Why Investors Are Betting Big on This Trump-Proof Asset

When markets panic, gold shines. This age-old investment wisdom is proving remarkably accurate as President Donald Trump’s aggressive tariff policies send tremors through global financial markets in 2025.

The Golden Surge

Here’s the situation: Gold has shattered previous records, reaching an eye-popping $3,245.28 per ounce on April 11, 2025. That’s a staggering 28% climb since November 2024, when Trump secured his second term. The precious metal briefly stumbled when Trump announced a 90-day tariff pause, but quickly regained its footing as underlying anxieties persisted.

Why does this matter? Because gold’s dramatic ascent isn’t merely a price movement—it’s a powerful signal about investor psychology and confidence in traditional financial systems.

What’s driving this golden rush?

First, Trump’s “Liberation Day” tariff announcements from April 2 fundamentally altered the global economic landscape. The imposition of steep tariffs—currently 10% on most countries and a whopping 145% on China—has created a perfect storm of uncertainty.

Second, and perhaps more concerning, is the shifting status of U.S. Treasuries. Traditionally the ultimate safe-haven asset, Treasuries have seen unprecedented volatility, with benchmark 10-year yields posting their largest weekly increase in over two decades during early April. This destabilization has investors questioning whether the U.S. dollar’s reign as global reserve currency might be weakening.

The ETF Explosion

If you needed concrete evidence of gold’s appeal, look no further than the ETF market.

Gold-backed ETFs witnessed inflows of 226.5 tonnes in Q1 2025—the highest volume since the Russia-Ukraine conflict began in 2022. In dollar terms, that’s $21.1 billion, rivaling levels seen during the 2020 pandemic chaos.

What makes ETFs particularly attractive in the current environment? They offer a convenient way to gain exposure to gold without the hassles of physical ownership. No storage costs, no security concerns, and instant liquidity. For institutional and retail investors alike, gold ETFs provide an efficient vehicle to participate in the gold rally while maintaining the flexibility to adjust positions quickly as market conditions evolve.

North American investors have led this charge, but European and Asian investors aren’t far behind. This isn’t isolated behavior; it’s a synchronized global reaction to fears about economic stability.

Gold’s Smile Profile: Winning in Multiple Scenarios

What makes the current gold rally particularly fascinating is what analysts call its “smile profile” in relation to U.S. Treasury yields. Traditionally, gold and yields have an inverse relationship—when yields rise, gold falls. But currently, gold has been rising in both periods of falling and rising U.S. real yields, albeit for different reasons.

This unusual dynamic creates a win-win scenario for gold under two distinct market paths:

1. The Disruptive Path: If Trump’s tariffs create significant economic disruption, gold performs as an inflation and currency debasement hedge despite higher yields and a potentially stronger dollar.
2. The Fed-Focused Path: In a more benign environment where attention returns to the Federal Reserve’s rate-cutting cycle, gold benefits from lower interest rates, which enhance the appeal of non-yielding bullion.
   

This dual-scenario support explains why investors from various perspectives are flocking to gold simultaneously.

Central Banks Lead the Charge

Perhaps the most compelling signal comes from the world’s central banks, which have purchased over 1,000 tonnes of gold for the third consecutive year in 2024. Despite a mid-year lull, buying accelerated toward year-end with reserve managers adding around 333 tonnes in the final quarter—54% higher than the previous year.

The People’s Bank of China has notably returned to gold purchasing, adding 5 tonnes in November 2024 and another 10 tonnes in December. With China’s currency potentially facing devaluation pressure from tariffs, both the central bank and Chinese consumers have strong incentives to increase gold holdings as a store of value.

What’s particularly striking is how much room remains for further central bank diversification. Gold still represents a relatively small percentage of total reserves for many major economies. Russia maintains about 25% of its reserves in gold, while the United States holds approximately 70%. Meanwhile, China’s official gold reserves represent less than 4% of its total reserves—suggesting substantial potential for additional purchases.

The Retail Opportunity

For everyday investors, the current environment presents a compelling case for gold exposure. With over $6 trillion still parked in money market funds, significant capital could flow toward gold as investors seek alternatives.

Gold ETFs remain well below their historical peaks—approximately 18% lower in tonnage terms than previous records and about 6% lower than 2020 levels in real notional terms. This suggests substantial room for growth if investor sentiment continues to favor safe-haven assets.

Most remarkably, gold currently represents only about 2% of total investor financial assets globally. Even a modest increase in allocation percentages could drive prices significantly higher given gold’s relatively limited supply.

The Bottom Line

What’s happening with gold isn’t just another market fluctuation—it represents a fundamental reassessment of risk in a world where traditional certainties are increasingly scarce.

The precious metal is simultaneously serving multiple roles: inflation hedge, currency debasement protection, portfolio diversifier, and geopolitical insurance policy. This convergence of supportive factors explains its extraordinary performance and suggests the rally may have further to run.

For investors considering gold exposure, ETFs offer perhaps the most convenient entry point to this ancient asset that has suddenly become remarkably relevant to modern financial concerns. As Trump’s tariff policies continue to reshape the global economic landscape, gold’s enduring appeal as humanity’s ultimate store of value shows no signs of diminishing.