by Gary Alexander
August 25, 2026
The bond vigilantes are a real and well-recognized species of unelected but powerful critics of financial and monetary policies in major nations. These enforcers – called “vigilantes” by economist Ed Yardeni in 1984 – bid up Treasury yields when they see termites in the woodwork, like excessive monetary easing, runaway budget deficits, rising inflation, geopolitical threats, or a looming Fed (FOMC) change in policy.
The bond vigilantes made new headlines last week by pushing 30-year rates up to a near-20-year high, but perhaps we haven’t given enough ink to the ‘gold vigilantes,’ who perform the same service, using the world’s oldest and most respected currency – an ounce of pure gold. I started writing about this a month ago (July 28) in a Growth Mail column, “An Undeclared New Gold Standard Has Quietly Returned.” It was the first of five historical reviews designed to take our mind off meaningless market gyrations in August (vacation time) markets, which can scare us or delight us, but are mostly based on slender volume.
Since that column appeared, gold has risen from just over $4,000 per ounce to over $4,600 per ounce (+15%). Midway, on August 11, I covered gold again, marking the 55th anniversary of America going off the gold standard in 1971, and the 15th anniversary of gold’s record surge in August 2011 based on a debt ceiling debate and Treasury debt downgrade. After a 4-year dip (2011-15), gold quintupled in 10 years, rising from $1,075 in late 2015 to $5,400 in early 2026 – and now, gold has begun a huge new surge.
The gold vigilantes are mostly responding to America’s debt addiction. We just crossed the $40 trillion debt level, and the CBO predicts a Fiscal Year 2026 deficit of $2.1 trillion, despite a strongly growing economy. Another part of gold’s rise comes from this new, possibly prolonged Iran War, and since wars (and gold’s reaction to war) often accelerate in August, I’ll cite some examples from this week in history:
How Nations Tend to Fight Wars (with Gold) in Late August in History
- On August 24-25, 1814 (in the War of 1812), British forces sacked Washington DC, burned much of the White House and destroyed the Library of Congress: All 3,000 books were burned. Three days later, August 28, the British captured a large part of the East Coast, including most of the Chesapeake Bay, so major New York banks stopped all payment of specie (gold and silver).
- On August 28, 1862, the Rebel army launched a second Bull Run attack, the Second Battle of Manassas, 30 miles west of Washington, DC, where U.S. Treasury Secretary Salmon Chase ran out of funds to pay soldiers or conduct the war. His solution? Warm up the printing presses! On this date, he hired six people to create a Bureau of Engraving and Printing (BEP). Chase first elected to print “paper coins,” replacing silver, which had become scarce. He didn’t print dollar notes at first, but the BEP started printing Greenbacks in 1864, as the costly war dragged on.
- World War I began in August 1914, giving rise to Barbara Tuchman’s classic book, “The Guns of August.” Early in the month, Sir Edward Grey, British foreign secretary, said, “The lamps are going out all over Europe; we shall not see them lit again in our lifetime.” World War II justified in that prediction, but in the short-term stock markets were closed in American and Europe. The Bank of England suspended gold-for-sterling in the Currency & Bank Notes Act of August 6.
- On August 23, 1939, the Hitler-Stalin “nonaggression pact” cleared the way for Germany to launch World War II with their invasion of Poland on September 1. During that time, inflation (and the price of gold) were only kept in check by domestic price controls amid rationing:
- On August 28, 1941, FDR issued established the Office of Price Administration (OPA), which imposed rent controls and rationing. They initially targeted tires. Soon, the agency printed coupon books for sugar, coffee, meat, fats and oils. Americans took the “Homefront Pledge,” a promise to avoid all “black markets” in favor of OPA rations. The end of the war didn’t end the OPA. President Truman kept the agency going into 1946, but in 1947 OPA was phased out, with only rents, sugar, and rice still limited. The agency claimed victory, saying consumer prices only rose 31% (1941-45), half the 62% rise in World War I. Two future Presidents worked for the OPA, including Nixon and Reagan – plus economist Milton Friedman, who learned the folly of price controls, first-hand, but Mr. Nixon clearly didn’t learn much about the folly of price controls.
- On August 24, 1944, the Liberation of Paris came, fittingly, on the Patron Day of St. Louis. But a year later, on August 25, 1945: The Cold War began a week before VJ Day, when the Baptist missionary and U.S. army specialist John Birch was killed by Chinese Communists in China’s Anhui province. As the first official American death in the subsequent 45-year Cold War, Robert H. Welch, Jr., later named his anti-Communist John Birch Society in honor of this fallen martyr.
- On August 7, 1964, by a unanimous vote in the House of Representatives and a vote of 88-2 in the Senate, Congress passed the Gulf of Tonkin Resolution, giving President Lyndon Johnson authority to “take all necessary steps… to prevent further aggression” in Indochina. Imagine that – to launch a soon-unpopular war, and Congress complied, with only two dissenting votes out 535. The next year (1965) is when inflation and currency crunches began, leading to devaluation later.
- On August 3, 1990 (a Friday), the first Gulf War began. On Monday, August 6, the United Nations Security Council voted 13-0 (with two abstentions: Cuba & Yemen) for economic sanctions against Iraq. In another wartime surprise, on August 19, 1991, the Dow fell 3% in response to the last gasp of the 45-year Cold War, as eight senior “hard-liners” in the Soviet government staged a coup against Mikhail Gorbachev, whom they detained under house arrest.
In the last decade, gold has tended to rise most after the outbreak of wars, first a couple of Ukraine invasions by Russia, then the big move after the Iran-sponsored invasion of Israel in October 2023:
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Gold demand rose on each of these wartime events. At the same time, many nations rushed to supply more gold. On the supply side, last weekend marked the centennial of the 20th Century’s greatest source of gold. On August 22, 1926, gold was discovered in South Africa, where production peaked in 1970, the year before President Nixon ended the gold standard in America. In 1970 South Africa’s gold output peaked at over a million kilograms (1,000 metric tons), producing nearly one-third of global gold then.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Currently, China is the leading producer and consumer of gold, replacing their dollar hoard with gold, so in this new (unofficial) gold standard of massive central bank buying, China keeps its eyes on the prize.
Who would have thought China would become a mighty nation led by fanatical gold vigilantes?
All content above represents the opinion of Gary Alexander of Navellier & Associates, Inc.
Also In This Issue
A Look Ahead by Louis Navellier
Why Data Centers and Memory Stocks Remain Great Buys
Income Mail by Bryan Perry
The Current Blueprint for High Yield Income
Growth Mail by Gary Alexander
The “Gold Vigilantes” Went to War This August
Global Mail by Ivan Martchev
Secretary Bessent’s Act of Desperation
Sector Spotlight by Jason Bodner
Trust the Data, Not Your “Gut” Feelings
View Full Archive
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About The Author
Gary Alexander
SENIOR EDITOR
Gary Alexander has been Senior Writer at Navellier since 2009. He edits Navellier’s weekly Marketmail and writes a weekly Growth Mail column, in which he uses market history to support the case for growth stocks. For the previous 20-years before joining Navellier, he was Senior Executive Editor at InvestorPlace Media (formerly Phillips Publishing), where he worked with several leading investment analysts, including Louis Navellier (since 1997), helping launch Louis Navellier’s Blue Chip Growth and Global Growth newsletters.
Prior to that, Gary edited Wealth Magazine and Gold Newsletter and wrote various investment research reports for Jefferson Financial in New Orleans in the 1980s. He began his financial newsletter career with KCI Communications in 1980, where he served as consulting editor for Personal Finance newsletter while serving as general manager of KCI’s Alexandria House book division. Before that, he covered the economics beat for news magazines. All content of “Growth Mail” represents the opinion of Gary Alexander
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