There's a global gold rush: It is a worrying sign.

Gold prices have risen more than 30% so far this year, which suggests its annual price increase might eventually exceed what we saw during the pandemic or the West’s 2007-09 recession, according to Dow Jones Market Data. Futures for the precious metal have not surged so much in a year since 1979, when an energy crisis fuelled an inflationary shock that brought the world economy to its knees.

Unlike the past, though, it is not a deadly bug or financial meltdown that is drawing people to what’s perhaps the earliest safe haven ever discovered.

Instead, the recent run-up to a record price of almost $3,700 per troy ounce on Tuesday is the direct outcome of a spike in uncertainty after a shift in the White House.

It is not just the dismal future of world trade that is to blame. Given US President Donald Trump’s incessant attacks on the US Federal Reserve’s leadership, the entire edifice of modern finance is at threat. The Fed, after all, is its nerve centre. Throw in turbulent geopolitics—with wars in Europe and West Asia—and it is easy to see why investors are rattled.

The fear is that we could be heading for stagflation, or a spell of high inflation and slow output growth, like in the 1970s. After the US dollar’s direct convertibility into gold was nixed by Nixon in 1971, the metal’s price shot up. What could be bought for just $35.50 per ounce in May 1970 was selling at $670 by September 1980. Mirroring this, the price of 24-karat gold rose from ₹184 per 10gm in 1970 to ₹1,330 a decade later.

The current upshoot, which began almost three years ago, has intensified over the past few months with Western investors piling into exchange-traded funds (ETFs). The net assets of US ETFs linked to physical gold have reportedly ballooned 43% since January, according to Morningstar Direct, with March and April seeing two of the three biggest monthly inflows since at least 2014.

The possibility that the US Fed will embark on a rate-cutting cycle has pushed speculators into a scramble for gold, since lower interest rates could raise its appeal—despite the fact that holding it yields no payback—relative to safe government bonds.

In India, cumulative investments in gold ETFs have crossed ₹5,648 crore over the year till date. Assets under the management of gold ETFs surged nearly 94% year-on-year, rising from ₹37,390 crore last August to ₹72,496 crore last month.

For many Indians, the attraction of gold lies not only in its intrinsic value, which makes it a hedge against inflation, but also in its value as collateral; as reported, gold-backed loans now account for 1.1% of total bank credit, their share nearly doubling from a year earlier.

For all the crypto hype, gold has risen more than Bitcoin (up 24%) in the year till date—a telling commentary on its hold on the human psyche. Gold is often seen as an anachronistic buy, but could well outlast rival valuables of any extraction or conception.

Clearly, Shakespeare got it wrong when he warned in The Merchant of Venice (speaking on behalf of gold): “Many a man his life hath sold, but my outside to behold." Embossed seals on paper and digital tokens might glitter too, but gold still rules.