Global financial markets reacted strongly following the speech by Jerome Powell, Chairman of the U.S. Federal Reserve, at the Jackson Hole forum on Friday. His statements indicated a greater flexibility in monetary policy and an approximately 85% probability of a 25 basis point interest rate cut at the upcoming September meeting.

The Fed’s gradual shift toward easing is not due to a contraction in inflation but rather a different reality where inflation remains “stubborn” and could rise again due to tariffs and supply chain pressures. This change reflects growing concerns about labor market weakness and the risk of economic slowdown, prompting the Fed to prioritize supporting economic activity even if inflation stays above target levels.

Gold and Silver: Safe Havens Return to the Forefront

In this context, investment landscapes are changing drastically, with gold emerging as the biggest beneficiary of rate cuts and a weaker dollar, having risen nearly 28% since the start of the year. Despite being a non-yielding asset, gold outperforms others in a low-yield environment due to lower opportunity costs. Demand is boosted by fears of economic slowdown and geopolitical tensions, with investors turning to gold as a classic hedge against risks and uncertainty, alongside declining real yields and central banks, especially in emerging markets, increasing gold reserves as part of diversification strategies away from the dollar.

Silver also stands out as a dual-character asset, both a precious metal and an industrial commodity. It benefits from low interest rates and a weaker dollar, while industrial demand from sectors like solar energy, electric vehicles, and microelectronics enhances its investment appeal and supports medium- to long-term prices, making it a strategic choice for investors. Silver has gained nearly 32% since the beginning of the year.

U.S. Stocks: Strong Gains and Hidden Risks

U.S. stocks are the apparent beneficiaries of lower interest rates, with investor appetite shifting toward growth and technology stocks that rely heavily on cheap financing and future expectations. However, these gains mask growing risks, as current stock valuations are high relative to economic fundamentals, raising concerns about a possible correction if inflation or employment data exceed expectations. Moreover, much of the U.S. stock rally is driven by massive liquidity flows concentrated in major tech stocks, exposing the market to risks of overconcentration in limited sectors.

The current environment also faces challenges related to tariffs, which could negatively impact profit margins, especially for companies heavily exposed to global markets. With rising recession risks in the U.S., markets may face dual pressures from slowing growth and rising costs. Thus, although stocks benefit temporarily from lower rates, the margin between optimism and risks is narrow, making investors highly sensitive to economic data and Fed statements, where any contrary signal could trigger a market correction. The Dow Jones Industrial Average has risen about 7% since the start of the year, the S&P 500 about 10%, and the Nasdaq Composite nearly 11% since early 2025.

Global Currencies Regain Strength Against the Dollar

Meanwhile, major currencies like the euro and yen benefit from the declining appeal of the U.S. dollar as a reserve currency. The euro/dollar pair has risen about 13% since the start of the year, supported by dollar weakness and expectations that the Fed will be more dovish than the European Central Bank, along with relatively better Eurozone data that boosted confidence in the single currency. The Swiss franc also emerged as a major beneficiary of dollar weakness, gaining nearly 12% against the dollar since the start of the year, supported by its historical role as a safe haven and the Swiss National Bank’s move toward a more neutral monetary policy.

Diversification: An Essential Strategy

In these volatile conditions, diversifying investment portfolios across gold, silver, stocks, and digital currencies becomes increasingly important to reduce risks associated with the volatility of each asset. Diversification extends beyond asset classes to geographic diversification across U.S., European, Asian, and emerging markets, allowing risk distribution across different economies with varying financial cycles. This balance between defensive and offensive assets and across diverse regions is essential for achieving stability and sustainable returns in an uncertain economic environment.