeah.

It's not just David alone causing this surge. It is also central. Although I wish that for him it is also central banks. For years, and recently, investors have started outpacing central banks in their gold buying, which is remarkable. And this surprised me. The fact is, gold delivers. So since we left the gold standard in 1971, gold has somehow generated annual returns of more than 8%, according to the World Gold Council. That beats the bond market, commodities, emerging markets, cash, everything but US Stocks, which is salient right now because the picture for US Stocks is really changing. Investors cannot flee fast enough. A Bank of America survey this week showed that fund managers have cut their holdings of US equities by the most on record, by 40 percentage points.

40 percentage points. That is a wild bonus indicator you just brought us.

Thank you. Where that came from.

Well, Mary, thank you so much for joining us today. Always fun to have you.

Thank you for having me. It's always a delight to be here

and great to have you back, Adrian.

This episode was produced by Angel Carreras. It was engineered by Gilly Moon, who we will miss so much. Good luck at your new adventure, Gilly. It was fact checked by Sierra Juarez and edited by Kate Concannon. The indicators of production of NPR.