It seems like October 2025 will be one of the most volatile months in the history of the market. Even if gold has surged to all-time highs of about $3,900 per ounce, U.S. equities are unexpectedly strong.
Gold Surges, Markets Diverge
New Haven Asset Management’s portfolio manager, Rebecca Teltscher, tells Devan Murugan of MINING.com that investors are dealing with a perplexing, almost contradictory market environment. Teltscher pointed out, “Take Canada’s TSX vs the US – two markets presenting very different tales.”
Due to reasons including rising central bank demand, investor flight to safety, and positive operational leverage within mining businesses, gold prices are at all-time highs and have risen a whopping 109% year-to-date, driving the TSX.
Tech Boom Defies Logic
When there is economic instability or geopolitical unrest, investors turn to gold. However, Teltscher said that the United States presents a different picture. Despite a government shutdown and impending debt issues, IT giants known as the “Magnificent Seven” are propelling the S&P 500 to new values.
According to Teltscher, “at this time, we are not buying it – we believe valuations are simply too high on the US market, especially in the technology sector.” It “does not really make any sense,” according to Teltscher, that the US market has been rising for many days in a row despite a government shutdown.
“We seem to be in bubble territory, even if I detest the term ‘bubble,'” she said. “Almost all metrics show that the US market is costly, whether it is price-to-sales, price-to-book, dividend yield, or PE. Every indicator you look at is screaming expensive.” “You have two very successful markets, but one is indicating economic fragility and the other is indicating growth, in contrast to the TSX.”
The conflict between technology and gold
Historically, when equities are weak, gold climbs. However, both gold and U.S. stocks are at all-time highs today. This is “extremely inconsistent,” according to Teltscher, who also cites the acceptance of cryptocurrencies and central bank activities as partial causes.
Perhaps because they perceive global tensions to be at an all-time high, central banks are raising their reserves. All of these indicators suggest that gold is a safe haven investment. Teltscher also noted that gold prices may rise even more if Bitcoin, a cryptocurrency, were not seen as an additional safe haven.
Is the safety net too extensive?
In the past, markets have mostly ignored U.S. government shutdowns and have instead relied on government actions and central banks to support them. However, Teltscher cautions that investors could be underestimating this safety net’s limitations.
Since 2008–2009, we have not had a true recession. There has never been a protracted economic downturn for investors under 40. Unprecedented central bank and government stimulus actions kept the epidemic from turning into a recession, she said.
Although markets are pricing in “no recession,” Teltscher emphasized that the underlying economic data paint a different picture: declining retail expenditure, a slower GDP, and deteriorating consumer mood all point to possible problems.
What comes next?
Although she refrains from foreseeing a disaster, Teltscher believes that markets will ultimately adjust to the realities of the economy.
Valuations should not be as high as they have been in recent months, but there should not be a fall either. “The market has to take into account the economic and geopolitical concerns we have been seeing,” she said.
Investors have a unique conundrum as October progresses: U.S. tech stocks are still at an all-time high, but safe-haven gold is rising. Teltscher argues that the market has to return to reality since only one of these signals can be accurate.