December Market Recap: Innovation Matures, Constraints Tighten, Money Evolves

Key Takeaways

• Innovation is maturing. AI is shifting from build-out to adoption, where execution and returns matter most.
• Real assets are the bottleneck. Energy, materials, and infrastructure will constrain how fast the digital economy can scale.
• Money is changing. Policy is being constrained by debt, deficits, and market liquidity, elevating the role of hard assets.

The views expressed are for illustrative purposes only, subject to change without notice, do not constitute investment advice or recommendations, and are those of the author(s) and not necessarily those of VanEck or its other employees. Past performance is no guarantee of future results.

2025 Was a Year of Change. 2026 Will Be Defined by Constraints.

2026 started with a bang. A big New York welcome to the city’s newest power couple, Nicolás and Cilia Flores Maduro.

The geopolitical and economic consequences of this moment will unfold over time, with real implications for capital flows, scarce resources, and how investors must be diversified to navigate a rapidly changing world.

2025 was a good year for almost everyone. The investors who did best embraced structural change. Those who struggled were positioned for a world that no longer exists.

Equities worked. Real assets worked better. Even bonds worked a little.

For thematic investors, this remains a target rich environment.

Anyone who follows us knows the themes we focus on.

1. Disruptive technological innovation.
2. Old world assets building the new world.
3. Debasement protection.

Those themes are not changing in 2026. How investors access these evolving themes makes all the difference.

A Great Year for Asset Owners

Source: Morningstar, as of 12/31/2025. Past performance is no guarantee of future results.

Theme One: Innovation is Going Mainstream

The race in compute continues and it’s having an outsized impact on economic growth.

However, this innovation cycle is maturing, and the center of gravity is shifting from build to adopt. What matters now is integration, execution, and return-on-capital.

AI is moving into workflows, automation, and physical systems where it solves real problems. One of the clearest examples is warfare.

AI’s Contribution to U.S. GDP Growth

Source: Barclays.

Military power is shifting from manpower to machines. Artificial intelligence, autonomy, robotics, and advanced systems are reshaping how conflicts are fought and how deterrence is maintained. Speed, precision, and technological superiority now matter more than scale alone.

This is not cyclical. It is structural. Defense spending has been rising globally.

Global Military Expenditure Rose by 9.4% in 2024

Source: SIPRI. As of April 2025.

Elevated geopolitical risk is accelerating the pace and scale of investment. President Trump recently announced on Truth Social that “in these very troubled and dangerous times, our Military Budget for the year 2027 should not be $1 Trillion Dollars, but rather $1.5 Trillion Dollars.”

We recently added direct exposure to defense and aerospace. These companies sit at the intersection of advanced computing, autonomy, and national security. The investment backdrop is long-duration and materially less sensitive to traditional economic cycles.

Theme Two: Real Assets are the Constraint

The next phase of this cycle will be defined by constraint. AI, electrification, automation, and reshoring all compete for the same finite resources.

The future must be built in the physical world. As an example, this chart demonstrates the outsized investments in data centers.

Yes, data centers need power. Factories need inputs. Supply chains need redundancy.

Old world assets are building the new world.

This is why real assets matter so much. They determine how fast innovation can scale.

Data Center CAPEX Has Surged Since 2022

Real Private Nonresidential Fixed Investment, Quarterly

Source: BofA Global Research, as of 2025.

One of the clearest examples is Silver.

Silver’s exceptional electrical and thermal conductivity make it essential to solar panels, electronics, semiconductors, and industrial systems. It is now moving deeper into the next generation of battery technology.

Incremental innovation increasingly runs into material limits. Silver markets were already tight before this development. Industrial demand has exceeded mine supply for several years. When new demand meets constrained supply, prices adjust.

Silver rose nearly 130% in 2025 and 50% in the fourth quarter alone. Silver is not unique. It is representative.

The digital economy is accelerating, but it rests on a physical foundation that cannot be expanded instantly. Energy, materials, and infrastructure are bottlenecks.

Real assets are increasingly central to how the next phase of growth is built.

Silver Shines for Best Year on Record

Source: Bloomberg, as of 2025. Past performance is no guarantee of future results.

Theme Three: Money is Changing

Gold did not become one of the top-performing assets by accident. It was information. But the story is bigger than gold. We have moved from monetary dominance to fiscal dominance.

For decades, monetary policy drove outcomes. Interest rates moved lower and lower. Governments borrowed freely, but debt service remained manageable.

Now the constraints are visible!

Fiscal dominance occurs when monetary policy is forced to operate within the constraints of government financing, market liquidity, and debt sustainability.

This is not theory. It is observable.

Interest Expense is now an issue, and as such, one must ask: are U.S. Treasuries still the unquestioned reserve asset? Gold and foreign central banks are saying no as foreign governments now hold more gold than U.S. Treasuries.

Central banks are not buying gold for nostalgia. They are buying it because gold carries no counterparty risk, no sanction risk, and no political dependency

Money is changing.

US Budget Deficit Persists Outside of Recessions

Source: Bloomberg, as of 2025.

Debt as a Percentage of GDP Rises

Source: Bloomberg, as of 2025.

Foreign Central Bank Now Hold More Gold Than US Treasuries

Source: Visual Capitalist, as of 2025.

The Bottom Line

Our themes are accelerating as they are being recognized by the broader investment community.

Technological innovation is going mainstream.

The physical world is constraining the digital one.

Fiscal dominance is redefining policy and money.

This is the new world investors are navigating.

There’s no going back.

Macro themes we’re watching:

Today’s predominant macro forces are driving the key themes and exposures in VanEck’s models, including the core allocation of the VanEck Wealth Builder Plus Portfolios. The allocations below are representative of the Moderate Portfolio.

Source: VanEck, 11/30/2025. Not intended as a recommendation to buy or sell any securities or digital assets, or as investment or any call to action.

Standardized Performance

Source: VanEck. As of 12/31/2025. Returns greater than 1 year are annualized. The performance data quoted represents past performance. Past performance is not a guarantee of future results. Performance may be lower or higher than performance data quoted. Performance figures presented herein are preliminary and may differ slightly from final performance figures. Please contact us at [email protected] for additional information.