Shining Dawn

Mark Luschini, Chief Investment Strategist

Gold, Atomic number 79, and the element whose periodic table symbol, Au, derived from the Latin aurum meaning “shining dawn,” has long been considered a store of value. Its utility as a financial instrument has not always gone without challenge, however. In 1924, the notable British economist John Maynard Keynes referred to it as the “barbarous relic,” believing it had dubious merit as a choice for monetary arrangements based on the gold standard. More recently, famed investor Warren Buffett said it would be “just about the last thing he would own” when asked about gold during a 2005 Berkshire Hathaway annual meeting. Despite the views of these luminaries, gold has retained its value as a means of exchange for thousands of years. Today, gold continues to draw significant interest from individual and institutional investors alike, as evidenced by its price surge over the last several years.

The true value of gold comes from the network effect, the almost ubiquitous view that it is an “insurance policy” used to guard against risk, in a fiat, or paper currency, monetary regime. Some view the track record for investing in gold as underwhelming, given its extended periods of rather dull performance. Yet, gold has outperformed the S&P 500 index on a price-only basis since the U.S. left the gold standard following the Bretton Woods system in August 1971. To be sure, many S&P 500 companies deliver an income stream via dividends, which, when included, improve the index’s return above that of gold by almost 2% annually. More recently, though, gold’s annualized returns over the last fiveand ten-year periods ending 2025 exceed the return on the S&P 500, including dividends, indicating its prowess as an investment over various time frames.

4 Key Issues for 2026

Guy LeBas, Chief Fixed Income Strategist

Continuing our longstanding tradition, we are dedicating this second fixed-income discussion of the new year to outlining a handful of major issues that will likely determine the trajectory of the bond markets. In 2025, we identified the following as the four most significant forces: upside inflation risk from policy (i.e., tariffs), corporate profit growth, mean-reversion in interest rates, and the maturation of private credit. With the benefit of hindsight, each of these factors did have a material impact. Tariffs were arguably the biggest driver of markets, particularly in spring; corporate profits powered credit markets; mean reversion caused trend-following funds to deliver poor returns; and private credit matured into a moody teenager of an industry.

For 2026, we anticipate the influence of politics at the Federal Reserve (Fed), unilateral attempts at fiscal stimulus, AI data center bond issuance, and the risk of a jobless boom will be among the most dominant market themes.

A Maalox Moment in Technology

Gregory M. Drahuschak, Market Strategist

The January issue of Investment Perspectives concluded that corporate earnings appeared to be on track to provide a solid base for stocks. Although the path was bumpy last month, earnings continued on that track, as the S&P 500 2026 estimate edged up to $309.74, with the Technology and Materials Sectors leading the group, expected to show earnings gains of 31.3% and 20.3%, respectively.

The S&P 500, Dow Jones Industrial Average, and the Nasdaq Composite Index posted gains of 1.37%, 1.73%, and 0.96%, respectively. However, like the path for earnings, these gains came amid choppy trading, largely achieved in the first three days of the month.

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