^{By: Lewis Johnson}

As global dynamics shift, so do market leadership trends. At Capital Wealth Advisors, we’re watching three major developments that may shape where capital flows next: the continued strength of gold, the rise of European defense stocks, and international stimulus spending. Each reflects deeper changes in global policy and economics—and may signal long-term investment opportunities.

Here’s what we’re paying attention to as 2025 unfolds:

1. Gold at an All-Time High: More Than a Safe Haven

Gold recently reached a new all-time high, and we believe it’s not just about inflation fears or geopolitical uncertainty. A major structural change occurred when Russian central bank assets were seized after the Ukraine invasion—prompting other central banks to reassess the safety of holding reserves in foreign currencies.

This has created a new class of gold buyers: foreign central banks looking for insulation from political risk. If we are indeed entering a deglobalization cycle, gold could act not only as a store of value—but as a political hedge.

Why We’re Watching:

• Gold demand is rising among central banks
• Limited global supply supports price growth
• Historical gold ownership by central banks once approached 100% of their reserves—today, it’s around 20%

Investor takeaway: In a world where capital is reassessing risk, gold may still have room to run—even at current highs.

2. European Defense Stocks: From Oversight to Opportunity

The second emerging opportunity is the resurgence of European defense companies. Historically underfunded since WWII, the European defense sector is gaining momentum following new security threats and policy shifts. NATO member countries, encouraged by the U.S., are increasing their military budgets—most notably, Germany’s $1 trillion stimulus to rebuild its military-industrial base.

This isn’t just catch-up spending—it’s a potential long-term reallocation of capital into a previously overlooked sector.

Why We’re Watching:

• European defense spending is rising, led by Germany and other NATO nations
• Valuations have been historically low, offering value opportunities
• Growing investor interest amid rising geopolitical tensions

Investor Takeaway: The defense sector may evolve from a niche allocation to a core holding as global security dynamics shift.

3. Global Stimulus and the Rebalancing of Consumption

For the past 10–15 years, the global economy has leaned heavily on the U.S. consumer to power demand, while countries like China built export-heavy manufacturing models. But that tide may be turning.

We’re now seeing signs of a global rebalancing, where countries begin investing in their own infrastructure and stimulus spending—a process that could reduce dependency on U.S. demand and create domestically led growth across Europe and Asia.

Why We’re Watching:

• Massive stimulus programs (like Germany’s military plan) suggest a policy shift
• Rebalancing global consumption could disrupt long-standing trade models
• Potential winners: companies tied to domestic infrastructure, commodities, and alternative supply chains

Investor takeaway: As the world becomes more multipolar economically, the next generation of leaders could emerge outside the U.S.—especially in sectors supported by stimulus.

The Bigger Picture: Deglobalization Is Gaining Momentum

We believe these three trends—gold strength, defense sector growth, and stimulus-driven investments—are all connected to a broader deglobalization shift. After decades of increasing globalization, the world may now be rewiring itself into more localized supply and demand systems. This change isn’t just cyclical—it may be secular and long-lasting.

What that Means for Portfolios:

• Past winners (like U.S. tech mega-caps) may not dominate the next cycle
• Opportunities may emerge in commodities, value stocks, and international markets
• Diversification across sectors and geographies is more important than ever

Positioning for What’s Next

At Capital Wealth Advisors, we’ve designed a number of internally managed investment strategies, each tailored to navigate different types of market environments. In a world where volatility is rising and leadership is changing, having the right tools—and using them strategically—can make all the difference.

We’re closely tracking these shifts, not just as analysts, but as investors seeking to position portfolios for what comes next. If you’re interested in how your investments align with these themes, let’s start the conversation.

Let’s Connect:
Have questions about investing in uncertain times? Contact us to speak with one of our advisors.