Prof G Markets - Gold Hits $5K — What’s the Market Afraid Of?

Episode Date: January 27, 2026

Ed Elson speaks with Robert Armstrong, author of the Unhedged Newsletter, about how the markets reacted to Trump’s Greenland TACO, why gold hit a new milestone, and the frontrunner for the next Fed chair. Then, Ed is joined by Reed Albergotti, technology editor at Semafor, to discuss the terms of the finalized TikTok deal. Finally, Ed shares his take on how investors should really be thinking about gold.  Check out our latest Prof G Markets newsletter Follow Prof G Markets on Instagram Follow Ed on Instagram, X and Substack Follow Scott on Instagram Send us your questions or comments by emailing [e-mail] Learn more about your ad choices. Visit podcastchoices.com/adchoices

I'm Ashthernden, and this week on Today Explain, I traveled to Minneapolis to speak with Attorney General Keith Ellison, who is suing the Trump administration over ICE descending on his state. It would mean that we had federal active duty troops patrolling our streets, which is concerning because the way ICE does its business is been proven over and over again to be deeply problematic. New episodes of Today Explain drop every day of the week wherever you get your podcast. And you can now watch our Saturday interviews at YouTube.com. Max. Megan Rapino here. This week on a touch more figure skating legend Tara Lipinski joins us to talk about the upcoming Winter Olympics, whether this will be the comeback year for U.S. women's figure skating and what she learned about herself after appearing on the reality show, The Traders. Plus, we're talking about the NWSL's high impact player role, aka the Rodman rule, and why the players union is against it. Check out the latest episode of A Touchmore, wherever you get your podcast and on YouTube. Today's number, 500,000. That is roughly how many dollars Alex Honnold was reportedly paid to free climb a 1,600-foot tower in Taiwan last week.

On a risk-adjusted basis, that makes it the lowest ROI decision in history. Money markets, Matt. If money is evil, then that building is held. The show goes up! The show goes on! Welcome to Prof G Markets. I'm Ed Elson. It is January 27th. Let's check in on yesterday's market vitals. Major indices rose heading into a key earnings week. Treasury yields declined. The dollar tumbled. And finally, silver gained the most since the financial crisis. And gold breached a new milestone.

More on that in a minute. Okay. What's happening? Stocks carried their rally into the new week following President Trump's Greenland. talko, but global tensions are still gripping markets. President Trump threatened Canada with a 100% tariff over a potential trade deal with China on Saturday. Meanwhile, the dollar sank to its lowest level since 2022. That slide came amid fears of a government shutdown and talk of US intervention to stabilize the Japanese yen. And of course, the metals rally rages on. The price of gold just hit $5,000 per ounce for the first time ever.

joining us to break down what is moving markets right now, a lot in there. We're speaking with Robert Armstrong. Rob is the author of the unhedged newsletter and co-host of the unhaged podcast. You all know him. He's a regular at this point. Rob, thanks for joining us. Nice to be back. A lot we want to get into here.

I think I would love to start with your reactions to last week's taco. It feels like years ago because so much has happened in the past several days, not really market's news, but we can just set that aside for now. Let's just focus on the taco. We want to get your reaction because, as I remind everyone, you invented the term taco. We're now seeing another taco. This time with Greenland.

He decided to pull those Europe tariffs after, you know, things went kind of, I don't know, I don't have nuclear is the right word, but people were pretty riled up about what was happening with Greenland. What do you make of last week's talker? What does it tell us going forward? Well, the first thing I would note is that the markets didn't move very much on this crazy plan of Trump's, this crazy saber rattling on Greenland. So, you know, the S&P was down a couple of percent.

The dollar was a percent weaker or maybe a little more. So it didn't seem like he was scared off by markets exactly. So, and that's kind of a theme that the market's reaction function to crazy Trump stuff does seem to be getting blunted over time. But maybe, you know, it's the politics. He just realized at some point that he was holding a losing hand against Europe and he folded. I mean, I think, you know, and maybe we ought to be glad. this is a guy who cuts his losses when he realizes the other team isn't going to just shrivel. Yeah.

He also threatened these tariffs on Canada if they go ahead with this China deal. My instinct here is we'll probably see a taco again. I mean, I'm just trying to figure out if there's any rubric or formula that you can follow as an investor or even as, as, just a market observer when Trump comes out and makes these statements about tariffs, like, do you just not believe them? I think in this case, with the candidate tariffs, you can be pretty confident not believing them that they're going to end up anywhere near 100%. Yeah.

Trump has shown no appetite for outright trade embargoes, which is what a 100% tariff amounts to. If we cut off all trade with Canada, there would be howls of pain in the U.S. economy as well as the Canadian economy. And it would just be more than the president could take. So I would 100% bet on a taco in this case. There's just no way. It's not predictable. It was just an expression of rage, I think. Yes.

Not a policy proposal. I've had a thought recently after this, after last week's talko, I wonder if investors would be better off never, ever listening to anything that he says. I would love to put that question forward to you. Like, there's an argument to be made that if you just turn it off, you just press the mute button, you might perhaps make better investment decisions. Or at the very least, just don't really take anything. think that he says that seriously? I mean, this is a delicate game to play because he's the president, and, you know, he does have a lot of power.

I think you'd have to be careful to distinguish the cases where it's straight out of the truth social account and the cases where there's more voices echoing the policy, right? So because, of course, there have been highly market-relevant Trump policies. You know, the tax cuts. Yes. Whatever. But, you know, I wonder if just pretending he didn't have a truth social account and limiting it, limiting your intake that way. I think that might work pretty well.

But again, there's another question, which is how much does this guy change over time? I think, I wonder. if as his term wears on, second term, lame duck president, 79 going on 80, whatever, you have to take seriously the possibility that his risk appetite and his just sheer bloody-mindedness is becoming more extreme over time. Right. You know, and we saw that in the case of Venezuela, you know? I mean, so I don't know, turn it off.

but clearly a more skeptical attitude is warranted here. Yes, there should be some filter between what is a truth social post and what is a policy proposal. The line is very, it's very blurry. It's not totally clear. But I think you're right. I think there probably is a line. And if someone could figure out exactly what that line is, maybe it's when Scott Besson says something, I doubt it. Maybe when a plurality of officials get together and agree that this, yes, this is the

plan. Again, I'm not sure about that either. But it does seem very relevant if we're trying to pass out what is taco and what isn't. I guess Taco versus Fafo, as you've pointed out before. I do want to get your reactions to what's happening with the price of gold right now. Gold has now surpassed $5,000. It's up more than 50% over the past six months. It is coinciding with murmurs of a sell America trade coming back. Perhaps those are related, perhaps they aren't. But yeah, I'd like to get your views. I mean, gold has had this unbelievable year.

They keep on setting these price targets, or at least I keep on seeing these price targets that seem absurd, and then it just keeps on hitting them. What do you make of what's happened with gold over the past few weeks and the past few months? First of all, I should note for the benefit of your listeners that the association of financial pundits and forecasters,

ought to erect a monument to how wrong I have been about gold for the last couple of years. I mean, I was a skeptic at $2,500, right? 100% ago. So I don't like it as an asset class. I don't think it's been great over time. I've articulated again and again my skepticism, and I have been wrong as it is literally possible to be. So with that said, that's your health warning to everyone listening to me,

I think that there are three theories. One, what this shows you is about the debasement trade, right? That the dollar and is going to weaken over time and there's going to be inflation, et cetera, et cetera. U.S. assets in particular and paper assets in general, that's bad for them. There's another theory that gold always goes up on political instability. It's not so much the inflation stuff. it's the politics. Third theory is that it's a mean stock now,

and people are just piling in. All three of these can be true to different degrees. I don't like the debasement theory because we just don't see it in the bond market. People love to huff and puff about how the dollar is so weak now, but if you look at a 10-year chart, sort of average. Inflation expectations, however,

You measure them. Any market-based measure of inflation expectations, 100% fine. So how could you have massive debasement that gold is picking up on? Yeah. And the bond market just doesn't see it at all? That strikes me as crazy. That leaves us with, then we go to the politics. Yeah, the world does seem a bit insecure right now.

But again, why wouldn't that express itself in sovereign bond yield somewhere? Same argument. That leaves us with mean stock, which has been my favored theory. You know, it's like people are chasing the momentum. But the longer you're wrong, the more you start to doubt yourself. So you've caught me at a moment of self-doubt. And I'm actually writing today trying to look again at the politics. the debasement theory and see what can be salvaged there.

Yes, it is very interesting. It's like gold has turned out to be everything that Bitcoin wanted to be, and it's remarkable how Bitcoin has not performed. And it's just while they have the Bitcoin president in office, while the world appears to be going politically to shit in various ways, this is Bitcoin's year, but it isn't. It's gold's year instead. I mean, there is a theory, by the way.

I mean, I think there are people out there saying, that crypto people are realizing that crypto is actually correlated to the stock market. So it's not a hedge against your other assets. And so they're switching to gold, right? They're like, oh, you know, there's no diversification benefit to crypto. It's just an amplifier of the returns on the rest of my portfolio. But I can't find anyone who says they see that happening, that they see out of crypto and into gold trades.

Yes, I would love to see, I would love for someone to come forward if that is really happening. Yeah, yeah, exactly. All of your pride and reputation having loudly talked about why crypto is exactly the investment for this situation. But still, it would be very, it would be very good for us, or at least for me as a crypto-sceptic. Final thing I'd like to get your reaction to. We are, the contenders for the Fed chair has been an ongoing race. Last week, we learn, I learned on Kalshi, actually, on one of these prediction markets, that there is a new contender.

This guy, Rick Reeder, his chances have soared to nearly 50% after Trump had a call with him. He called him very impressive. They had a meeting at the Oval Office. He is very much in favor of cutting rates. He is a former BlackRock executive. He's expressed concerns about the labor market, et cetera. I haven't looked into him very much yet, but any reactions or thoughts on the possibility of not Kevin Hassett, not Kevin Warsh, but Rick Reader as Fedcher. I've spoken him to a lot. I've interviewed him for the newsletter. He's an extremely clever man with a very deep knowledge of markets. I mean, he's arguably the most important bond trader in the world, given the sheer amount of assets he manages at black.

So he knows the market as well as anyone you can possibly imagine. And I think he's a very smart guy. Does that mean he has the temperament to be the chair of the Fed or that Trump will pick him? I have no idea. It is important to notice, to note, however, that on several occasions, quite consistently, Reader has said he doesn't think rates at, you know, call them 5% now or whatever they are, or win rates are at 5%, now the base rate is a little lower, you know, whatever.

He's consistently said, actually, I don't think these highest rates are doing very much to control inflation. And in that context, he's used the example in the past of the housing market, right, where if you brought the cost of mortgages down, houses would get cheaper, so that would actually be anti-inflationary. So he says these kinds of things you can understand why the president would be interested in at least talking to him. He also said on at least one occasion that maybe the Fed should or suggest. I emphasize the word suggest here.

He suggested that maybe the Fed should help the Treasury control interest costs. Maybe he was misconstrued. That is a left-fieldy idea. I'm not sure if you really meant that or whatever, but it's out there. And so I think he is a guy who might naturally appeal to the president. I mean, it's clear what the president is afraid of, right? Which is that he'll appoint somebody who will give him a lot of sweet talk in the appointment process and then turn out to be his own person or her own person.

Yes. Which is, of course, the whole point of the structure of the Fed chair's job. And my sense of Rick Reeder is that he's a market vet who's going to have his own views. And I wonder if Trump might not get that sense from him to and back off. Right. He's a really serious person. Yes. Rick Reader is not a toady.

Yeah. Which is, it's very interesting because it's hard to see. the right fit for the job as anyone but a toady and a sick of fan. I agree. I mean, it appears that the best person would not be a seasoned Wall Street executive. It seems like the best person would just be a guy who doesn't have many thoughts and just is willing to say yes and bring things down. With a small number of exceptions, Trump has appointed for loyalty rather than competence.

Yes. You could argue within the case of Rubio or possibly Bacent, that's not true. But as a general rule, the main thing about getting appointed to something important in the Trump administration is saying yes. As loud as you can. Exactly. So I guess I'm hopeful for Rick Reeder based on your explanation. But I have to say, the fact that he's taking the meeting and the fact that Trump really likes him for the job, it just naturally makes me skeptical. and I think that would be reasonable to most people.

Rob, we'll have to have you back very soon. Thank you very much. Rob is the author of the unhaged newsletter and co-host of the unhedged podcast. Thanks for joining us, as always. Thanks, guys. After the break, TikTok seals the deal. And for even more markets content,

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That's Join Deleteme.com slash ProfG code. Proff G. Right now in the world of AI, two things are happening simultaneously. One, the technology is getting better fast. People are finding new uses for it. It's more popular than ever. And two, every company that makes AI is absolutely hemorrhaging cash. On the Vergecast this week, we're talking about what OpenAI and other companies are doing

to try to finally figure out how to make some money off of this technology. Spoiler alert, it's mostly ads. And we're talking about whether any of it's actually going to work. All that, plus some stories about the Chinese company that appears to be beating Tesla on the Vergecast, wherever you get podcasts. We're back with Profti Markets. TikTok's fate in America is finally settled. After years of legal battles, the U.S. and China have approved a deal that sells TikTok's U.S. business to a group of non-Chinese investors. Under the agreement, by Dancer's ownership will fall to 20% of the U.S. business, with the remaining ownership spread across PRS.

primarily American investors. Oracle, Silver Lake, and Abu Dhabi-based MGX will each take 15% stakes in the company. Okay, here to help us unpack the terms of this deal. We are joined by one of the reporters who broke this news. We're joined by Reid Alba Gotti, technology editor at Semaphore. Reid.

Thank you for joining us on Profty Markets. Absolutely. Good to be here. So TikTok has closed the deal. It's official. you actually reported that this was going to close before it actually closed. I'd be interested to know how you got that scoop. But before we get there, what do we know about the deal? What are the terms?

Where are we on TikTok? Yeah, I mean, you know, well, it's basically a, you know, this joint venture, you know, with Oracle and Silver Lake in the U.S., they're going to basically take over the U.S. version of TikTok. I think the really interesting part, honestly, less than the, the business deal itself is, is like, what's going to happen with the algorithm in the U.S. And from what I understand, I mean, and this is something I, you know, reported on back in December is that, you know, they're going to retrain the algorithm on U.S. customers. And this way, they'll be able to, the Oracle will sort of administer this.

They'll actually be able to tell, you know, if there's any manipulation from the Chinese government, essentially, on the algorithms. I thought that was sort of fascinating. Yeah, I mean, the reason this is happening is there was a national security concern that dates back many, many years. The idea was to not have China influencing the algorithm, the TikTok algorithm that millions of Americans use. Have they solved that, actually? Like, do we know that this new TikTok is free of Chinese influence? Well, I think this is actually the big question, right?

I mean, we've gone through all of this, you know, Congress and now this huge, complicated deal, which, you know, the U.S. and China had to sign off on all for, you know, eventually for China to still kind of have a hand on this, right? Now, if you talk to people at Oracle, there's a, no, I mean, they're, they literally are going to be able to oversee this and make sure that there's, you know, that there's no manipulation. But I've seen, you know, there's been chatter since December when this deal, you know, was originally sort of came out and most of the terms came out like a month ago from critics. You think that, no, actually, you know, unless there's a complete break between China and the U.S. version of TikTok, there's always some danger that there's going to be manipulation. Now, like the technical feasibility of that or, you know, whether that's actually the case, I don't know.

but I mean, to some extent, perception is reality, right? If people are worried about it, then I think it may continue to be a big question mark. Just looking at the new owners, so we've got Oracle. It sounds like Oracle is really the one who's dealing with the technological side of the whole thing. We're interested to hear more about that. Also, Silver Lake, American investment firm, MGX, based out of Abu Dhabi. So that's not an American owner. Some people would maybe say, well, why are we having non-Americans come in, these Middle Easterns come in and control the algorithm?

What do you make of the ownership? Who's really in control here? Yeah, I mean, that's another interesting. I think that's going to definitely raise some questions. Now, if you've been following the Gulf region, which, you know, Semaphore has, there have been a bunch of deals between U.S. tech companies and, you know, MGX and G42. and other Abu Dhabi entities, UAE entities really. So this is, and this has been what the Chinese relationship with the UAE has been this big sort of question mark around there. Should we even allow, for instance, Nvidia chips to be shipped there?

The U.S. government now, you know, has, it's been, it's sort of under Trump has been a bit more open to dealing with, with those entities. But I think the question is like, well, you know, how much are they, like you said, Oracle is actually going to be administering this on the technical side. So how much is this just a monetary investment? Do they actually have any influence? I think if you talk to Oracle, they'd say,

no, if someone from MGX calls us up and says, can you make a little tweak to the algorithm here? It's not like they have the power to do that. But again, you know, these are just, even just, you know, the original ownership, right, of ByteDance owning TikTok. was enough, I mean, ByteDance always claimed that they were not manipulating the algorithm as well. So I think there's just always going to be some suspicion around TikTok and, you know, the algorithm, so to speak.

Yeah, I mean, this is an algorithm that has been wildly successful. I mean, just thinking back to when TikTok first came on the sea, and it seemed as though there are all these potential social media companies that came and went, but no algorithm really cracked it. It was always basically Facebook that was the winner or Instagram, whichever algorithm you were on. And then TikTok wins. It's been so successful for so long. It seems as though now it's about to change in a big way for the first time ever, which I think begs a question, like, how will it change?

What will it do to the social media market? And one thing that we found kind of interesting is that on news of the deal closing, meta stock jumped 1%. Now, maybe that's not large enough to attribute that this is because of the TikTok deal, but I'm certain that there's definitely a question that investors are asking, like, what does this actually mean for TikTok the product? And perhaps could it be, you know, worsening something that's already working very well? What do you think? No, I, you know, I don't think the algorithm itself is something that's a secret anymore. In other words, Like the technical aspect of it is not, and everybody kind of, I think, knows how this works.

There's not, you know, there isn't at this point, I mean, look, look at just, you know, frontier AI companies, right? I mean, it's hard to keep even that stuff secret. So I think everybody generally knows how this works. The thing is what's valuable now in this, in this, you know, U.S. TikTok entity is the fact that they have all this data on the users. They know what people like already. So that's why Oracle can't just come in and say, we'll just like wipe this thing clean and we'll completely start over, develop, you know, our, because they basically be starting from scratch. So you'd log on the TikTok and it wouldn't know anything about what you want to watch. And they'd have to start that process over again. So I think it's, you know, it's not the algorithm now. It's just that it's the, there's all this, you know, institutional knowledge, I guess. And they need to find a way to retain that. while also, you know, making sure that there's no kind of like undue influence, you know, behind the scenes. All right.

Reid, Alvigati, technology editor at Samafort. Reid, appreciate your time. Thank you. Thanks for having me. Well, it's quite telling that gold, the asset that is known across the world as the safe haven asset, the thing you buy when things are looking really bad, it's quite telling that that asset hit another record. record high this week. $5,000 per Troy ounce up more than 50% in the past six months, up more than

80% in the past 12 months. What that tells you is that investors are looking around, they're seeing what is happening, especially in America, and they're getting quite frightened, whether that is our unsustainable fiscal deficit, which is set to explode again under Trump, or our escalating geopolitical tensions from Greenland to Venezuela to Iran, or even what is happening domestically. Most recently, armed federal agents, raiding cities, and shooting people in the middle of the street. All of this is working in tandem to make investors feel anxious, very anxious. And let's be real, they probably should be. You know, we can talk about earnings and we can talk about profits, but when masked agents are on the ground,

shooting people in the head, suddenly the story changes a little bit. It's not about headwinds and tailwinds anymore. It becomes bigger than that. It becomes about violence. It becomes about democracy. It potentially becomes about war. And what do you do when you're worried about all of these things? What do you do when you're worried about the future of America?

What do you do when you're worried about America's place in the world, perhaps a new global order? What do you do? You buy gold. Now, again, I'm not questioning the anxieties. Again, I think these anxieties are reasonable. However, I would question investors' conclusions. And in this case, the conclusion is that if America falls apart, for whatever reason,

if that happens, the answer to your problems is gold. And to that, I would ask the question, why? Why specifically? Because gold is a hard asset? Okay, well, there are lots of hard assets. Because gold is uncorrelated from the dollar. Okay, well, there are plenty of non-dollar denominated assets, too. Or maybe because it is universally recognized as valuable, a store of value.

Again, I could present to you a laundry list of other assets that fit the description. We could talk about many of the other metals, metals that are more useful than gold. metals like copper and lithium and aluminum. We can talk about other commodities as well. We could talk about food, oil. We could talk about maybe even Bitcoin. We could even talk about international stocks. If you think the U.S. is going to shit for whatever reason,

well, there are 194 other nations that you could invest in, many of which have far lower debt loads in the U.S., countries like Norway or Denmark or Switzerland. And if you're a real duma, you could. just invest in weapons manufacturers and defense contractors. I'm not endorsing any of these, but my point is, when times get bad, there are plenty of things you could invest in besides gold. But the market doesn't seem to be fully recognizing that.

It seems that gold is rallying not because of its intrinsic value, but because of a story that investors are instinctively telling themselves. When things like bad, this is what you do. You buy gold. Everyone knows that. That is not an investment thesis. That is a story. In fact, it is often the story of a bubble. A bubble is when the price of an asset becomes so untethered from its fundamentals that it no longer reflects its actual intrinsic value in the real world. Gold is supposedly almost twice as valuable today as it was 12 months ago. But again, why? And be specific. What can it do for you that it didn't do last year? How can it improve your life relative to anything else? What makes it such a safe haven? These are the questions that investors need to ask themselves very honestly. And saying it's worth it because everyone else says it's worth it isn't an answer.

You have to have your own answer. It has to be a real, genuine answer. This is what investing is about. Now, to be clear, I think gold could rally tomorrow. I think it could rally the next day. I think it could keep rallying for the rest of the year. But at a certain point, you do have to start asking questions. And in every rally like this, and in every bubble, potentially like this,

the most important question is also the simplest one. And that question is, why? Okay, that's it for today. This episode was produced by Claire Miller and Alison Weiss, edited by Joel Patterson and engineered by Benjamin Spencer. Our research team is Dan Shillan, Isabella Kinsel, Chris Nodonoghue, and Mia Silverio. Thanks for listening to Profugee Markets from Proffery Media. If you liked what you heard, give us a follow.

I'm Ed Elson. I will see you tomorrow.