Several headlines this week caught our attention, and we wanted to be sure you saw them. Mortgage rates topped 7% for the first time since January 2025. A major AI data center project brought the cost of financing and infrastructure into focus. And a survey of family offices found inflation is now their top concern.

At first glance, these stories have little in common. To us, they point toward the same question that many investors have not fully considered:

What happens if inflation and the cost of money stay higher for longer than investors expect?

The cost of borrowing is showing up in housing

According to Freddie Mac, the average 30-year fixed mortgage rate reached 7.03% on September 24, compared with 6.30% a year earlier, the highest reading since January 2025.

For a family trying to buy a home, that difference is immediate. A higher rate can change the monthly payment enough to put a house out of reach. It can also discourage current homeowners from moving or refinancing.

But this is bigger than housing. Borrowing costs influence construction projects, consumer spending and the investments businesses are willing to make. When money remains expensive, plans that make sense at lower rates may need to be reconsidered.

That is why we watch mortgage rates as more than a real estate statistic. They are one visible measure of how the cost of capital is affecting the broader economy.

Stress may be building in commercial real estate

Commercial real estate is where that pressure may show up next. Trillions of dollars in commercial property debt will have to be refinanced at today’s higher rates, and some properties are now worth less than the loans against them. Some analysts argue that lenders have been slow to recognize the resulting losses; if they are right, recognizing them could strain some banks’ capital.

Polymarket, which allows individuals to bet on almost any outcome, is now offering markets on bank failures unfolding in the near future. Who bears the losses when banks fail is not a hypothetical question. Former New York Fed President William Dudley addressed it in a recent article, arguing that an effective resolution regime should require a failing institution’s own investors to absorb losses (a bail-in) rather than shifting the burden to others or the public. He noted that the nearly $20 billion in FDIC losses from the collapse of Silicon Valley Bank’s parent company were recovered through higher industry assessments, not absorbed by SVB’s investors.

Remember: when rates rise, reality sets in.

Even the AI boom has to contend with these costs

We often hear about AI infrastructure as if demand alone will carry every project forward. Oracle’s Project Jupiter data center in New Mexico is a reminder of what it takes to turn that demand into a working facility: substantial financing, reliable power, permitting and years of construction.

The project has drawn attention over its financing and infrastructure challenges. Oracle issued a force majeure notice to STACK Infrastructure, the Blue Owl Capital-owned developer of Project Jupiter, reportedly to protect itself from potential payments if the facility misses its planned 2028 in-service date. Oracle says the notice preserves contractual rights and that the project remains on schedule, and Reuters reported that the notice cited potential delays in securing power. Blue Owl says the notice does not change the financial commitments to the project.

Oracle is the anchor tenant, and the agreement is reportedly structured to make Oracle contractually responsible for the underlying financing costs. That does not mean the AI buildout is ending, or that this particular project will fail. It does show how sensitive large projects can be to delays and the cost of getting them built.

The scale of the obligations behind the AI buildout was also on display this week, when Reuters reported on Anthropic’s confidential IPO prospectus, which it reviewed but which has not been publicly released. According to that report, Anthropic posted a net loss of about $42 billion in 2025 (roughly $34 billion of it was a non-cash accounting charge tied to convertible financing). Its operating loss was just over $8 billion. It also has about $518 billion in cloud, computing and infrastructure commitments over roughly a decade, with partners including Google, Amazon and Microsoft, against $20.28 billion in cash, cash equivalents and short-term investments at the end of 2025. Commitments on that scale are why financing matters to projects across this buildout.

Inflation is often discussed in terms of groceries or gasoline. Investors also need to consider the rising costs of energy, construction and financing. Those costs can affect the returns on even the most promising investments.

Wealthy investors are watching inflation, too

Citi’s 2026 Global Family Office Report identified inflation as the top concern among the family offices it surveyed (63% ranked it first, up from 37% in 2025), followed by interest rates, financial-system stability, and market volatility.

We find that telling. Inflation affects far more than a household budget. It changes what future income is worth, what companies pay to operate, what bond investors demand in yield and what stock investors may be willing to pay for earnings. Citi’s survey also found that family offices are more likely to cut private credit than to add to it, with the report pointing to record default rates.

If inflation proves persistent, investors may have to adjust assumptions they have made about rates and valuations. We do not know that this will happen. We do know that it is a scenario worth preparing for.

What history can—and cannot—tell us

The 1970s offer a useful example of how persistent inflation can change markets. Financial media often say that rising rates and inflation are bad for gold, which pays no interest. Less often discussed is that rising rates and inflation tend to compress valuations of financial assets. Consider the data: over the decade, the S&P 500’s price-to-earnings multiple fell by nearly half, while gold rose roughly 15-fold, from about $35 to about $512 an ounce between the end of 1969 and the end of 1979.

We can’t treat history as a forecast. The economy, monetary system, and investment markets are different today. And comparing gold’s former official price of roughly $35 an ounce with its January 1980 peak of about $850 does not represent a straightforward investment return.

The lesson is broader: when inflation and monetary expectations change, the relationship between financial assets and physical assets can change substantially, too.

Where does gold fit?

Gold is not a guarantee against losses. It can be volatile, and it does not rise every time inflation rises. Interest rates, the dollar, investor demand, and other forces all influence its price.

Still, physical gold has a distinct place in a diversification conversation. It does not depend on a company’s earnings or a bond issuer’s promise to repay. It also pays no income and carries premiums, spreads and storage costs. For investors concerned about purchasing power and financial uncertainty, that distinction is worth considering, as is the available data.

The question we would ask today is not, “Are we about to repeat the 1970s?” It is: “How would my portfolio hold up if inflation remains stubborn, and borrowing costs stay elevated?”

That is a conversation to have while you have time to weigh your options thoughtfully.

As we pen this article, sentiment is very poor in the metals, which contrarian investors sometimes treat as a potential buying signal. Consumer confidence fell 6.7 points in September to 81.9, its lowest level since 2014, according to the Conference Board, with higher prices and fuel costs cited. A weaker consumer alongside persistent inflation could renew interest in hard assets, though past relationships do not guarantee future results.

If you would like to discuss whether physical gold fits into your overall strategy, our team at St. Joseph Partners would be glad to speak with you. Our services platform includes purchases in taxable accounts, in IRAs and through our patent-pending 401(k) offering.

 

Past performance is not indicative of future results.