How Do Political and Economic Uncertainty Affect Precious Metals Markets

Gold climbed past $4,000 per ounce on October 8, 2025, amid the U.S. government shutdown.

The halt in official economic data releases was the latest political uncertainty pushing investors toward tangible assets. Silver outpaced gold during the same period, rising roughly 53 percent as Bank of America called it a potential "catch-up" trade.

This pattern is not new. When confidence in political or economic stability weakens, precious metals have tended to move differently from stocks and bonds. For retirees and near-retirees focused on preserving purchasing power, understanding how instability influences metal prices can offer useful context.

Why Precious Metals Have Been Viewed as Volatility Hedges

Gold and silver earned their reputations as "safe havens" because they have historically maintained value independent of government solvency or corporate earnings. Gold is a physical asset, and its supply grows slowly relative to fiat currency expansion.

When uncertainty rises, investors sometimes move assets away from securities or currencies toward tangible stores of value. Metals do not depend on a company's profitability or a government's fiscal position, which helps explain their appeal during policy disputes, wars, and recessions. 

2025 drivers of renewed demand:

• U.S. government shutdown and suspension of Bureau of Labor Statistics data releases.
  
• Regional conflicts in Ukraine and the Middle East.
  
• Tariff uncertainty under President Trump's 2025 trade policy.
  
• Federal Reserve rate cuts, lowering real yields.
  
• 10% decline in the U.S. Dollar Index year-over-year.
• Central-bank purchases of roughly 900 metric tons in 2024, with 2025 on track to end with similar totals.

What "Safe Haven" Means for Retirees

Retirees typically prioritize helping to preserve what they’ve built and generating a steady income over chasing aggressive growth. Traditional safe-haven options include high-yield savings accounts, CDs, Treasury securities, and short-term bonds. These are meant to provide predictable returns but offer limited hedging against inflation or currency devaluation.

Some retirees explore precious metals as an alternative or complement to these options.

A Financial Analysts Journal study found that portfolios with 5% to 10% gold allocations showed improved risk-adjusted returns in 90% of tested periods from 1987 through 2019. 

Silver's Distinct Role

Silver often mirrors gold's traits as a store of value, but also serves as an industrial metal.

In 2025, the global silver market recorded its fifth consecutive supply deficit, with fabrication demand-particularly for photovoltaics-reaching a record 690 million ounces.

Prices climbed roughly 53% year-over-year, the strongest rally since 1980.

Because silver straddles investment and industry, it tends to be more volatile than gold. That volatility can amplify both gains and losses, but it also connects silver's price to technological expansion, especially in solar and electronics.

Takeaways for Retirees

Periods of political or economic strain often test traditional "safe" assets. Gold and silver have, at various times, provided a hedge against inflation, currency weakness, and market volatility.

However, precious-metal prices fluctuate and involve additional costs such as storage, insurance, and bid-ask spreads.

For retirees considering precious metals:

• Metals may serve as one element of a diversified plan intended to help reduce exposure to financial-system risk.
  
• Allocation decisions should be made independently, with advice from qualified professionals.
  
• Historical performance is not a guarantee of future results.

Understanding the historical relationship between uncertainty and metals prices can help retirees make informed, self-directed choices about whether and how to include physical bullion among their safe-haven holdings.