Assistant professor of instruction and economist Joshua Mask discusses the reasons why the price of gold has skyrocketed in recent months.
Joshua Mask, assistant professor of instruction in Temple University’s College of Liberal Arts, provides insight into the precious metal market.
Photo by Ryan S. Brandenberg
For much of human history, gold has been a precious commodity. In recent years, its price has skyrocketed and fluctuated due to various economic and geopolitical factors—in the past five years, its price has roughly tripled, according to Reuters.
What’s behind these changes, and what do they indicate about our society and economy? For more information, Temple Now spoke with Joshua Mask, assistant professor of instruction in the Economics Department at Temple University’s College of Liberal Arts, about why gold prices have risen so dramatically.
Temple Now: What are the factors contributing to the steep rise in the price of gold recently?
Joshua Mask: The rise in the price of gold has been a longer-term trend influenced by a few factors. Gold was what we consider “dead money” for a decade, meaning that you’d hold onto it and wouldn’t see any sort of return from doing so, until 2022 when Russia invaded Ukraine. Russian assets held in the Western financial system, including reserves and bonds, were frozen. That led other countries to buy more gold to reduce how much of their wealth they held in foreign financial institutions, so they wouldn’t be susceptible to the same thing. That’s what’s been driving the gold market broadly in the background since 2022.
Also, in January of 2025, President Trump took office, and he has a very different perspective on trade. If you’re worried about trade going haywire, a way that you can hedge against that and protect yourself is by buying precious metals like gold. There’s only a certain amount of gold in the world so if everybody tries to buy gold at once, it’s going to raise the price of it. They’re buying it from fear but then the fear turns into fear of missing out. So, then you get this hysteria, which came to a head in January of this year.
The price came back down to earth once President Trump announced his nomination of Kevin Warsh to head the Federal Reserve. It’s the responsibility of the Federal Reserve to control the money supply. Once that nomination came out, all the people that are trading precious metals aren’t worrying as much about trade risks and they relax and stop selling and buying gold.
TN: Why has gold traditionally viewed as a safe haven asset, or something that people buy in times of uncertainty?
JM: People tend to view gold as being a safe haven asset because historically it has been the most common form of money that we’ve used, mostly because its scarcity helps it maintain value. But in terms of protecting people, it’s a yellow rock. It doesn’t produce anything, it doesn’t generate any interest. It’s just a historical thing that people have latched onto. I think changes in gold prices are more of a symptom of how people feel about the economy.
As an economist, I consider the U.S. Treasuries to be the safest thing that you can put your money in. My generic investment advice is always going to be that you should ignore this stuff, put your money in the S&P 500, and hold it for 20 years. You will beat everybody trying to trade this kind of stuff.
TN: How do fluctuations in gold prices affect other industries?
JM: There may be industries that are directly hit, like jewelry, which has always been a volatile market. Precious metals and metals in general are usually pretty volatile. The question is whether precious metal prices affect the economy at large, which really depends on how many people are holding onto gold as a personal safety haven. If half the U.S. population is trying to hold gold, then they’re going to be very affected by gold prices. I think the percentage of people holding onto gold today is only about 2% to 3% above historical averages, which isn’t enough that I would think it would affect the economy in a broad way.
TN: We know you can’t predict the future, but do you have any insight into what may happen to precious metals prices in the next few months or years?
JM: I think the big fear was centered around who was going to be the next chair of the Federal Reserve but now that Kevin Warsh has been nominated, I would be surprised if we see another big spike in gold prices. But that could change if, for example, the president comes out with a completely different trade policy tomorrow that nobody was expecting. That’s going to drive the retail investors. This longer-term trend of central banks buying gold is still going on, but that will stop once they’ve all acquired enough gold that they’re comfortable. My guess is that 10 years from now, gold will probably perform like it did 10 years ago, and then it won’t do much because it doesn’t have much real use.
