The 'Sell America' Trade Is Driving Gold Higher
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Nothing can drive prices higher than desperation. And people in Iran are desperate for gold.
According to the Financial Times, black-market gold prices in Iran have shot up 80% over the past year compared with a 45% rise globally.
Now, you may not care what an ounce of gold costs at a Tehran bazaar...
But the factors driving the price of gold in Iran are the same ones driving its price everywhere else across the globe. And they show the kind of desperation that could keep gold's price rising over the next few years.
Put simply, people in Iran are worried...
The country is in talks with the U.S. over a new nuclear deal. But no one knows what that deal will look like. The people of Iran have lived through sanctions before... and it was painful.
Right now, they're desperate for something to protect their wealth. As a result, gold imports in the country have surged.
The head of the Iran-China Chamber of Commerce, Majidreza Hariri, considers gold a weapon Iran can use to defend its economy. As he puts it...
If other countries run their economies like conventional armies, we operate like guerrillas. Today it might be gold, tomorrow [crypto], and so on.
This Iran story is important. This same sort of thinking is happening across the world economy for everyone from individual investors to major central banks.
Things just don't look as certain as they used to.
Much of that, of course, is due to tariffs...
For decades, U.S. stocks, bonds, and the dollar were a sure bet. But when President Donald Trump ignited a global trade war earlier this year, investors started to look at the world order differently.
The U.S. is no longer seen as a reliable or friendly trade partner or the best place to park your cash.
And the U.S. dollar – along with U.S. stocks and bonds – has sold off in what's now called the "sell America" trade.
But that's not all...
The new budget bill working its way through Congress has rattled investors, as well.
We've all heard warnings – again, for decades – about the U.S. fiscal deficit and accumulated debt. For a long time, the warnings seemed overblown. Debt kept rising with no immediate ill effects.
People likely assumed that we'd address the deficit when we needed to.
But after the stimulus bouts in the global financial crisis and the pandemic, America's debt is now completely unsustainable.
The economy is still strong. Typically, that's when it's easier for the government to be fiscally responsible. Yet, Congress still can't get its spending down.
The new budget bill working its way through Congress will add $2.4 trillion to the U.S. debt by 2034.
Now, global markets are rejecting America's spendthrift ways.
They're selling off U.S. Treasurys because they're concerned about America's credit quality. The yield on the 30-year Treasury bond – the benchmark for long-term interest rates – has risen from 4% in September to around 4.9% today... matching levels seen in the great financial crisis.
Here's what's more concerning...
Typically, higher interest rates mean a rising dollar. If you can earn more in U.S. bonds, global investors will convert their currency to U.S. dollars so they can buy U.S. Treasurys to earn the higher yield. That drives the value of the dollar up.
But that relationship has broken down...
Put simply, bond yields are rising because investors don't trust U.S. bonds... And the higher yields aren't attracting inflows to the dollar as they usually do.
The dollar's decline, in turn, is driving gold higher... both mechanically and on a demand basis.
Let's start with the mechanical relationship. By that, I mean that anything priced in a currency also reflects the shifting value of that currency.
So many price charts (typically in U.S. dollars) really show the value of two things: whatever asset you're looking at and the value of the dollar.
The most intuitive example of this is a chart of gold.
That's because gold, as we've covered, is viewed as a more stable store of value than any paper currency. And when you see gold's price going up, you're also seeing the value of the dollar going down...
That also feeds into the second effect...
The dollar is the world's reserve currency. But as investors and central banks watch the value of the dollar plummet and our country struggle with governance... well, they start to look for other things to own as reserves.
The best argument for the dollar has been that there's no better alternative. No one really wants to rely on the Chinese yuan. And the Japanese yen is in the midst of a long-term decline.
The euro is likely the main contender. But it's built on a coalition of sovereign nations rather than a single country. That's a shaky formula for long-term stability.
No other currencies are big enough to replace the dollar as a tool of trade and international finance. That leaves gold as the alternative.
As we reported back in March, central banks are snatching up gold to hold in their reserves. From 2022 through 2024, they've added more than 1,000 tonnes of gold reserves per year...
That has only continued through 2025. Over the past quarter, Poland amassed 48 tonnes of gold, China 12 tonnes, Kazakhstan 6 tonnes, India 3 tonnes, and the Czech Republic 5 tonnes.
This is real money... 48 tonnes of gold is worth about $5 billion.
Central banks don't make snap judgments. They make long-term plans. So we can expect this to continue.
According to surveys from the World Gold Council (conducted before the tariff news and new budget bill), 69% of central banks reported that they expected gold's share of global reserves to increase in five years. Meanwhile, 62% said the dollar's share would decrease.
As a whole, the share of global reserves held in gold is only about 22%. That means there's room for a lot of demand to continue coming from central banks.
That said, gold production has barely budged for decades. Even with low interest rates and gold prices steadily ticking up, mining companies have stayed disciplined and maintained their same output.
We get about 5,000 tonnes per year mostly through mining and recycling. And that hasn't changed much since 2010...
Mining companies are now saying they'll maintain that discipline. But even if they don't, it'll take years for gold production to rise by an appreciable amount. That'll keep supply tight and prices high.
Plus, we still haven't seen any real speculative interest from everyday investors, which often marks the top in gold. The shares outstanding of gold exchange-traded funds ("ETFs") that we use as an indicator for such a frenzy are still well below their highs.
Shares outstanding for the largest gold-backed ETF in the world – SPDR Gold Shares (GLD) – are well below the high levels seen as recently as 2022...
(The exception would be China, where investors have piled into gold funds. To us, it looks like Chinese citizens are behaving just like those in Iran.)
The bottom line is that much of the "sell America" trade equates to a "buy gold" trade.
If central banks want to continue to diversify their reserves away from the dollar, it's going to continue to have a big effect on gold.
Right now, countries hold 57% of their currency reserves, or about $6.6 trillion, in the U.S. dollar.
Gold reserves only total about $4 trillion today. So even moving a small amount of dollar reserves into gold can put serious upward pressure on the metal's price.
Once upon a time, the idea that gold's price would hit $5,000 was ridiculous. We used to laugh at folks who made such a claim. It looked like a flashy prediction just to get attention.
But that's only a 50% move from today's price. And with all the fundamentals in place, it now looks more like a conservative estimate.
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New Research in The Stansberry Investor Suite...
If you're an American, your entire life is lived in dollars. If you reside somewhere else, only a bit less so.
So if the value of the dollar is declining, how do you protect yourself?
Gold is one answer, as we've seen.
But another answer is to own productive assets. Productive assets generate income and profits. And if the dollar declines in value, they'll simply earn more dollars.
Whitney Tilson and the Stansberry's Investment Advisory team have one such opportunity this month...
They've found a company that works in the payments industry and gets paid on volume, taking a small slice of every transaction its customers make.
It's not Visa (V) or Mastercard (MA), but you can think of it in much the same way. It's also not a competitor to these companies either. Rather, it works alongside them.
Every time you buy a new couch or a slice of pizza with a credit card, this company gets a tiny cut of the profits.
And if the value of the dollar goes down, all those goods simply cost a little bit more... which means this company will get the same slice of a greater number of dollars.
Right now, this company is in the midst of acquiring its biggest competitor.
As the team explains in this month's issue of Stansberry's Investment Advisory, this is a match made in heaven. And that's setting up a massive buying opportunity for its stock – one with triple-digit upside.
Stansberry Investor Suite subscribers can read the entire report here.
If you don't already subscribe to The Stansberry Investor Suite – and want to learn more about our special package of research – click here.
Until next week,
Matt Weinschenk
Director of Research
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