Gold Now! Gold Forever! Only Gold! Gold! Gold!

Summary

Unhedged Podcast Summary

Episode: Gold Now! Gold Forever! Only Gold! Gold! Gold!
Date: October 7, 2025
Hosts: Katie Martin & Robert Armstrong (Financial Times)

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Episode Overview

This episode dives deep into the remarkable rally in gold prices in 2025—a year in which gold surged nearly 50%, approaching $4,000 per ounce. Katie Martin and Robert Armstrong unpack why gold has soared in a period with no obvious financial crisis, what classic and emerging factors might explain this run, and whether gold's reputation as a reliable hedge (or "pet rock") still holds. In classic "Unhedged" style, the hosts bring their trademark blend of skepticism, wit, and markets expertise.

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Key Discussion Points & Insights

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1. Gold’s Surprising Rally: Setting the Scene

• Gold’s performance: Up 12% since early September and over 50% for the year, nearing $4,000/oz (03:01).
• Historical context: Biggest gold rally since the 1970s, surpasses nominal and inflation-adjusted highs.
• Not anticipated: Neither host nor many analysts saw this coming at the year’s start.
• Quote: “However you cut it, this is a monster, monster, monster year for gold. And I don't remember that many people banging on about it at the start of the year. It's kind of just come out of nowhere.”
  — Katie Martin [03:51]

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2. Traditional Drivers: Do They Apply?

• Falling real interest rates: As the Fed began cutting, real yields on inflation-protected treasuries dropped, lowering the opportunity cost of owning gold (04:00).
• Classic logic: Gold doesn’t yield, so when real returns on cash decline, gold becomes more appealing.
• Quote:
  “Now we have this traditional relationship, real yields down, gold up back in place. So that helps.”
  — Robert Armstrong [04:00]
• Wider puzzlement: But the “normal” crisis-driven gold bull market doesn’t fit current conditions: stocks and economy are strong, no global crisis (03:38, 08:30).
• FOMO narrative: The rally partly fueled by fear of missing out—“gold-plated FOMO.”

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3. Gold as a “Rorschach Test”

• Multiple explanations:
  The hosts note gold means different things to different investors:
  • Hedge against inflation or deflation
  • Safe-haven during war or financial spillover
  • Expression of general unease with the financial system
• Quote:
  “It’s a bit of a sort of Rorschach test...it's a bit of a squidgy one where people kind of paint their own adventure onto it.”
  — Katie Martin [06:52]
• No singular narrative: The same price chart inspires ten different explanations from ten investors (07:12).

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4. Geopolitical and Systemic Worries

• Central banks buying gold:
  Central banks’ gold share in reserves doubled from 10% to 21% in ten years (12:01).
  • World Gold Council: ~1,000 tons purchased by central banks over three quarters (12:21).
  • Motivated by desire for assets outside US/dollar/Western sanctions (12:32).
• Trigger events:
  Russia’s invasion of Ukraine (2022) and the freezing of Russian dollar assets led other countries to rethink dollar holdings.
• Shift in global trust:
  Decentralization of reserves—nations seeking “neutral” assets.
• Quote:
  “This stuff, it can't be sanctioned by the United States, can't be devalued by the United States. We're heading to a world that is de-globalizing. Bonds of trust are breaking. Let's try the yellow stuff.”
  — Robert Armstrong [12:32]

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5. Retail Gold Fever

• Physically backed gold ETFs:
  In September, record inflows: $26 billion—the “crazy” rush into gold funds (14:25).
• No need for the safe under your bed:
  ETFs provide the gold exposure without storage hassles—though the funds do hold real gold (15:19).
• Quote:
  “People cannot get enough of these things... I don't see what turns it around.”
  — Katie Martin [15:28]

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6. Is It a Bubble?

• Historical patterns:
  Gold’s past surges—1970s, post-2008 crisis—led to long periods of poor returns (06:04).
• Cycle thesis:
  If geopolitics and policy “normalize,” gold may falter, but such normalization is far from likely to the hosts (16:19).
• Optimism/doubt:
  Armstrong: “It is possible for geopolitical news to get better. Aren’t I just a little ray of sunshine here.” [17:17]
  Martin: “Betting on an outbreak of sanity? Yes, I have to say you are on your own with that one.” [17:17]

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Notable Quotes & Memorable Moments

• Armstrong on Gold Skepticism Turned Gold-Curious:
  “I have come around to the view that there is a place for this stuff in a diversified portfolio. A view I did not know.” [05:11]

• On the Contradictory Nature of Gold: “You can both worry and be long risk assets overall.”
  — Robert Armstrong [09:12]

• Martin’s Classic Pet Rock Joke: “...you may as well own a pet rock and hope that the price of the pet rock goes up.” [05:02]

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Timestamps for Key Segments

• [03:01] — Gold price context and rally summary
• [04:00] — Real rates, opportunity cost, and gold logic
• [06:52] — Gold as a psychological/”Rorschach” asset
• [12:01] — Central banks’ reserves shift
• [14:25] — Retail ETF gold rush
• [15:28] — Is more upside likely, and what could stop the rally?
• [16:19–17:17] — Could geopolitics “normalize” and would that crush gold?

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Long/Short Segment — [18:07]

• Katie Martin: Short Japanese yen over political uncertainty and potential volatility, especially with new PM candidate Sanai Takeichi (18:07).
• Robert Armstrong: Hedge yen risk, but go long Japanese stocks—possible pair trade (18:56).
• Quote:
  “So you heard it here, we've given you a pair trade. Short the yen, long the stocks.” — Robert Armstrong [19:34]

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Summary

This episode provides an accessible yet sophisticated look at the gold market’s rampant rally in 2025, rooting it in shifting macro drivers, war/inflation anxiety, and a remarkable rethinking by both central banks and retail investors. The discussion wrestles with gold’s “squidgy” nature as an asset that invites narrative projection yet stubbornly refuses to fit conventional models—even as it approaches historic price peaks. Armstrong and Martin’s sometimes contrarian, always candid banter gives listeners not only market insight but also a mostly skeptical playbook for thinking about gold in portfolios, all in the context of today’s “weird” financial world.

Transcript

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[Katie Martin]

Pushkin Remember the summer, those warm happy days so recent and yet so long ago. Now the night's drawing in at the tail end of the summer. First weekend in September we had the FT Weekend Festival in London on the grounds of lovely Kenwood House and some guy called Robert Armstrong traveled all the way from far away New York to join us for a recording of this very podcast. Where am I going with this? You're asking yourself.

[Robert Armstrong]

I know where you're going. You mean old person.

[Katie Martin]

In the long short. That part of the show where we go long a thing we love or short a thing we hate. Rob was short gold. It's going down, he confidently predicted. Listeners have a little guess how much gold has gone up since that day. That's correct. It's up by 12%. The shiny stuff is now close to $4,000 an ounce. Today on the show we're asking how did Rob get it?

[Robert Armstrong]

I would like to inter and.

[Katie Martin]

What the hell is up with gold? This is Unhedged, the Markets and Finance podcast from the Financial Times and Pushkin. I'm Katie Martin, a markets columnist and professional Rob Troll at the FT in London and I'm joined down the line from New york City by Mr. Wrong Robert Armstrong.

[Robert Armstrong]

Dude, okay, I'm not a total rookie at this game and those who were with us on that beautiful day in London will remember that it was a long term call. I specifically framed it in terms of disappointing long term returns and so I still have a chance to be right even though I have been wrong for like a month.

[Katie Martin]

There's nothing on this show.

[Robert Armstrong]

I mean, I think it just continues to be in a way the biggest story other than AI in finance. You know, it's just so rare to see this particular asset go up this much at a time when there are not any crises elsewhere in markets.

[Katie Martin]

The normal reasons why gold tends to go up just don't apply here, which is very weird. But, but first of all, where are we at? So we're very, very, very close to $4,000 an ounce for the first time ever. It might well have hit $4,000 by the time this show goes out in a couple of hours. It's the biggest rally since the 1970s. A fine decade as Rob and I will attest. It's up more than 50% this year. September was the biggest month for the gold price since 2011. People, they are calling it gold plated FOMO. It's all going on. It's like a huge, a huge rally. And it's not just up a lot in like nominal terms. It's up a lot in inflation adjusted terms.

[Robert Armstrong]

We are at an inflation adjusted high. It is true.

[Katie Martin]

However you cut it. This is a monster, monster, monster year for gold. And I don't remember that many people banging on about it at the start of the year. It's kind of just come out of nowhere.

[Robert Armstrong]

There is one fundamental factor that is that is traditionally associated with gold and that is working for it right now is that the real rate of interest has been falling as Fed cuts have appeared on the horizon and even reached us. So the 10 year inflation protected treasury yield, which is a kind of proxy for real rates, is down from 2.2% to 1.8% since June. So that helps. And again for our listeners who don't think about gold all the time and good for you, the reason is gold doesn't yield anything. So when the yield on money, real yield on money, goes down, the opportunity cost for owning gold declines. And for a long time people were amazed that real yields were up and gold was up at the same time. But now we have this traditional relationship, real yields down, gold up back in place. So that helps.

[Katie Martin]

If bonds aren't paying you that much once you take inflation into account, then you may as well own a pet rock and hope that the price of the pet rock goes up and you make money out of it.

[Robert Armstrong]

You know, this is a good time now that you use your pet rock joke that you use every time to note that you've been as wrong about gold as I have. Katie, a little bit of contrition and a little bit of humbleness from you on this topic always, because always the pet rock crowd has been wrong and I'm coming around. I think I've described myself on this show as gold curious. And while I stick to my call that gold is an unsustainable high right now, I have come around to the view that there is a place for this stuff in a diversified portfolio. A view I did not know.

[Katie Martin]

You'Re turning your documented wrongness into my wrongness that you're just clearly making up in a little switcheroo.

[Robert Armstrong]

And I'm sticking to my so far massively unsuccessful call about gold right now, I think the gold plated FOMO point is correct. If you look at the chart, the price has gone up in a sort of. It's like a straight line up now. And the last two times it did, did that right a little bit. After the global financial crisis when nobody wanted to own everything else. And in the 1970s when everyone was stealing your car, both of those, at both of those times, the big spike in gold was followed by a long period of poor returns. And so it does feel a little bubbly. But I think the world's attitude to, towards gold has changed, but tactical. Short, long term. Long, I guess, is what I'm saying.

[Katie Martin]

Okay, fine, that does make sense. The funny thing about gold compared to other sort of mainstream assets is that, you know, it's a bit of a sort of Rorschach test. Right. You can kind of see in it what you want. And so some people think that it goes up when investors are worried about inflation.

[Robert Armstrong]

Yep.

[Katie Martin]

Some people say it goes up when people are worried about disinflation or deflation. Some people say it goes up when investors are feeling happy about the state of the world. Some people say it goes up when people are feeling sad. Because it's not like a bond where you can say, okay, you've got certain growth rates and certain inflation rates and that tells you that the bond should be, you know, here it's not like stocks where it's like, this company's doing really well, its share price has gone up. It's a bit of a squidgy one where people kind of paint their own adventure onto it. So I was at a briefing earlier today at Fidelity International, which is next door, and Mike Riddell from there was saying, you know, when line goes up, people pin all sorts of reasons on it. And that's exactly what's going on here. So you can Talk to like 10 different people who are all positive about gold and ask them why they're positive about gold and they'll all give you completely different reasons. But let's start with one sort of simple one is that gold tends to go up when people are nervous about, you know, war, famine, pestilence, financial crises, all that sort of thing. It tends to be treated as a safe retreat in times of stress. The problem is that sits very uncomfortably against a market that is like fine at the moment. You know, stocks are doing great.

[Robert Armstrong]

Stocks are doing great. And the fundamentals are pretty good. Sales growth is pretty good. Earnings are pretty good. If you look at the macro economy, we do have these quite Poor job growth numbers. But outside of that, there's a lot of indicators that say the economy is charging along. Okay, not least the government's estimate of what GDP growth is, which, you know, is 3% in the last quarter or whatever. 3% plus. So it is weird. But in a way, this speaks to how many of our minds are split right now. That one, we've had an incredible rally and a strong economy that continues to defy expectations and makes it very hard to be short any kind of financial asset whatsoever. At the same time, we have general, rather amorphous worries about the Trump agenda for the world economy, that, you know, the tariff stuff doesn't work and the overall isolationism doesn't work, and pressuring the Fed for big rate cuts when inflation is still above target doesn't work, and et cetera, et cetera. And maybe gold is the asset. Having gold in a certain percent of your portfolio is the asset that lets you eat your cake and have it too. You can both worry and be long risk assets overall.

[Katie Martin]

Yes. And you can make yourself sound very clever or think that you sound very clever saying, ah, yes, but I'm hate debasement trade.

[Robert Armstrong]

I'm debased.

[Katie Martin]

I hate that. So it's this idea that, you know, this accusation's been pinned on all sorts of different administrations in the US and elsewhere over the years, but it's this idea that what we're seeing is the debasement of the dollar. So, you know, interest rates are going to be held too low for too long, and that's going to be bad for the value of the dollar. And so we're trashing the dollar. Or it's the debasement of like the entire financial system, the idea that government bonds are worthless, rates are too low and borrowing is too high. And so that pushes people into the arms of this supposed other safe asset, which, to be clear, does have periods of falling really hard in periods of market stress. But nonetheless, it's this idea that you want to hold gold because nothing else is safe. Everything else is getting debased. And that I think just sort of takes you to. There is a legitimate debate to be had around are governments borrowing too much? Is this system all sort of sitting on sand? You know, I worry about that. I'm not sure gold is the way that I would express it, although if I had done over the course of this year, I'd be doing very nicely out of it. But that's a real debate, isn't it?

[Robert Armstrong]

Yeah, I think that's right. And a related Point. Very closely related to this point, and this is something that really has changed in the last three or four years is that central banks around the world are expressing fear about being too dependent on the dollar, the potential debasement of the dollar by adding gold to their store of reserves. So I have before me a chart of gold as a percentage of international reserves. And 10 years ago it was at 10% and now it is at 21.

[Katie Martin]

Yowza.

[Robert Armstrong]

That's a big increase and that's a lot of gold. And in the last three quarters, these are numbers from the World Gold Council. I'm just doing quick math here. Something around over the last three quarters, a thousand tons of gold purchased by central banks, which is a lot.

[Katie Martin]

Wow.

[Robert Armstrong]

And central bank purchases have been on that order since kind of mid-2022. Since you know, the post Covid period has been one in which central banks are like, you know what?

[Katie Martin]

Yeah.

[Robert Armstrong]

This stuff, it can't be sanctioned by the United States, can't be devalued by the United States. We're heading to a world that is de globalizing. Bonds of trust are breaking. Let's try the yellow stuff. And I think that's real. And I don't see anything that suggests to me that trend is going to change anytime soon.

[Katie Martin]

Yeah. The other thing that happened in 2022 is of course Russia's full scale invasion of Ukraine. At which point Russia's dollars got frozen. And I mean to my mind, why should normal countries have to worry about that? Unless you're going to launch a war of aggression against your neighbor, then why do you care that this stuff is in dollars? But it has sparked a bit of a rethink among reserve managers around. Okay, are my dollars like neutral and apolitical or should I hedge that a bit with other stuff?

[Robert Armstrong]

I would say the decision of the reserve managers is quite rational. Even those who are not going to invade their neighbors. We world of strange alliances. If you are India, I don't know, I'm picking, I'm just picking out that example as a country who is somewhere in the world where you're going to have naturally have a lot of divided alliances. If you're a Middle Eastern nation, who knows what kind of conflict you're going to be drawn into by your friends or your enemies and which side of that conflict you're going to be on and you're going to want a neutral asset and gold looks like a neutral asset. This is really the reason that now I understand I was like you. It's a pet rock I was Camp Pet Rock for a long time. Yes, but now, even while I think the current price is probably unsustainable, I do understand why you want to have some of this stuff in a portfolio.

[Katie Martin]

Yeah, it makes sense. But so look, so we've covered off like the big global reserve managers. They're like sort of national massive pots of money. But retail investors are also, they love themselves a little bit of gold. So exchange traded funds that are physically backed by gold. Again, these are numbers from the World gold council. These ETFs drew in their largest monthly inflow ever in September. Strongest quarter on record of $26 billion flooding into these things. The numbers are just cray cray. Like people cannot get enough of these things. So that means that you don't have to actually buy a block of gold and find somewhere safe to keep it. Either paying someone to keep it in a safe or putting it under your bed. You can buy an exchange traded fund that just tracks the cost, the price of this thing. And so you get all of the benefit and none of the storage Nightmare.

[Robert Armstrong]

And the ETFs do, I should say, own the physical gold. Yeah, it's not a synthetic product, it's the gold itself. So that is reassuring.

[Katie Martin]

You know, leave the, the ETF operators to sort of worry about the physical storage and all that sort of thing. But there's just a lot of things pulling the same way. And like, you know, I didn't disagree with you back in September when you were saying I think gold's getting a bit toppy here, but this thing just seems to be one way traffic at the moment. I don't, I don't see what turns it around. You know, we're not going to get a sudden end to, you know, fiscal incontinence in the big economies. We're not going to get a sudden kind of reset to something much more normal in US economic policy. So what's to stop gold just like going on and on and on and on.

[Robert Armstrong]

I think you are underestimating the possibility of some kind of return to sanity.

[Katie Martin]

I'm massively underestimating.

[Robert Armstrong]

I mean that's what happened. What happened to the gold spike in the 70s is the 80s. Suddenly you had Ronald Reagan and a resurgent economy and winning the Cold War and everything else. And gold struggles terribly. You had the great financial crisis and gold was extremely strong and even for several years after the great financial crisis. But as the recovery continued and people became more confident, gold struggled again. So, you know, we could have political change in the United States. Globally, wars could end. You know, it always feels like when you're in a patch of bad news, it always feels like the bad news is gonna go on forever. But sometimes it doesn't. And the geopolitical news has been terrible. But it is possible for geopolitical news to get better. Aren't I just like a little ray of sunshine here.

[Katie Martin]

Betting on an outbreak of sanity? Yes, I have to say you are on your own with that one. I am generously going to give you another opportunity to be wrong about things in just a sec With Longshore.

[PGM Narrator]

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[Katie Martin]

Foreign it's long short that part of the show where we go long a thing we love or short a thing we hate. I am gonna be short the Japanese yen. There is a lot going on. They've got another a new prime minister in waiting, Sanai Takeichi. She's the first woman ever to do the job, but the market is saying, oh, hang on a minute, is she going to try and stop the bank of Japan from raising interest rates? So people are suddenly really quite nervous about an outbreak of volatility in the yen and in Japanese government bonds. It could all get quite, it could get quite tasty. So I'm going to be short yen. I'm going to be short yen. What about you?

[Robert Armstrong]

Our new colleague? Our new colleague, not very new, but new ish colleague on the newsletter Hakyung Kim wrote about Japan yesterday and I thought her piece was very compelling about why we should expect a weaker yen. But with that in mind, I'm going to hedge the yen and buy Japanese stocks, which I still like for exactly the same reasons. I think if this new leader gets what she wants, then the same reasons that that should make you worry a bit about the yen, should make you feel good about your Japanese equity allocation as long as you're hedged. So you heard it here, we've given you a pair trade. Short the yen, long the stocks.

[Katie Martin]

The thing with Takechi, and they're talking calling it the Takechi trade, is that she models herself on the UK's Margaret Thatcher, but people are worried about whether she could end up being the UK's Liz Truss so, you know, normally Japanese government bond markets are aggressively boring and they've suddenly got really interesting. So I'm here for it. One way or another, I'm here for it. Listeners, we hope you will be here for us. We will be back in your ears on Thursday. So listen up then. Unhedged is produced by Jake Harper and edited by Bryant Urstadt. Our executive producer is Jacob Goldstein. Topher forges is the FT's acting co head of Audio. Special thanks to Laura Clarke, Alistair Mackey, Greta Cohn and Natalie Sadler. FT Premium subscribers can get the Unhedged newsletter for free. A 30 day free trial is available to everyone else. Just go to ft.com unhedgedoffer I'm Katie Martin. Thanks for listening.