January 2026 Review

• The value of all the world’s above-ground gold rose to USD39trln on Thursday, January 29^th. But then fell USD3.4trln on the final business day of January, roughly the market capitalisation of Microsoft. The value of above-ground silver is USD3trln. From high to low last Friday, the value of all the world’s silver fluctuated by USD1trln.
• Donald Trump has continued to dominate both financial market headlines and the broader news through domestic and foreign policy initiatives. International stakes have been raised by the extraction of Venezuelan President Nicolas Maduro and his wife and by threats to Iran and Cuba where domestic unrest continues.  This geopolitical tension lifted gold to new highs before Friday’s sharp price reversal.
• Concerns over US foreign and trade policy have pushed many of America’s trading partners to become less reliant on the US. This, coupled with the perception that the US would like a weaker US currency to improve trade competitiveness, led to a weaker US Dollar in January.
• Japanese Prime Minister, Sanae Takaichi, called a snap election to build on her popularity and hopes to win an outright majority on February 8^th. Her spending plans haven’t helped Japanese bonds but have aided Japanese equities to lead the regional performance league table in January.  Japanese ten-year government bond yields rose (prices fell) prompting thoughts that Japanese investors might sell their foreign bond holdings in favour of their own government bonds and in the process bolster a beleaguered Japanese Yen.
• US Consumer Prices (CPI) rose 0.3% in December and 2.7% over the previous twelve months.
• The new Chair of the US Federal Reserve (US equivalent of the Bank of England) was announced by President Trump after months of rumours as to who it might be. From June it will be former governor, Kevin Warsh.
• UK Economic Output as measured by Gross Domestic Product (GDP) rose by 0.3% in November 2025.
• UK Consumer Price Index (CPI) for December announced on 21^st January showed inflation slightly higher than anticipated at 3.4% versus a year ago. However, as the following graph illustrates, inflation should fall further in the coming months due to declines in the price of some key items.

Crisis of Confidence?

While US economic growth was impressive in 2025 and is expected be resilient in 2026, US consumer confidence data announced in the last week of January showed a worrying decline for policymakers.