A new-ish gold rush and other indicators

0:01NPR.

0:11This is the Indicator from Planet Money. I'm Waylon Wong here with Mary Childs from Planet Money. Hi, hello. And Adrienne Ma. Hey there. So we are here for our weekly Indicators of the Week segment. And before we get going, we wanted to welcome Adrienne back because you have been away from the show for the past few weeks. And Adrienne, the floor is yours if you want to say hello and talk about why. Yeah. Yeah. If you listen to NPR, you might already know this, but I recently lost somebody that I loved. Her name was Kia Duggins. She was an incredible person. You should actually look her up if you get a chance.

0:56Kia was my girlfriend. And unfortunately, she was also one of the 67 people who died in that American Airlines plane crash in January. Needless to say, I have been going through it lately. The past several weeks have been incredibly tough. During that time, though, I've also gotten a lot of messages from listeners who offered condolences and words of encouragement and even wanted to share their own stories of loss and what they've learned from it. And so to all the people who reached out and offered words of support, I just want to say thank you. Adrienne, we're glad to have you back. Yes, we are with you, and it's really nice to be back in the booth.

1:45Thank you. It is good to be back. And apologies in advance if it's a little while until I am my normal self again. I don't think you have to be funny for, like, a long time. No, there's no requirement to feel or act normal. Oh, yeah? Okay. Well, in that case, you're just going to get goth Adrian for the rest of the year. Goth Adrian. Emo Adrian. We're here for it. Mary Whalen and Emo Adrian, we're going to do what we do most Fridays, which is highlight numbers from the news, crack a few jokes, and help people make sense of what's happening in the economy. This message comes from NPR sponsor Capella University.

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3:47waylon kick us off with your indicator my indicator is 513 that is the number of lawmakers in germany's lower house that voted to approve huge new defense spending plans these plans you guys are so big they required a change in the constitution to happen change in the constitution requires a two-thirds majority in the lower house and these 513 votes that was enough it still has to be voted on by the upper house, but it looks like they will also approve. They're changing the constitution. Is that like an amendment here or is this a bigger deal than that? Well, it is a pretty historic moment for Germany, I will say.

4:27The country's constitution has something called a debt break. That's B-R-A-K-E. And it's a limit on borrowing. And what the lawmakers voted yes on was exempting most defense spending from this limit. How much are they talking about spending here. Well, hold on to your butts. There is talk of up to one trillion euros, which honestly, a staggering amount. And this will go into military and infrastructure. Like part of these plans is a 500 billion euro fund to modernize hospitals, schools, roads, that kind of thing. A chunk of this fund will also go toward climate related spending. This is something that Germany's Green Party insisted on.

5:08And the other two political parties, you know, they needed support from the Greens, as they're called, to get all of these votes. Okay, money for climate, for infrastructure, but also a lot, a lot of money for the military, right? Because it seems like European defense is a very hot topic right now. We all have done a couple episodes on it. We have. That's the definition of when it's hot. Everybody is when the indicator is on the case. It's obviously a huge change to be talking about German rearmament. This is a very sensitive subject. The country you might remember had to demilitarize after World War II.

5:42And then it wasn't until the Cold War in the 50s that it was allowed to build up its military again and join NATO. But, you know, we have war in Ukraine. We have nervousness about Russia's moves in Europe. We have rapidly deteriorating relationships between the U.S. and its allies in Europe. So this vote in Germany fits into this bigger geopolitical shift we're seeing. And we'll have more on that in an episode next week. That's exciting. I can't wait to learn more. Adrian, what do you got? Turning things to the U.S., my indicator of the week is 894 deals. That is how many corporate mergers and acquisitions were announced in February.

6:20And that makes this past February the slowest month for deal activity in the U.S. in at least a couple of years. And a big reason for this slowdown in corporate matchmaking is uncertainty. A lot of it caused by President Trump's tariff policies. Yes, it seems pretty obvious. We are in a trade war. There's all the back and forth of Mexico and Canada. There's tariffs on China, the European Union, Japan, and the White House is promising more to come. Yeah, totally. And this is creating a lot of uncertainties for CEOs about how to run their businesses, right? Because if you're a company that imports stuff from other countries, you are probably wondering right now, should I raise the prices of my products to account for those tariffs?

7:03Or should I stock up on a lot more imported stuff before the tariffs go up? So with all these companies trying to navigate these kind of day-to-day micro business decisions, it's kind of hard for them to think macro, right? To think about big strategic moves like buying or merging with other companies. Yeah. And like if you have officials in the Trump administration saying like, maybe we'll have a recession. I mean, then you don't want to hire. You don't want to spend money. You don't want to buy a factory. Totally. Business uncertainty has all these ripple effects. Well, Adrienne, speaking of business uncertainty rippling, my indicator of the week, I'm pleased to announce, is$3 ,000, as in dollars, as in that's how much you'll need for one troy ounce of gold.

7:50What's a troy ounce? I've never known what a troy ounce means either. I know, right? I just learned. I'm so glad you asked because I did Google it. It is an ancient way from the Middle Ages that we measure precious metals. And supposedly it originates from Troy, France. So I guess it could be a troy ounce. It is a little bit more than a normal ounce. It's 31.1 grams for a troy ounce versus 28.35 grams for a regular ounce. That's very specific. The price for gold per troy ounce has risen 14 % this year alone. That is like the opposite direction as the stock market, which has dropped, I think, like 10 % this year.

8:29Yes, it dropped 10 % from its peak in February, although it has clawed some of that back. But as you know, and as Adrienne just relayed, there is a lot of uncertainty, a lot of fear. Of course, you know, when things are getting a little fearful, gold suddenly becomes a really attractive investment for a lot of people. Historically, it's been seen as a safe haven investment. That's exactly right. And it just so happens that I saw this in real life the other day. So I was coming home from New York and I took a lift from the train station. And the guy who drove me, his name was David, super nice guy.

9:00David, if you're listening, hello. He asked what my job was. I told him. He was like, oh, so what do you think of this gold rush? He just got right down to business. He did. Because he is out there buying gold. And I'm paraphrasing, but he basically thinks that the world order has been upended, is being upended, governments around the world in upheaval without exception. He wants a store of value. I think part of it is like gold is this traditional and trusted and, you know, ancient way of opting out of financial markets in a way. Because even if you hold cash, you're still kind of playing in the arena because you've got to pick which currency to hold.

9:34When it comes to holding gold, we're not just talking about individual people like David, right? No, yeah. It's not just David alone causing this surge. It is also central, although I wish that for him. It is also central banks for years. And recently, investors have started outpacing central banks in their gold buying, which is remarkable. And this surprised me. The fact is gold delivers. So since we left the gold standard in 1971, gold has somehow generated annual returns of more than 8 % according to the World Gold Council. That beats the bond market, commodities, emerging markets, cash, everything but U.S.

10:10stocks, which is salient right now because the picture for U.S. stocks is really changing. Investors cannot flee fast enough. A Bank of America survey this week showed that fund managers have cut their holdings of U.S. equities by the most on record, by 40 percentage points. 40 percentage points. That is a wild bonus indicator you just brought us. Thank you. I'm where that came from. Well, Mary, thank you so much for joining us today. Always fun to have you. Thank you for having me. It's always a delight to be here. And great to have you back, Adrienne. Thanks, Waylon. This episode was produced by Angel Carreras.

10:45It was engineered by Gilly Moon, who we will miss so much. Good luck at your new adventure, Gilly. It was fact-checked by Sierra Juarez and edited by Kate Kincannon. The Indicators are production of NPR.