Editor’s Note: A reader recently asked me if it is time to buy gold and bury it in his backyard. He’s worried the economy may soon collapse under the weight of recently enacted import tariffs.

I understand his concern, but I believe it is premature to hit the panic button. Despite the tariffs, inflation has risen only slightly this year as has the national unemployment rate.

Nevertheless, there is merit in the idea of owning something in addition to stocks and bonds as a hedge against potential economic dislocation that the tariffs may eventually cause. Right now, that something is gold but there is another metal that is starting to emerge as the next market leader.

Back and Forth

I have been following the price of gold closely ever since the Fed initiated its zero-interest-rate-policy (ZIRP) five years ago in the immediate aftermath of the coronavirus pandemic. Predictably, the price of gold soared from below $1,600 per ounce to above $2,200 as interest rates fell to historic lows.

But once it became apparent that the global economy would not collapse, gold fell below $1,700 one year later. It then shot up above $2,200 in February 2022 when Russia’s invasion of Ukraine triggered economic sanctions that threatened to destabilize the global economy.

However, the Fed started raising interest rates the following month and made clear its intention to continue doing so until inflation was under control. That development triggered a selloff in gold that drove its price below $1,700 before the end of that year.

In January 2023, gold was back above $1,900. That’s when I advised my readers: “Once again, gold appears to be headed above $2,000. But this time, I don’t think it is going to hit a wall. Instead, I believe gold is going to establish a new all-time high price later this year.”

Yellow Metal is Red Hot

Turns out, my timing was a bit premature. Gold did rise in 2023 but did not hit a new all-time high until the following year. In fact, the price of gold rose 30 percent in 2024, finishing the year above $2,600.

This year has seen a continuation of that trend. Last week, gold traded above $3,600 for the first time ever. Wall Street is expecting the Fed to start cutting interest rates when it meets next week. And since gold is traded in dollars all over the world, a stronger dollar means overseas investors (and other countries) will have to cough up more foreign currency to buy it.

As well as gold has performed over the past two years, gold mining stocks have done even better. That’s because the cost of mining gold is a fixed cost, while the price at which it can be sold is variable. As the price of gold goes up, profit margins for gold miners rise disproportionately.

Digging for Profits

When I wrote about gold in January 2023, I did not recommend buying the metal itself or an exchange-traded fund (ETF) that owns it such as SPDR Gold Shares (NYSE: GLD). Instead, I suggested the VanEck Gold Miners ETF (NYSE: GDX).

I noted then, “When the price of gold rose 20% over the past three months, GDX gained 32%. To the extent gold continues to appreciate, almost all that gain should fall straight to the bottom line of most gold miners.”

Since the date that article was published (1/30/2023) through the end of last month, GDX has more than doubled in value while the SPDR S&P 500 ETF (NYSE: SPY) has delivered a total return (share price appreciation plus dividends paid) of 67%.

However, as the chart below illustrates, that comparison is misleading. Until the end of last year, SPY was outperforming GDX. But once this year got started, GDX took off while SPY pulled back under the weight of the Trump administration’s new import tariff plan.

It was not until six months ago that GDX overtook SPY. And since then, it has shot up at an accelerating pace while SPY has eked out modest gains (circled area in the chart above).

The Nuclear Option

Now that gold is red hot, readers are asking me if it is too late to get in on the action. I think gold still has some room left on the upside, but probably not much. A more plausible scenario is that it levels off later this fall before giving back some of its recent gain.

Instead, I suggest investing in a different kind of precious metal: uranium. That’s because there is an energy crisis brewing due to rapidly increasing demand for data centers to support artificial intelligence (AI).

Some of those data centers consume more electricity than a small city. They need a dedicated source of firm power that is affordable and clean. The obvious solution is nuclear power, which uses uranium as its energy source.

The easiest way to participate in the growth of nuclear energy is by owning shares of the VanEck Uranium and Nuclear ETF (NYSE: NLR). Through the end of last week, NLR is up 42 percent this year.

That’s a big gain in a short period of time, but I believe it still has a lot of room on the upside. We are in the early stages of the nuclear energy renaissance, and by the time it is over uranium could be better than gold.