The following content is sponsored by the Reagan Gold Group

The U.S. economy may not be as strong as it previously was. GDP growth in 2023 was 2.5% compared to 5.8% in 2021. High levels of public debt and geopolitical tensions have dissuaded other nations from using the dollar, which could create inflationary pressure on Americans. Could investing in gold provide the solution?

This charticle, sponsored by the Reagan Gold Group, will explore the U.S. economic climate and how gold can help Americans protect their investments.

#1: High Levels of Public Debt

The U.S. public deficit has grown considerably over the last decade. According to the U.S. Treasury, as of September 30th, 2024, total public debt stood at $35,464,673,929,172–if called in, it would be as every U.S. citizen would have to pay over $100,000.

High levels of public debt can negatively affect the U.S. economy. Interest payments can divert funds from where needed and reduce economic growth. However, public debt alone does not break an economy. 

For example, Japan’s sovereign debt is more than 250% of GDP, but as much of the debt is held by Japan’s central bank, its robust and asset-focused balance sheet mitigates much of the potential instability. 

#2: Less U.S. Dollars in International Systems

Another global trend that could impact the U.S. economy has slowly emerged since World War II–the dollar has lessened its circulation among international markets. The IMF reports that global FX reserves held in USD have notably declined, dropping from 71% in 2000 to 58% in 2023.

Geopolitical tensions have contributed to fewer U.S. dollars flowing through the global banking and exchange systems. This reduction in demand for U.S. dollars impacts the nation’s overall economic influence globally, potentially creating instability in other areas. 

#3: Subpar Returns for U.S. Pension Funds

The performance of the largest pension funds in the U.S. over the last five years shows slightly depressed returns, especially when compared to gold.

Inflation and the overall reduction in the dollar’s economic power create a situation where, as pressure mounts, retirement payments may not stretch as far as retirees hope. This situation has led to many, including central banks, seeking insurance.

Could investing in gold be that insurance? 

#4: Rising Gold Spot Prices

Despite financial crises, rising geo-political tensions, and a global pandemic, gold performance over the last 20 years has been strong, with its spot price growing aggressively:

Historically, gold has held its value against inflation, and its continued growth over the years has made it a sound investment in times of turmoil. So, considering the current economic climate, it’s no surprise that many investors are turning to gold. 

#5: Increasing Demand from Central Banks

As if underlining the importance of gold, central banks have also increased their gold purchases by over 30% over the last five years.

When the World Gold Council asked central bankers, “How relevant are the following factors in your organization’s decision to hold gold?” The most common, highly relevant answers were that gold has no default risk, its performance in crises, and its value as a hedge against inflation, at 49%, 47%, and 42%, respectively. 

#6: The Growth of Gold

When compared against other assets, gold’s current performance shows that it is more than just a hedge against inflation over the long term:

Gold’s recent performance has eclipsed many other assets over the long and short term, with its price growing at a higher rate than even the Emerging Markets Index.

#7: Gold Returns vs. Other Assets

In fact, gold was one of the better-performing overall assets between 2023 and 2024, returning nearly 14%.

Indeed, keeping to its history of consistency, investing in gold has provided percentage returns above other lauded long-term assets such as bonds.

A Golden Opportunity

The U.S. economy may not be what it was, with economic and geopolitical turmoil creating inflationary stresses that pressure lower-performing assets such as retirement funds. 

Institutional and personal investors want to protect their wealth, and physical gold has proven to be one of the best hedges against uncertainty.

Learn more about how gold can protect your investments.