Big Gold Imports Hurting GDP Growth

May 1, 2025

By Robert Wiedemer

S&P 500 up 12.7% Since April 8; NASDAQ 100 Actually Closed up 1.5% for the Month of April

The strength and speed of the rebound from the dark days of early April is truly impressive. It was made more impressive because on the morning of April 30 the S&P 500 was down almost 2% but rebounded so much that it closed positive for the day.

Talk about market players buying the dip! As I said in my March 10 Update, we are not heading for a market collapse! In fact, the S&P 500 is only down 4.2% year to date. That’s down but that’s certainly not a collapse as so many were predicting.

Q1 GDP Announcement Yesterday Showed a 0.3% Decline but the Decline Was Heavily Due to Increased Imports, Especially Gold Imports

I also forecasted in my March 10 Update that we are not headed toward a recession. Given that Q1 GDP was down 0.3%, was I wrong? Not at all. In fact, the GDP report was pretty good today. GDP growth was up over 4% due to strong investment and decent consumer spending. The only reason it was negative was that GDP declined by almost 5% due to increased imports. Imports directly reduce our GDP.

This was one of the largest increases in imports in recent history. Part of it was due to importers trying to bring in goods before tariffs took effect. But a big part of it – 25% to 50% was due to gold imports! Yes, people are buying a lot of gold (even Costco is selling it) and gold is mostly imported. If you think that’s because purchases of gold ETFs are up, that’s not true. The gold for most gold ETFs is kept in other countries, primarily England, but also Switzerland and Canada.

Will Gold Imports Continue to Dampen GDP Growth?

The big increase in imported goods last quarter will clearly reverse, thus helping GDP. However, we may also see a big decrease in inventories as many retailers will pull those down in Q2 instead of paying tariffs on imported goods. Reductions in inventories will hurt GDP.

But the biggest question is will imports of gold slow down? They may not and if not, we will have a longer term hit to GDP -- but not one that actually reflects a slowing economy. This is a big enough issue that the Atlanta Federal Reserve Bank has just decided to only show a gold import adjusted GDP forecast going forward. Gold imports are really hurting our GDP growth, and the Atlanta Fed is right to ignore imports of gold when calculating our GDP growth.

So, when you make simple adjustments for gold imports and an unusually large importation of goods to avoid tariffs, you get 3% GDP growth in Q1. Hardly a recession!

Of course, things could get worse for the economy in the future. But with a big deficit of $2 trillion and a 23% increase on that $2 trillion in the first 5 months of this fiscal year, there is a lot of stimulus to offset any headwinds. I will keep you up to date on the increase in the deficit as the amount of the increase has been declining for the last few months and may continue to do so. Still, I have a hard time seeing a real recession coming, especially when adjusting for gold imports going forward.

Still Lots of Bearishness Out There in Hopes of a Recession and Stock Market Rout that Will Save Bonds and Real Estate

So, keep a close eye on reality for the economy and stock market. There is A LOT of bearishness out there as so many people want to see a recession that will reduce interest rates.

In fact, I saw one writer say that the long-expected recession since 2023 may finally be coming true. I’m surprised he didn’t write that the long hoped for recession was coming true. Keep in mind that the people who are desperate for lower interest rates to save bonds and real estate will be hollering loudly for a recession and a bad stock market for at least a couple more quarters.

Certainly, there are more challenges to come for both the stock market and economy, but the rain is beginning to clear.