The gold investment company Incrementum released (In Gold We Trust).
As the global political and economic order continues to be turbulent, gold is returning to the center stage of capital markets. The gold investment company Incrementum's (In Gold We Trust) 2025 annual report points out that the world is currently undergoing a new round of financial restructuring, and gold, as a non-counterparty risk and non-inflationary monetary asset, is becoming increasingly strategically significant.
From the U.S. deindustrialization and uncontrollable fiscal deficit, to the rise of non-state credit assets like Bitcoin, and the central banks' massive gold purchasing behavior, these trends collectively form the backdrop of 'The Big Long' pattern. This report analyzes trends in the gold market, future expectations, the role of crypto assets in the new order, and potential risks such as structural inflation and dollar devaluation, aiming to provide investors with a long-term robust gold investment framework.
The Gold Rush: Returning from the margins to the mainstream.
The report compares the current gold bull market to the movie (The Big Short) from the opposite perspective: in the context of restructuring the global financial and monetary systems, strategically investing in gold will yield significant returns. In the words of Richard Russell: 'No frenzy can compare to the gold frenzy.'
For a long time, gold has been marginalized in the Western financial system, seen as lacking yield and considered an outdated hedging tool. However, the situation has begun to change in recent years.
Like the financial bubble depicted in (The Big Short), the gold market is also undergoing a transformation from the margins to the core. This trend, known as 'The Big Long', symbolizes the long-term bull market for gold and reveals the capital market's reassessment of systemic risks. In the current financial environment, investors face many critical questions:
Do U.S. and German sovereign bonds still have safe-haven functionality?
Has the dollar hegemony come to an end?
'MAG 7' valuations are too high?
Is gold too expensive now?
Traditional views hold that gold prices are high and have little room for upward movement. However, the report proposes that, on the contrary, we are currently in the middle of a gold bull market, not at its end.
Current state of the gold market.
According to Dow Theory, a complete bull market can be divided into three phases: accumulation, public participation, and mania. Gold is currently in the second phase, known as the 'public participation phase'. Typical characteristics of this phase include:
Media reports are becoming increasingly optimistic.
Speculative interest and trading volume are rising.
New financial products are being launched.
Analysts raise price targets.
In the past five years, global gold prices have increased by 92%, while the dollar's real purchasing power over gold has decreased by nearly 50%. According to the 2020 report (In Gold We Trust), the current gold price trend is approaching an inflationary scenario path, far exceeding the base case scenario.
Data shows that last year, gold set 43 historical highs in dollar terms, second only to 57 in 1979. As of April 30 this year, 22 new highs have been set. Although it has broken through the $3,000 barrier, this rise is still moderate compared to historical bull markets.
Gold is breaking through absolute prices while also forming a technical breakthrough at the relative level (such as against stocks), indicating that a strong pattern of gold relative to traditional assets has been established. For investors already in gold, continuing to hold is a wise choice, while for newcomers, the current entry remains attractive.
Although gold, as a non-productive asset, does not pay dividends, it typically outperforms yield-generating assets like stocks and bonds at critical market stages. Investors should appropriately consider the role of gold in asset allocation.
It is important to note that historical data shows that during bull markets, gold prices may experience pullbacks of 20% to 40%. For example, the price fluctuations following April 2nd serve as a reminder, although gold quickly rebounded and set new highs. Especially, assets like silver and mining stocks often experience larger pullbacks. Therefore, investors need to maintain consistent risk management strategies to cope with market volatility.
New type 60/40 investment portfolio.
The report proposes a new type of 60/40 investment portfolio, a rethinking of the traditional 60% stocks/40% bonds allocation. The new asset allocation is as follows:
Stocks: 45%
Bonds: 15%
Hedging Gold: 15%
Performance Gold: 10%
Commodities: 10%
Bitcoin: 5%
This new type of portfolio reflects the authors' views on the current market environment, particularly concerns about losing trust in traditional safe-haven assets like government bonds. The report suggests distinguishing between hedging gold and performance gold, with performance gold including silver, mining stocks, and commodities, which are seen as having significant potential in the coming years.
Key factors influencing gold
Geopolitical restructuring.
The global geopolitical landscape is rapidly restructuring, which is favorable for gold. The report cites Zoltan Pozsar's 2022 article 'Bretton Woods III', noting that the world is transitioning from 'the gold-backed Bretton Woods era to the Bretton Woods II supported by internal currencies (with irredeemable confiscation risk of U.S. government bonds), to Bretton Woods III supported by external currencies (gold and other commodities).
Gold has three main advantages as an anchor for the new monetary order:
Gold is neutral, belonging to no country or political party, and therefore can serve as a unifying element in a multipolar world.
Gold carries no counterparty risk; it is pure property, and countries can easily solve confiscation risks by storing gold domestically.
Gold has high liquidity, with an average daily trading volume exceeding $229 billion in 2024. Research by the London Bullion Market Association (LBMA) indicates that gold sometimes has higher liquidity than government bonds.
Impact of Trump policies.
Trump initiated profound restructuring of the U.S. economy and the global economy after returning to the White House. With a majority in both the Senate and the House, combined with a Republican-dominated Supreme Court, he wields significant political power. His policy direction includes:
1. Addressing government over-indebtedness issues:
The DOGE (Department of Optimization and Government Efficiency) program initially hoped to save $1 trillion annually, equivalent to about 15% of Washington's spending.
Recently, Musk significantly lowered expectations, now mentioning a savings potential of $155 billion.
The U.S. now pays over $1 trillion annually in national debt interest, exceeding its generous defense budget.
2. Trade policy reform:
The new tariff policy announced on April 2, 'Liberation Day', raised the average U.S. tariff to nearly 30%, significantly higher than the approximately 20% during the 1930 Smoot-Hawley Tariff Act period.
OECD data shows that the U.S. dependence on China is about three times that of China's dependence on the U.S., considering that China's manufacturing base is also three times that of the U.S., indicating a more favorable position for China in this conflict.
3. Dollar policy:
The Trump team believes that the high dollar value is one of the main reasons for U.S. deindustrialization and plans to significantly devalue the dollar.
At the same time, they hope to maintain the dollar's status as the undisputed global reserve, trading, and reserve currency.
Trump threatened to impose a 100% tariff on countries that seek to replace the dollar as a trading currency.
These policies may lead to a slowdown in the U.S. economy, even a recession. According to the GDPNow indicator, the U.S. economy has begun to contract. If this trend continues, the Federal Reserve will face greater pressure and will need to relax monetary policy more aggressively than currently priced.
Changes in European monetary policy.
The report also notes that fiscal policy in Europe, particularly in Germany, has undergone a 180-degree transformation. Friedrich Merz (CDU), who is expected to become Germany's next Chancellor, proposed exempting defense spending exceeding 1% of GDP from debt rule limitations and creating a €500 billion debt financing plan for infrastructure and climate protection. Forecasts show that German public debt will rise from 60% of GDP to 90%.
This marks a historic moment for Germany: under the conservative CDU/CSU leadership, fiscal conservatism has been formally abandoned. The report describes this change as 'monetary climate change.' The reaction from German government bonds was significant, experiencing the largest single-day volatility in 35 years after the announcement.
Central bank demand.
Central bank demand is a key pillar of 'The Big Long'. Since 2009, central banks have been net buyers in the gold market, and this trend has significantly accelerated since February 2022 when Russian currency reserves were frozen. For three consecutive years, central banks have increased their gold reserves by over 1,000 tons, achieving a special 'hat trick'.
According to the World Gold Council (WGC) data, as of February 2025, global gold reserves reached 36,252 tons. In 2024, gold accounted for 22% of monetary reserves, the highest level since 1997 and more than double the low of about 9% in 2016. However, there is still a long way to go to reach the historical peak of over 70% in 1980.
Asian central banks accounted for most of these purchases, but Poland became the largest buyer in 2024. Notably, despite significant purchases by China in recent years, its official gold reserve ratio stands at only 6.5%. In comparison, the gold reserves of the United States, Germany, France, and Italy account for over 70% of their reserves. Russia increased its share from 8% to 34% between 2014 and the first quarter of 2025.
Goldman Sachs assumes in its research report that China will continue to purchase gold at a rate of about 40 tons per month, meaning that the People's Bank of China’s demand will approach 500 tons per year, equivalent to nearly half of the central banks' total demand over the past three years.
Legal tender continues to depreciate.
The report emphasizes the monetary function of gold: Unlike legal tender, the supply of gold cannot be arbitrarily expanded. Since 1900, the U.S. population has increased by 4.5 times (from 76 million to 342 million), while M2 monetary supply has grown 2,333 times (from $9 billion to $21 trillion), with per capita growth exceeding 500 times (from $118 to over $60,000). The report compares this to 'the muscle bulge of a steroid athlete—impressive in appearance but structurally fragile.'
Monetary supply growth is a long-term key driver of gold prices. In G20 countries, the average annual growth rate of M2 is 7.4%. After experiencing three years of sometimes negative growth, monetary supply is now growing again. The report cites Larry Lepard's work (The Big Print), arguing that monetary supply growth will accelerate significantly, becoming another catalyst for 'The Big Long'.
Gold as portfolio insurance.
Gold performs excellently during economic recessions and stock market bear markets. The report analyzes 16 bear markets from 1929 to 2025, where gold outperformed the S&P 500 in 15 of them, with an average relative performance of +42.55%.
The report compares gold to the Italian defensive tactic 'catenaccio' in football, with the defensive reliability of Giorgio Chiellini and the goalkeeping safety of Gianluigi Buffon. When other investments fluctuate, gold stabilizes the portfolio with predictable resilience.
Shadow Gold Price
The report retains the concept of 'Shadow Gold Price' (SGP), which refers to the theoretical gold price when the monetary base is fully backed by gold. The Bretton Woods Agreement calculated the exchange rate between the dollar and gold in this way: the dollar monetary base divided by U.S. gold holdings.
Based on current market prices:
If the U.S. M0 is fully backed by gold, the gold price would need to reach $21,416.
If the Eurozone M0 is fully backed by gold, the gold price would need to reach approximately €13,500.
If the U.S. M2 is fully backed by gold, the gold price would need to reach $82,223.
If Switzerland's M2 is fully backed by gold, the gold price would need to reach CHF 29,101.
Historically, partial coverage was the norm:
In 1914, the Federal Reserve Act mandated a minimum gold coverage ratio of 40%. To meet this requirement, the gold price would need to rise to $8,566.
From 1945 to 1971, a 25% coverage was required, corresponding to a shadow gold price of $5,354 for M0 today.
International shadow gold price shows how much the gold price would need to reach if the monetary supply (M0 or M2) of major currency areas (U.S., Eurozone, UK, Switzerland, Japan, and China) were covered by central bank gold reserves in proportion to their share of global GDP:
M0 25% coverage: $5,100.
M0 40% coverage: $8,160.
M0 100% coverage: $20,401.
M2 25% coverage: $57,965.
M2 40% coverage: $92,744.
M2 100% coverage: $231,860.
Currently, the gold coverage ratio of the U.S. monetary base is only 14.5%, meaning that only 14.5 cents of each dollar is backed by gold, while the remaining 85.5% is 'air'.
During the gold bull market of the 2000s, the gold coverage ratio of the monetary base increased from 10.8% to 29.7%. To reach a similar coverage ratio, the gold price would need to nearly double to over $6,000. Historically, the gold coverage ratio exceeded 100% in the 1930s, 1940s, and 1980s. The record high in 1980 of 131% corresponds to a current gold price of about $30,000.
Gold price forecast.
The report presents the Incrementum gold price model proposed in 2020, which predicts:
Base case scenario: By the end of 2030, the gold price is expected to be around $4,800, with a mid-term target of $2,942 by the end of 2025.
Inflation scenario: By the end of 2030, the gold price is expected to be around $8,900, with a mid-term target of $4,080 by the end of 2025.
Currently, the gold price has exceeded the mid-term target of $2,942 for the basic scenario by the end of 2025. The report believes that by the end of this decade, the gold price is likely to be between two scenarios, depending on the degree of inflation in the next five years.
Inflation risk analysis.
The report warns against overlooking the possibility of a second wave of inflation like that of the 1970s. The similarities to current developments, guided by the inflation trends of the 1970s, are shocking.
In the coming months, the report still sees mainly deflationary trends, especially due to the sharp drop in oil prices. The significant appreciation of leading industrialized nations' currencies against the dollar further reinforces the deflationary effect in those countries.
However, this does not mean that inflation risks have been eliminated. Despite recession and capital market crashes having deflationary or even disinflationary effects, the response will be highly inflationary. The Federal Reserve's strong reaction seems to be only a matter of time. Possible measures include controlling the yield curve, a new round of QE or QQE, financial repression, further fiscal stimulus, up to MMT or helicopter money.
The report's quantitative analysis shows that gold, silver, and mining stocks perform exceptionally well in a stagflation environment. During the stagflation periods calculated by the report, the average annual real compound growth rate for gold was 7.7%, for silver it was 28.6%, and for BGMI (Barron's Gold Mining Index) it was 3.4%. In the 1970s, these figures were 32.8%, 33.1%, and 21.2%, respectively.
'Performance Gold' investment opportunities.
Even as gold slowly returns to the spotlight, a massive gold frenzy among Western financial investors remains distant: in the first quarter of 2025, gold ETFs recorded an inflow of $21.1 billion, the second highest in history. However, due to the significant rise in gold prices, this inflow in tonnage terms is only the tenth largest quarter in history.
At the same time, the capital inflow into gold ETFs remains far below that of stock and bond ETFs, with stock ETFs seeing inflows eight times that of gold ETFs and fixed income ETFs seeing inflows five times that of gold ETFs.
Reviewing performances from the 1970s and 2000s, silver and mining stocks have significant catch-up potential in the current decade. Market dynamics indicate that gold typically leads the rally, followed by silver, mining stocks, and commodities in a relay race pattern.
Bitcoin
Bitcoin may benefit from the current restructuring of the world order. In the context of escalating geopolitical tensions, the advantages of Bitcoin as a decentralized cryptocurrency seem apparent. Due to its independence from national control and cross-border transaction capabilities, Bitcoin indeed provides an alternative to traditional currencies. With the introduction of strategic Bitcoin reserve laws, the U.S. is also entering the competition for digital gold at the national level.
As of the end of April, the market value of all mined gold is approximately $23 trillion (217,465 tons, priced at $3,288 per ounce). In contrast, the market value of Bitcoin is about $1.9 trillion (priced at approximately $94,200), corresponding to about 8% of gold's market value.
The report suggests that by the end of 2030, Bitcoin could reach 50% of gold's market value. Assuming a conservative gold price target of about $4,800, Bitcoin would need to rise to approximately $900,000 to achieve 50% of gold's market value. This may be ambitious, but ultimately aligns with the historical performance of both assets.
The report suggests that having competitors in the non-inflationary asset space is not necessarily a disadvantage for gold. Following the adage 'competition stimulates business,' more and more investors may realize that a combined investment in gold and Bitcoin performs better on a risk-adjusted basis than investing in either asset alone. The report's long-standing motto is: 'Gold for stability, Bitcoin for convexity.'
Comparison of key indicators in the gold market from 1980, 2011, and the present.
The report compares various macro and market key indicators from 1980, 2011, and the present, confirming the 'Big Long' argument: gold prices still have room to rise. Notably, the current significantly higher dollar index—around 100 points—is far above the levels seen during the last secular peak in gold.
Potential risk factors.
Although the long-term upward trend remains intact, the report points out the following factors that may lead to short-term adjustments:
Central banks as a key risk: A sudden drop in central bank demand from the current average level of 250 tons per quarter could reduce structural demand.
Investor position reduction: The widespread sell-off following April 2nd Liberation Day shows how quickly speculative positions are being reduced.
Decline in geopolitical premium: Achieving a settlement in the Ukraine war, easing tensions in the Middle East, or a swift end to trade wars—especially with China—would significantly reduce the corresponding geopolitical premium.
U.S. economy stronger than expected: A strong U.S. economy may prompt the Federal Reserve to tighten interest rates.
High-tech and sentiment-driven risks: Sentiment is bullish, and positions are extreme in some cases.
Strong dollar: The dollar is oversold in the short term, and sentiment is extremely negative.
The report believes that short-term market conditions are tense, and gold prices may pull back to around $2,800 or even experience sideways consolidation. This adjustment may be part of the consolidation process of the bull market and will not threaten the medium to long-term upward trend of gold.
Conclusion
The report believes that the gold bull market is not over and is in the mid-stage of public participation. Gold is transitioning from being seen as an outdated relic to a key asset in investment portfolios, providing both defensive stability and offensive potential. The report compares gold to 'Michael Jordan' of assets, stable in defense and strong in offense—a true game changer.
The long-term rise of gold is based on several mutually reinforcing pillars:
The global financial and monetary system is inevitably restructuring in the face of profound political and economic turmoil.
Government and central bank inflationary tendencies—monetary climate change.
Emerging regional economies with an affinity for gold, especially in Asia and the Arab world.
Capital is shifting from U.S. assets (dollars, U.S. stocks, U.S. government bonds), which have overshadowed gold for years.
Expected excess returns from 'performance gold' (i.e., silver, mining stocks, and commodities).
The report notes that the current rise in gold prices may not only reflect a crisis but could also be the first sign of a 'golden swan moment': a rare but extremely positive signal for gold amidst global turmoil. As the existing monetary system increasingly loses credibility, the possibility of gold regaining its traditional role as a monetary asset is growing, potentially appearing as a supranational settlement asset—not as a tool of political power, but as a neutral, debt-free basis for trade, exchange, and trust.
As traditional safe-haven assets like U.S. or German government bonds lose trust and weaken their stabilizing function, gold is re-emerging as a core component of long-term investment strategies. During periods of geopolitical and economic turbulence, gold has once again proven to be a reliable safe-haven asset.
This article is a collaborative repost from: PANews.
More reports.
Digital gold has been upgraded! Tether brings gold onto the blockchain, allowing gold to traverse the chain?
Bitcoin vs. Gold: Four reasons to tell you which is the future king of currency?