The Price of Gold Rises as Trust in Institutions Wanes

Gold has risen sharply, up 90% in the last year. That alone doesn’t prove much, but it is suggestive.

I don’t particularly like metals as investments, but they have a place. Fiat currency is extraordinarily powerful when paired with strong institutions: a legal system that defines and protects private property, enforces contracts, and adjudicates disputes predictably. In that context, dollars aren’t just paper—they’re claims embedded in a functioning system.

But when faith in that system weakens, metals start to look more appealing. Gold, in particular, functions as an international asset that is far less dependent on any single country’s legal regime or political stability. It doesn’t require trust in courts, central banks, or elected officials—just belief that others will accept it.

I wasn’t prescient enough to anticipate gold’s recent rise, but in retrospect it makes sense. (And if you cynically suggest that this is true of most market changes, I'd have to wince and admit you're right.) When the world’s largest economy is led by an aspiring strongman who has openly mused about subordinating the central bank, weakening institutional checks, and ruling by personal will rather than predictable policy, some investors will move money out of bank accounts, bonds, and equities—and into assets that feel insulated from political discretion.

My crude working theory is this: if Congress and the courts continue to constrain attempts to concentrate power, the dollar will likely hold its value reasonably well. If those guardrails erode, international currencies and gold will continue to gain relative to it.

That said, I don’t claim deep expertise here. The system is complex, the variables numerous, and even if this framing is mostly right, predicting timing and magnitude is extremely difficult. Markets often sniff out risk early—but they also overshoot, reverse, and surprise.

Gold’s rise may not be prophecy. It may simply be a barometer: not of certainty, but of growing doubt about the reliability of governance itself.