Gold and silver reflect currency concerns: Gold and silver continued to draw attention in December, with both reaching new highs. Gold prices rose as investors increasingly expect the Federal Reserve to move toward interest rate cuts, with silver following amid ongoing industrial demand. While rate expectations have played a role, we believe an equally important factor has been growing concern about the long-term purchasing power of the U.S. dollar.
Historically, precious metals have been viewed as stores of value during periods of rising debt levels, fiscal imbalances, and accommodative monetary policy. As investors consider the combined effects of potential rate cuts, elevated government borrowing, and persistent deficits, interest in gold and silver has increased as a way to hedge against currency dilution.
For clients, we view this trend as informational rather than prescriptive. The recent strength in precious metals appears to reflect broader concerns about currency stability and purchasing power, not a signal to shift away from diversified, long-term investment strategies.
A K-shaped economy: Economic growth in the U.S. has remained relatively strong, but not evenly so. While overall GDP growth has held up, the benefits of that growth are not being shared equally across income levels, industries, or regions. Employment remains solid in certain sectors, while others show signs of cooling. At the same time, inflation pressures have eased in some areas but remained stubborn in others, particularly for essentials.
This dynamic has increasingly been described as a “K-shaped” economy, where some households and businesses continue to thrive while others feel ongoing strain from higher prices and borrowing costs. For markets, this unevenness complicates the outlook. Strong headline growth can support earnings and equity valuations, but pockets of weakness raise questions about sustainability and consumer demand.
This environment helps explain why markets have been resilient but also more sensitive to economic data. Investors are reacting not just to whether growth exists, but to who is benefiting from it and how durable it may be as financial conditions evolve.
Looking ahead to 2026. As attention turns to the new year, many investors are asking what 2026 could hold. There are several key considerations, including the path of interest rates, the outlook for inflation, and how markets may adjust if rate cuts begin more gradually than expected. While rate relief could support both stocks and bonds, the transition period may bring volatility as markets recalibrate expectations. Lower rates do not automatically mean smoother markets, especially if economic growth slows or inflation re-accelerates.
In our opinion, 2026 is shaping up to be less about a single dominant narrative and more about navigating trade-offs between growth, inflation, and policy decisions. For long-term investors, this reinforces familiar principles: diversification matters, patience is valuable, and short-term market movements are often less important than staying aligned with a well-constructed financial plan.
Year-end perspective. Taken together, these themes reflect a market that has weathered a great deal in 2025, including higher interest rates, uneven growth, political uncertainty, and shifting expectations. Yet it has remained surprisingly resilient. That resilience is encouraging, but it also underscores the importance of staying disciplined as conditions continue to evolve. Our focus remains on helping clients stay grounded, informed, and positioned for the long-term rather than reacting to headlines or short-term noise.
We wish you and your family a healthy, peaceful, and joyful new year.
Disclaimer: The information above is for general educational purposes only and should not be considered financial, tax, or legal advice. Always consult with a qualified professional regarding your specific situation. You should consult with your CPA and/or attorney before implementing any estate planning, gifting, or tax-related strategy.