Why is gold rising?

Kevin W. Frisz
Jan 14
5 min read

Updated: Jan 16

January 14, 2026

Summary

Welp. It had to happen eventually. Today is the first big drop of 2026. The S&P is currently down -1.0%. Tech stocks are taking the worst of the pain. The Nasdaq 100 is down -1.6%. The large AI stocks are down -2.2%.

If we look under the hood, defensive stocks are up (ie, consumer staples and healthcare). Gold is up. Bonds are up. That’s a classic “flight to safety”.

And what is driving that? Well, take your pick. Trump threatened Greenland again this morning. Iran is about to start executing protestors publicly. The large banks are warning about the economic impact of White House plans.

Oil is rising for the 5th day in a row. Presumably that is on worries that a military conflict with Iran would reduce its supply of oil into the market (or that it would threaten other Middle East producers).

All in all, the vibes are pretty negative at the moment. We’ll get into some of these topics below. Today we’re talking gold, bank earnings, Iran, and the latest economic reports.

Will Gold Stop Going Up?

The price of gold hit yet another new high today. Over the past year, gold prices have rocketed 74%. What is this? An AI stock?!

The primary driver seems to be foreign central banks diversifying away from the US dollar. You see, central banks (of countries not named “America) hold massive amounts of assets in reserve. These reserves have lots of purposes. They can stabilize their local currency if needed. They backstop their local banks in times of stress. Provide emergency loans in economic downturns. Etc etc. But here’s the question: what assets to hold? US bonds? Euro bonds? Stocks? Well, increasingly, the answer to that question is: gold.

When Russia invaded Ukraine in 2022, the US locked Russia out of the global financial system. This was a wake-up call to the world’s central banks that the US holds the keys to the global economy. Last year, President Trump’s trade war shook the system again. The world wanted a reserve asset not controlled by America. And gold is the easy answer.

And now, with the various geopolitical risks continuing in 2026, the demand for a “safe haven” is still in strong demand.

But here’s the problem with gold. It’s a hard asset. It doesn’t have profits like companies or yields like bonds. It doesn’t have a large obvious use like oil or corn does.

It’s just a lump of metal that sits there. It only has value because everyone has collectively agreed that it has some value. That makes valuation tricky. By that, I mean, you cant really value it at all.

It’s honestly humbling. All we can really do is look a history and look for correlations in periods of distress and see how gold has performed.

My gut says that gold will keep rising as long as (a) geopolitical risks continue to increase and (b) the US continues to be unpredictable global threat/partner. But really, I have no idea. No one really knows which way stocks or bonds are going to move. And with gold, it’s even more uncertain.

What Do Bank Earnings Tell Us About the Economy?

In the US, there are four mega-size consumer banks -- JP Morgan Chase, Bank of America, Citigroup, and Wells Fargo. These are the “too big to fail” consumer banks.

JPM reported earnings yesterday. Today, we got the other three. The main red flag on the radar is bad loans. When a bank dies, the most common reason is too many bad loans. So, to track this, the banks report how many of their loans went “bad” (ie, were written off) in the past quarter. And the leading indicator of bad loans is “delinquency”. That is, what % of their borrowers were late on their payments last quarter. If that metric starts to increase, then watch out. That’s a worrying sign – both for the bank and for the economy overall.

But the good news is that delinquency for all four mega banks is stable. 4Q showed a bit of an increase over 3Q, but it was actually down versus a year ago.

As we’ve discussed in other editions, retailers have started to talk about a dichotomy in their customers between high-income spenders and low-income spenders. The low-income customers have been pulling back on spending over the past year. You can see this in the macro level data, as unemployment has risen, and the savings rate has fallen. The good news however is that it hasn’t gotten so serious that it has affected their ability to pay their debts (at least not at the big four banks).

Separately, the banks have all spoken out against President Trump’s proposal to cap credit card interest at 10%. Citigroup went so far today as to say it would cause an economic slowdown, due to the resulting massive restriction in credit in the system.

Why is Iran in revolt?

Speaking of bad loans, let’s talk quickly about why Iran has exploded all of a sudden. Late in 2025, they had a large bank collapse. A regime-controlled bank, named Ayandeh Bank, sank under the weight of massive bad loans that had been made under suspicious circumstances. The state tried to cover it all up. They merged the bank into another bank, and then engaged in a massive amount of currency printing to cover up the losses.

However, all that currency printing resulted in a collapse in Iran’s currency. And that led to skyrocketing inflation. The Iranian rial fell 82% last year, and food costs soared 72%.

This economic pain was caused by regime corruption and insider enrichment. Protests began late in 2025 with small businesses, who closed shop, to protest the poor economy. These protests spiraled further, as the cost of food soared even higher.

In reality, this latest event was just a match that was thrown on a powder keg after the Iranian military was soundly defeated by Israel last year, and its nuclear program was attacked at will by the United States.

For our purposes, it has limited stock market impact. But increased global uncertainty is never a good thing. Oil prices are rising (again) today. They’ve been going up in a near straight line since the protests escalated significantly on Jan 8th.

Retail Sales and PPI

t’s helpful to group economic stats into buckets. The most important two are: jobs and consumer inflation. Let’s call those Tier 1.

Tier 2 would include retail sales and producer inflation. We got both of those two this morning. Retail sales were stronger than expected. And producer price inflation or PPI (think of it like CPI inflation but for manufacturers) was slightly higher than expected.

Net-net, these reports reflect: (1) a consumer that continues to spend at a healthy rate and (2) continued price inflation. So this will only further lower the already low chances of a rate cut later this month.

In a “normal” environment, I might attribute today’s pullback to this economic data. But if anything, this data suggests that rates will stay higher for longer. Yet rates are moving lower.

Final Thoughts

Another heavy news day. Economic data and earnings (so far) have been “okay”. The banks’ earnings were not terrific, but they certainly were not bad. I’m surprised those stocks are pulling back as much as they are.

But the major worries are more in the amorphous geopolitical arena. Inciting conflict with Europe over Greenland seems like an unforced error that is happening in slow motion. On top of that, President Trump keeps hinting at military action in Iran. When/if that happens, hopefully it’s successful and contained.