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For decades, the dream of tying the dollar back to gold has lived mostly on the edges of economic debate.

It showed up in think tank papers, conference panels, and late-night investor forums, but rarely anywhere near the people who actually run the government’s finances. That changed this month, when one of the idea’s most loyal champions landed a job advising the Treasury secretary.

The timing is hard to miss. Washington is carrying a record debt load, bond buyers want more to keep lending, and gold itself just posted its worst week in months.

So the question is no longer whether gold fans have a voice in Washington. It is whether anyone will listen.

A gold standard advocate with Bessent’s ear

Judy Shelton was named a counselor in the Office of the Secretary on Oct. 9, 2026, according to the Treasury. Her job is to advise Secretary Scott Bessent on currency policy, with special attention to China’s financial conditions.

She previously served as U.S. director of the European Bank for Reconstruction and Development, a senior research fellow at the Hoover Institution, and a senior fellow at the Independent Institute.

Also read: Scott Bessent sends clear signal to bond market investors

The hire turned heads in Washington. Shelton’s controversial economic views led the Senate to block her nomination to the Federal Reserve during Donald Trump’s first term, and she is not widely known as a China expert. That history makes her return to a policy role all the more notable.

Her best-known idea goes back more than a decade. In 2012, she proposed zero-coupon government bonds, called Treasury Trust Bonds, that holders could redeem in either gold or dollars.

Shelton called it a “trust-but-verify” approach to sound money. The idea was simple: If Washington kept the dollar strong, most holders would take cash, and if it didn’t, they could take gold instead.

Still, her new role is advisory. Her duties centre on currency policy and China, and the announcement makes no mention of gold-linked bonds or any change in how the government borrows.

Any shift of that size would require far more than one adviser’s backing.

Washington’s debt bill keeps getting bigger

The appetite for bold ideas starts with the size of the bill. Federal debt topped $40 trillion in August, and yearly interest on it now runs above $1 trillion, making it the government’s second-biggest expense behind Social Security, Reuters reported. That is money that cannot go to roads, defense, or tax relief.

The total has kept climbing since that milestone. The national debt stood at roughly $40.39 trillion on Oct. 15. With rates this high, every dollar the government rolls over or adds costs more to carry than it did a few years ago.

Bond investors have been sending their own message. The 10-year Treasury yield hit 5% on Sept. 14, a level the market had only briefly touched in 2023 and otherwise had not seen since 2007. That yield helps set what Americans pay on mortgages, car loans and credit cards.

Bessent has tried to steady the market. Treasury doubled its buybacks of long-dated bonds on Aug. 19, but long-term yields later climbed to their highest levels in 24 years, according to TheStreet.

Shelton’s plan speaks directly to that pressure, since a gold option is designed to attract lenders.

Gold can still help diversify a portfolio over time, but this month showed it can also fall hard and fast.STEFANO RELLANDINI / Getty Images

Gold’s slump makes the timing awkward

The awkward part is that gold is not riding high right now. Spot gold slipped below $4,000 an ounce on Oct. 23 and ended the session nearly 27% below its January peak of $5,501.70. That is a sharp reversal after the metal’s powerful run earlier this year, Reuters reported.

That drop came even as technology stocks took a beating, a moment when investors usually expect gold to offer some cover. Oil prices also jumped on fears of Middle East supply disruptions, reviving inflation worries just days before the Fed’s Oct. 27-28 meeting.

More Gold & Silver:

Top bank revises 2026 gold price forecast as investors reassess rally

Wells Fargo resets gold price target amid rate concern

Gold and silver crash as 10-year yield tops 5.2%

Interest rates add another headwind. The Fed raised rates by a quarter point in September, to a range of 3.75% to 4%, and most major brokerages expected at least one more increase before year-end, according to Reuters.

Higher rates tend to weigh on gold because unlike a Treasury bill or savings account, the metal pays nothing to the people who hold it.

The next test is only days away. Nearly all economists expect the Fed to skip a hike at that meeting and raise rates again in December. A tougher tone than expected from Fed Chair Kevin Warsh could keep yields elevated and put fresh pressure on gold prices.

What this could mean for your money

Even with the sell-off, some of the world’s most powerful gold buyers have not walked away. Central banks bought about 346 metric tons of gold in the first half of 2026. Steady buying from China’s central bank in particular has helped put a floor under prices.

For everyday investors, Shelton’s arrival is not a cue to dump stocks or wait for gold bonds to hit the market. Bessent has said officials cannot set the equilibrium price of Treasury yields, as reported by TheStreet, a reminder that Washington’s tools have limits.

Gold can still help diversify a portfolio over time, but this month showed it can also fall hard and fast.

What Shelton’s appointment does offer is a signal worth watching. For now, her role is to advise Bessent on currency policy with a focus on China, not to rewrite how Washington borrows.

But if gold-linked debt ever moves from paper to policy, the idea’s path into the Treasury will likely trace back to this hire.

Related: Wells Fargo resets gold price target amid rate concern

Transcript:

Caroline Woods: Joining me now, Sam Stovall, chief investment strategist at CFRA research. Sam, great to have you back.

Sam Stovall: Always good to talk to you, Caroline.

Caroline Woods: So we’re looking at some green arrows today. You’ve pointed out that this is the most expensive four year old bull market since World War two. Yet you think it still has room to run? Why?

Sam Stovall: Sam well, I do, Caroline. One reason being that we have 40% of the S&P 500 directed toward technology. And if you then add some of the tech oriented stocks in communication services as well as consumer discretionary, you’re looking at numbers that are 50% and higher. So this really is much more of a tech driven marketplace than it had been in the past.

Sam Stovall: Also, we find now that tech is trading at a discount on an absolute basis to its earnings over the past five and ten years. And on a relative basis, it’s trading at a discount over the last five, ten and 20 years versus the S&P 500. So I still think that Wall Street is focused on earnings. And earnings are expected to be very strong this quarter.

Sam Stovall: Obviously the bar was set very high, but I still believe that investors expect good things to come in this Q3 reporting period.

Caroline Woods: However, in October, tech and communication services ahead of some of these big earnings are the two worst performing sectors in the S&P 500. And then we have things like consumer staples up nearly 9% this month. Healthcare and utilities are up almost 7%. Is that a healthy broadening of the rally or could that be a sign that investors are quietly positioning for some trouble?

Caroline Woods: Sam.

Sam Stovall: Well, I think, you know, the jury is out on that. My belief is that investors got spooked with the core weave news. And in a very, very short period of time, there was a flight to safety into bonds. And that was one reason why the ten year yield shaved off 14 basis points in a single day. We had the rotation, as you said, into the safe havens of consumer staples, health care, utilities and energy.

Sam Stovall: But I believe that because we hit a low point in the end of September with only about 12% of the sub industries in the S&P trading above their ten and 40 week moving averages. And now we have worked our way back up close to 40%. I think investors are feeling a little less unnerved and believe that we do have some opportunities because seasonally, you know, October has been the best month of the four of the midterm election year.

Sam Stovall: And then November is the second best month. The fourth quarter is the second best of the 16 quarter presidential cycle, followed by the best and the third best. So a lot of good news from a historical perspective offers some enthusiasm and optimism, but obviously is not a guarantee.

Caroline Woods: So I want to know what that means for your year end price target. But before we get to that, sticking with history, I know you always say that history isn’t gospel, but it’s a guide. So historically speaking, when defensive sectors rally this sharply, what tends to happen next?

Sam Stovall: Well, if we do have a a defensive rotation being maintained then yes, I think that investors are worried that some bad things could be coming. But we were surprised by seeing a lot of strength in the second quarter and third quarter of this midterm election year. Historically, those two quarters are negative, but I have found that going back to 1990, which is as far back as S&P, has sector level data, that whenever the market was up in the third quarter, you want to let your winners ride.

Sam Stovall: So health care, energy technology were the three best performing sectors. You can add communication services as the fourth best performer. What’s also interesting is that these are the four best sectors when it comes to net debt to EBITDA. So if you’re looking at those sectors with the lowest debt exposure, then I would tend to say that if you are very worried about higher rates ahead, that in general these sectors tend to do the best.

Sam Stovall: Even though we did recently have a concern with Core, we’ve you have to look individually at many of the tech stocks. But when you have a sector itself, be as low as tech is, I don’t think you want to bail out too soon.

Caroline Woods: So the fact that the AI trade has suddenly come under pressure, not necessarily the case today, is sort of a mixed picture for AI, but our investors right to question it or is it, you know, is it time to rotate out of big tech? It doesn’t sound like you think that’s the case. So you would think that this is a buying opportunity?

Sam Stovall: I do. I think it’s always wise to question because you just don’t want to put it on automatic pilot. But we are expected to see, you know, very strong earnings growth for technology. Second only to the growth that’s expected in energy which is triple digits. But we’re expecting to see double digit growth through 2027. Earnings in 2027 are expected to be up by about 30 plus percent.

Sam Stovall: We have a PE on 2027 estimates that’s below 20. And if you recall, back in 2000, we had tech that was trading at 60 times forward estimates and Wall Street thought that was still attractively valued. So you know tech technology right now in our opinion it has taken it on the chin. And, you know, therefore our belief is that it does represent a good buying opportunity for the longer term.

Caroline Woods: You mentioned the the strength that we’ve seen in healthcare. It’s lower today but got a nice pop yesterday. Do you think that there’s more upside in healthcare or have investors missed that move?

Sam Stovall: No. We still believe that there is upside in healthcare. And it’s not just because of their defensiveness, but rather a improvement in earnings that are projected. Historically, healthcare has outperformed the market in midterm election years. And so history has play in this as well. So momentum earnings growth history. That’s why we have healthcare as one of our overweight recommendations.

Caroline Woods: So if investors are looking beyond technology and maybe looking beyond healthcare as well, what other sectors offer the best combination of both earnings growth and attractive valuations here?

Sam Stovall: Well, industrials is an area where our analysts still feel pretty confident that we could see some improvement. One reason is because we’ve been seeing an improvement in manufacturing PMI. We’ve been seeing more money that is being spent in terms of industrial activities. One of the problems is because transportation is found in the industrial sector. So with the higher energy prices putting pressure on the airlines, trucking firms.

Sam Stovall: ET cetera. There has been a concern, but we have a pretty high listing of stocks that are, we think, attractively valued, in particular in the defense area, which has not done all that well recently. But we still believe that because of the tensions worldwide, we’re likely to see some improvements there.

Caroline Woods: So if you were putting money to work today, which three sectors would get the biggest allocations?

Sam Stovall: Well, you know, because I say that, you know, history is a great guy, but it’s never gospel. I would be saying let your winners ride. That’s historically been the case. Also, remember that October 31st of midterm election years, through October 31st of the year after, has never declined since World War two. The average price change has been a gain of 16%.

Sam Stovall: And if you hold on to the three best performing sectors from March 31st of midterm election years through the end of October that they tend to carry over 12 months later, beating the market in average of 500 basis points and doing so nearly 80% of the time. So, you know, if our analysts are saying that they like, from a fundamental perspective, you know, health care, energy in technology, and if you want to add communication services, go ahead.

Sam Stovall: When you combine that with momentum as well as history, then I tend to say that, you know, you’ve got a winning hand.

Caroline Woods: I was just taking a look at the year to date winners. Consumer staples is actually number four energy, tech healthcare and staples. Do you like consumer staples at this point?

Sam Stovall: I like staples from a defensive perspective. You know we have been seeing a rotation into it. What’s the old saying when the going gets tough the tough go eating smoking and drinking. And so that’s one reason why staples tends to do fairly well. However, you know, with continued concerns about tariffs, cost of fertilizers, GLP one drugs and, you know, putting pressure on food groups, you know, a lot of these companies are now reducing volume in order to improve their profit margins.

Sam Stovall: ET cetera. I think it’s it’s primarily a safety trade at this point and not one, that will be offering a lot of good earnings growth.

Caroline Woods: Okay. And then what about bonds. We have the ten year yield trading at 5.1% right now. Are bonds becoming a better investment than stocks here.

Sam Stovall: Well certainly bonds are attractive if you get a risk free rate. Meaning if you hold to maturity at 5% or more, that’s good. However, I looked at all of the bull markets going back to World War two, that celebrated their fourth birthday. And there were six of them, and five of those six ended up being celebrating their fifth birthday.

Sam Stovall: And all of those had yields that were higher than where we are today. So meaning that just because we ended this fourth year at 5.25% on the ten year. The other five bull markets that then celebrated their fifth birthday had even higher ten year yields to start with. So I don’t think a higher yield is going to be as much of a headwind as somebody might think.

Sam Stovall: We have traditionally seen the ten year yield at about 5.75% on average, going back to its inception in the early 1950s. So, it’s the speed with which we advance that I think caught investors off guard. But right now, with us having come back down, that’s also another reason why some of these higher yielding defensive plays have done well.

Sam Stovall: Ditto for overseas markets because of the value of the dollar came down at the same time.

Caroline Woods: Okay. So let’s get back to your price target then. What’s your year end price target. Because I think last time you were on it wasn’t that much higher than where we’re currently trading.

Sam Stovall: Our year end target is 8058 050 for the S&P 500, and our 12 month target is 8650. Now you might think, well, wait, what kind of mushrooms has he been chewing on? But actually 86 is less than 7.5% above where our year end target would be. So that actually puts us on par for the typical market return when we have a Republican president and both houses of Congress being Democratic.

Sam Stovall: So since World War two, whenever we’ve, in a sense, had a balance between Congress and the presidency. The market has gained about 7% or so.

Caroline Woods: So, Sam, I was taking a look at your notes, though, and you say that the fifth year bull markets have historically gained nearly 21%. So a bull market can continue to year five. But investors need to expect more muted returns.

Sam Stovall: Well, that’s what I think. Even though all but one of the fifth year bulls posted double digit advances. You have to remember that this bull market has already recorded four double digit gains, and only once going back to World War Two did we have five successive years of double digit gains. So certainly not, out of the question, but I think it’s highly unlikely.

Sam Stovall: So therefore, you know, to me, sometimes a price target is more of a weather vane than a laser beam. So we believe that, you know, could end up with a mid to high single digit advance for all of 2027.

Caroline Woods: And how could midterms impact that? What’s the best case scenario for stocks with midterms in the worst case?

Sam Stovall: Well, the best case scenario for midterms is actually a the Republicans retaining control of both houses of Congress. Since World War two, a red wave, meaning the president and both houses of Congress of the same party has posted a 13 plus percent advance. However, we’ve only had ten observations. So statistician would say that that is not statistically significant.

Sam Stovall: Significant. The best performance for a Democrat is a split Congress. So president being Democratic and then one House being Democratic, in that case, the game was 17%. So the worst is, you know, if we have the Republican president and then we don’t have a red wave. So in that case, we end up with a single digit advance.

Caroline Woods: And just to clarify, your 7.5% upside from here, price target is no red wave is factoring in no red wave. Okay.

Sam Stovall: That’s correct. No Republican president has ever retained a red wave after midterm elections, whereas for Democratic president have.

Caroline Woods: Sam. We started by talking about it being an expensive bull market though. So I think that you’re still bullish. But the question is what does it look like to get to some of those levels? Do you think that current valuations alone make a meaningful correction more likely?

Sam Stovall: That’s the tough part, because we’ve been looking at a fairly expensive bull market for quite some time. Yes. This current bull market is the most expensive of all bull markets that celebrated their fourth birthday since World War two, which was exactly the same for year three and for year two. But we did not end up having a decline as a result.

Sam Stovall: In fact, the S&P started 2026 with a PE of 23.3 on forward 12 month earnings. Now that PE ratio is below 20. So we’ve actually seen an improvement in valuations because earnings have grown more rapidly than had been anticipated. So if we continue to see that kind of outsized gain then I think whatever correction is normal will end up being pushed into 2027.

Caroline Woods: Does that mean investors should keep buying stocks at these levels then, or should they become more selective?

Sam Stovall: I think investors should always be selective, or at least, you know, make sure that they fully understand why they are buying at this point. But we still have an awful lot of stocks that are ranked by in all 11 sectors. So on a both a relative basis as well as an absolute basis, we still think that there are some opportunities.

Sam Stovall: And, you know, as John Maynard Keynes once said, the stock market can remain irrational longer than short sellers can remain solvent.

Caroline Woods: And if you only could choose one opportunity for the rest of this year, as you think about 2027. You had mentioned let the winners ride health care, energy, tech. Which would it be?

Sam Stovall: I think that I would go for health care because it’s a group that has not been a leader for quite some time. It does tend to hold some growth potential. And as and also looking at 2027 estimate, right now it’s about 22% growth for healthcare versus 16.8 for the S&P 500. So here’s a group that in a sense has some growth opportunities ahead, but is also known as being a defensive sector.

Sam Stovall: So it might look good under either scenario.

Caroline Woods: I think that you didn’t like healthcare last time you were on granite. That was a few months ago. So is it just that tech has run? Because I remember you really liked tech. So what changed to make you start liking healthcare?

Sam Stovall: I was able to twist our analysts arm enough so that they would upgrade some of their stocks. Like, you know, one in particular, Cardinal Health, is one that we happen to favor. Because it does have good growth potential and is regarded as a defensive play as well. So that’s sort of, you know, describes what are a feeling is for the healthcare sector.

Caroline Woods: Sam Stovall getting physical there at the office. All right, Sam, what would actually bring this bull market to an end? What would you be watching for?

Sam Stovall: Well, I think the what many bull markets have stumbled over is debt levels. We do have fairly high debt levels. Whether you deal with the government at $40 trillion, whether you deal with a margin debt from the retail perspective as a percent of M2. Right now, we are at an all time high. So, you know, should we end up seeing the ten year yield climb precipitously higher?

Sam Stovall: Should we find that the fed is much more hawkish than we think they’ll be? You know, we do not think that they will raise rates in October because while the fed has made monetary changes with only a few months ahead of midterm elections, they’ve never done so twice. So because they already got one out of the way at the last meeting, we don’t think that they’ll do something additional between now and midterms.

Caroline Woods: Okay, so ten year yield at what level and how many more rate hikes would be considered hawkish.

Sam Stovall: Okay. And I’ll put my feet to the fire. So you know I would tend to say we would probably have to go up to five and a 5:45 percent before the market gets really concerned. And I think that we would need to see, several rate increases over a short period of time. The reason I’m being a little less specific is we had a similar situation back in 1994.

Sam Stovall: We had seven rate increases in 12 months that actually doubled the fed funds rate. Yet in that period, the peak to trough decline for the S&P 500 was less than 9%. So we only had a pullback, not a correction or even a bear market. And that’s still a possibility.

Caroline Woods: Okay. All right. I think this is a great time to pivot to our rapid fire round of this or that. You know how to play. Sam quick questions. Quick answer is no hedging. Are you ready?

Sam Stovall: Yes.

Caroline Woods: Year end rally. History repeats itself for this. Time is different.

Sam Stovall: History repeats itself.

Caroline Woods: S&P 500 before December 31st. New record highs are a correction.

Sam Stovall: A new record highs.

Caroline Woods: Stronger stretch for stocks November or December.

Sam Stovall: November is the best month in terms of frequency of advance during midterm election years.

Caroline Woods: Best trade for year end by the winners or by the laggards.

Sam Stovall: By the winners. Q3 winners tend to repeat in Q4 of midterm election years.

Caroline Woods: Consumer discretionary or consumer staples?

Sam Stovall: Consumer discretionary because I think that we will see strong results for Amazon.

Caroline Woods: Bigger threat to stocks, higher interest rates or disappointing earnings.

Sam Stovall: Disappointing earnings because I believe that valuations are being held aloft by elevated earnings expectations.

Caroline Woods: Bull market in 2027 still going strong or running out of steam.

Sam Stovall: Still going. But I think the trajectory of advance should be ratcheted downward.

Caroline Woods: So single digit returns or double digit returns.

Sam Stovall: Single digit returns.

Caroline Woods: Better signal for 2027 earnings growth or market breadth.

Sam Stovall: Earnings growth. We’ve seen periods in the past when we’ve had narrow market breadth and the market has continued to advance. So I think what is the driver of this? The fuel of the current advance is earnings growth.

Caroline Woods: Financials or industrials.

Caroline Woods: Industrials energy or utilities. Energy growth or value growth. Large caps are small caps.

Sam Stovall: Large caps.

Caroline Woods: Equal weight S&P or market cap.

Sam Stovall: Weighted cap.

Caroline Woods: Weighted dividend stocks or growth stocks.

Sam Stovall: Growth stocks.

Caroline Woods: Better protection cash or defensive stocks.

Sam Stovall: Defensive stocks because your you you have one foot on the defensive side but also one foot remains in the market. So if you’re wrong, you still have upward potential.

Caroline Woods: Best strategy right now. Buy any dip or wait for a deeper correction.

Sam Stovall: By any dip, especially if you are a long term investor and not a trader.

Caroline Woods: Best strategy for next year follow momentum or buy what’s undervalued.

Sam Stovall: Follow momentum, but realize that momentum can shift.

Caroline Woods: And one word to describe the market heading into year end.

Sam Stovall: Cautious.

Caroline Woods: Sam Stovall, Chief investment strategist, CFRA research. Always a pleasure. Thanks so much for playing along.

Sam Stovall: Oh my pleasure. Nice to talk to you, Caroline.

Caroline Woods

Artificial intelligence may one day make some of life’s most stubborn headaches cheap to fix. The catch is that humanity has to white-knuckle its way through a 20-year shake-up first, a bit like being promised a dream vacation after the world’s longest layover.

Microsoft co-founder Bill Gates said even the best-case scenario for AI comes with a stretch of disruption unlike anything society has seen before.

“My big concern is this 20-year transition period where they’ll have winners and losers and a lot of disruption, and we have to get through that in order to get to that period of abundance,” Gates said on the Oct. 22 “Decoder” podcast episode.Gates isn’t selling doomsday. He thinks AI could help cure diseases, improve classrooms, and make scarce things less scarce.

His worry is that society is treating the risks like a distant rumor while they’re already buckling in right next to the benefits.

Read more: Warren Buffett bought this company in 1988 when ‘no one’ wanted it — now it pays Berkshire $848 million a year

The AI transformation countdown has already started

In an essay published in August, titled “The Turbulent AI Era Is Here. The Choices We Make Now Are Critical,” Gates described AI as a technology that could either spread opportunity or deepen inequality.

“AI will either be the greatest equalizer ever invented, or the worst source of injustice,” Gates wrote.

He argued that the good and the bad are showing up at the same time, leaving governments and communities little room to adjust at a leisurely pace. Earlier technological shifts unfolded over generations. AI could rework entire industries within a decade.

Gates also warned that the people who need the most time to prepare may get the least of it, particularly workers whose jobs are most exposed to automation.

Microsoft co-founder Bill Gates has warned that AI could transform society faster than people are prepared for.Tom Brenner / Getty Images

AI dangers go well beyond paychecks

Gates has also raised concerns about AI helping bad actors carry out devastating attacks. In a September interview with NBC’s “Meet the Press,” he warned that the technology could enable catastrophes on an unprecedented scale.

“AI is certainly powerful enough to drive events that, you know, cause a billion deaths,” Gates told host Kristen Welker.

More Microsoft:

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He also pushed for government involvement, arguing that tech companies can’t manage the risks with voluntary safeguards alone.

The warning adds weight to his 20-year forecast. The challenge isn’t only helping people adapt to a changing economy. It’s also keeping powerful tools out of the wrong hands while making sure the benefits actually reach the public.

A pep talk for the next generation

If AI is about to touch nearly every field, young people entering the workforce face an awkward question. When machines can handle more of the work, what makes a human worth hiring?

Gates acknowledged that the technology can feel intimidating to people hoping to build careers and do meaningful work. But he offered a more upbeat take during the “Decoder” interview.

“If you’re in your 20s today, during this 20-year period, you can take the things AI still can’t do and you can use AI and you can have a lot of good impact, and you can suggest policies,” Gates said.

He also suggested society may eventually choose to keep certain activities human-led, even when AI could do them faster.

In Gates’ view, the next two decades won’t be defined solely by how powerful AI gets. They’ll be defined by the choices people make on the way there.

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