Gold After Midterms

Elena ReyesYour savings balance can stay exactly the same for a year, and you can still end up able to buy less with it. That gap between the number in the account and what it actually buys is on a lot of minds this week. I'm Elena Reyes, and this is Outside the Dollar from Lear Capital. Inflation, central banks buying gold, and gold's rebound after the midterms all raise the same question about the dollar and long-term purchasing power. We'll take five stories in order: a warning from the Fed, what Goldman Sachs says about gold, central bank buying, a recognition from the New York Post for Lear Capital, and then our feature on gold after the vote. So let's start with a warning from the Fed. Federal Reserve Chair Kevin Warsh is warning that inflation remains above the Fed's target. The Fed's focus here is price stability. That's the job, keeping prices from climbing faster than the central bank wants. And when inflation sits above target, the Fed has tools to respond. One of those tools is interest rates. Further rate hikes may be possible. What the Fed's path could mean for the economy is also open. We could see a soft landing where inflation cools without much damage to growth. We could see a recession, or we could see a market pullback. Those are three different pictures, and the honest answer is that any of them could show up. So let's slow down and talk about what inflation actually does to you, because it's easy to nod along without feeling it. Picture a grocery cart. Say you fill it every week with the same items. If prices rise, that same cart costs more. Your paycheck didn't shrink and your savings account didn't shrink, but the cart now takes more of them to fill. That's purchasing power. It's how much a dollar can buy, and inflation wears it down slowly. The dollars sitting in your account are the same dollars. They may just buy less each year and you never see a withdrawal. This is why an inflation warning from the Fed isn't only a story for traders. It touches anyone who holds cash, anyone saving for a goal years away, anyone planning a retirement. And notice the uncertainty. Rate hikes, a soft landing, a recession, a pullback. The range is wide. When the range of outcomes is wide, people reasonably start asking how to prepare for more than one of them. Which brings up something interesting. With outcomes this uncertain, why are big financial institutions talking about gold at all? Goldman Sachs is one answer. They see gold as a potential hedge for twenty twenty-seven. The backdrop it described is a slowdown in global growth along with economic uncertainty. A hedge is something you hold that may behave differently from the rest of your holdings when conditions turn rough. Think of a hedge along a property line. It marks a boundary and offers some cover. So when Goldman talks about gold in this context, the idea is about the role gold could play. Outlook Money's summary points to slow growth, persistent inflation, and rising macroeconomic risks as the conditions behind the case. That role is easier to see once you've got diversification in mind. It simply means not letting one thing decide how your whole financial picture does. If everything you own rises and falls on the same forces, a bad stretch hits all of it at once. Adding something that responds to different forces could soften that. But analysis is one thing. Some institutions have moved past talking about gold and are putting money behind it, buying it outright. Quartz ran a story on November third with a headline that says it plainly, "Central banks bought gold at the fastest pace since twenty twenty-four." The numbers come from World Gold Council data. Purchases reached three hundred and twenty-one tons in the third quarter. This year to date, buying is now six percent above last year's level. So the pace didn't just tick up for one quarter. The running total for the year is ahead of the year before. Now, a ton is a hard thing to picture. So think of it as a quarter's worth of shopping by institutions that manage national reserves. These are the buyers whose job is holding the assets a country keeps behind its currency. When they add more gold, that's a choice made at a very large scale. Why notice it? Because official sector demand tells us something about how institutions are thinking and that they see gold as a valuable asset to keep in reserve. Which brings up a question for those of us who aren't central banks. Gold has pulled back recently. Could that dip encourage individuals to start exploring ownership? And if you do start exploring, there's a second question that deserves attention. It's not only what you consider owning, it's who you work with while you do it, because that choice shapes fees, service, and how clearly things get explained. The New York Post published a list on November second called Best Gold IRA Companies for November twenty twenty-six. On that list, the New York Post ranked Lear Capital number one among gold IRA companies. Since this is our own show, I'll tell you what that ranking highlighted: nearly thirty years of experience, transparent fees, dedicated IRA specialists, and the company's reputation with customers. That's the list of reasons the Post gave, and I'll leave it as theirs. Lear takes an education first approach, which means we want you to understand how physical gold and silver work before you decide anything. And this week, midterm results came in and gold moved. The election and how gold responded to it is where we're headed next. The votes are counted. Democrats won both the House and the Senate, while Republicans kept the White House. That's divided government, with each party holding a piece of Washington. Now watch what gold did the day after. Reuters reported that gold surged more than 3% on Wednesday, November 4th. It climbed back above $4,000 an ounce. Reuters also said that was on track for gold's biggest daily gain since mid-August. So this was a sharp move, the kind that gets noticed. Reuters tied it to the dollar, which tumbled that day, and a reprint of the Reuters wire on Fidelity's news page described Treasury yields initially falling as well. Those two pieces, a weaker dollar and lower yields, are the setting for the jump. I want to explain how those two pieces tend to work on gold. Start with the dollar. Gold is priced in dollars around the world. When the dollar weakens, a buyer holding euros or yen may find gold less expensive in their own currency. That could encourage more interest from outside the United States. A weaker dollar may also nudge some people to look beyond dollar assets altogether. Gold is one place they might look. Now yields. A Treasury pays interest. Gold doesn't. It just sits there. So when yields fall, the interest you give up by holding gold gets smaller, and gold can look relatively more attractive. When yields rise, the comparison can swing the other way. Now, what comes after the vote? The World Gold Council published a piece in October, before the results, titled Gold and Midterms. Is this time different? The analysis says that regardless of the midterms results, gold has historically reacted to the economic, fiscal, and monetary policies that follow, rather than the outcome of Election Day itself. In other words, the policies matter more than the winner. I'll offer no judgment on either party. The point is practical. With divided government, spending, tax, and deficit decisions could get harder to settle. Whether that means gridlock or compromise, nobody knows yet. That brings us to the deficit, because debt didn't go anywhere on Election Night. Treasury's debt-to-the-penny tracker put U.S. federal debt at about $40.5 trillion in early November. The critical Congressional Budget Office projects that annual net interest costs rise from about $1 trillion in 2026 to $2.1 trillion by 2036. Picture a household whose card interest doubles over a decade, while the balance keeps growing. The interest alone starts crowding out everything else. I won't predict what that does, but heavy debt service is a reason fiscal choices stay uncertain. And uncertainty about the government's finances is one of the things people weigh when they think about what a dollar will buy years from now. So lay the threads side by side. Inflation that stays above target. A Fed whose next move is unclear. Goldman Sachs naming gold as a potential hedge. Central banks buying. Debt interest climbing. And a rebound in gold itself. Together, they could keep attention on precious metals. Which brings up the question I'd leave with you. With gold's price lower than it was, could this be a time to investigate how physical gold works before any possible further rally? With inflation, rising national debt, and economic uncertainty continuing to make headlines, now could be a great time to explore how physical gold and silver might fit into your long-term financial plan. Text dollar to 43343 to get your free precious metals investor kit, or connect with a Lear Capital specialist who can help you understand your options. That's dollar to 43343. Take the first step towards exploring what precious metals could mean for your financial future.