Precious metals are going to party like it's the 1970s, reckons Albert Edwards

By Jules Rimmer

Edwards thinks gold is the beneficiary of governments' fiscal incontinence and the debasement trade

The party might just be getting started for gold and other precious metals.

He's bullish on something - and less bearish on U.S. stocks than you'd imagine.

Albert Edwards, the notoriously bearish global strategist from Societe Generale, is bullish on precious metals and thinks that, far from resembling a classic investment bubble, the party might just be getting started.

In his weekly strategy note published Wednesday, Edwards is especially focused on gold and takes particular issue with the recent warning from the Bank of International Settlements of a "double bubble risk" in the elevated prices of both global stocks and gold (GC00).

Edwards is on record as explaining the booming gold price as a direct result of what he calls "fiscal incontinence" by governments engaged in unsustainable spending splurges, and the anticipation by markets of both quantitative easing and yield curve control, with QE referring to the purchase of bonds and YCC the related practice of not allowing yields to surpass a certain level.

Edwards also cites the Bloomberg strategist Simon White to disprove the notion that gold is in a bubble. White claimed that President Joe Biden's decision to freeze Russian forex reserves in 2022 was the shock and the trigger that persuaded emerging market central banks to pivot away from dollars toward gold to build and protect their own reserves.

Edwards also quotes from the journalist Edward Chancellor who remarks that the "irrational exuberance that normally accompanies a mania is absent" in gold. Chancellor notes that many Wall Street investment banks have gold price targets that are way below the spot price, and speculators are far too preoccupied with trading crypto (BTCUSD) to focus on gold.

For Edwards then, it's a case that the so-called debasement trade is a party that may "dissolve into a mad rave" and gold's price behavior may resemble that of the 1970s when it shot up during the inflation spike of that decade.

Could gold replicate its 1970s boom, asks Edwards

Furthermore, Edwards observes that the enthusiasm for gold is in fact exceeded by other precious metals and is starting to spill over into the industrial metals like copper. Copper (HG00) too has registered all-time highs of late.

Edwards is a self-described perma-bear but nonetheless congratulates the SocGen U.S. equity strategist Manish Kabra who has been "spot on" in his positive predictions for U.S. equities SPX and "an antidote to my gloom".

Rarely associated with optimistic forecasts about stock markets Edwards concedes that with the Fed "loosey-goosey" on monetary policy, "I can't see what would burst the equity bubble in the near term." It's not often you hear him say that.

-Jules Rimmer

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12-17-25 0743ET