Gold's climbs above $4,100, but is there more room to run?

Gold has reached record highs, surpassing $4,100 an ounce, driven by a combination of geopolitical concerns and fundamental economic factors. The speaker argues that the move isn't solely based on fear, but rather on underlying market dynamics. Potential tariffs and the seizure of assets by one nation have prompted central banks, particularly those in BRICS nations, to diversify their reserves by increasing gold holdings. This substantial central bank buying is identified as a key driver of gold's upward trajectory.

The weakening of the US dollar as the world's reserve currency, exacerbated by events like the weaponization of SWIFT and increased tariffs, further bolsters gold's appeal. This shift encourages a transition away from the dollar and towards gold as a stable reserve asset. Projections suggest gold could reach $4,500 by the end of the year and potentially exceed $5,000 within a year, contingent on these fundamental factors continuing to evolve favorably.

Near-term risks for gold investors include potential price retracements due to the rapid ascent, though this is mitigated by the Federal Reserve's anticipated interest rate cuts and ongoing central bank purchases. Conversely, a reversal in these trends, such as rate hikes or a cessation of central bank buying, could pose a threat. Deficit spending and the substantial national debt are also identified as structural drivers weakening the dollar and supporting gold. Investors are exploring various avenues for gold exposure, including ETFs, physical gold, and miners, with the latter seeing increased attractiveness due to widening profit margins.

• Gold prices are at record highs, exceeding $4,100 per ounce.
• Central bank buying, particularly from BRICS nations, is a significant driver, with 80 metric tons purchased last year.
• The US dollar's role as the world's reserve currency is shifting due to geopolitical events and tariffs, making gold a more attractive alternative.
• Projected gold targets range from $4,500 by year-end to over $5,000 within a year.
• Potential risks include retracements due to rapid price increases, while positive catalysts include Fed rate cuts and continued central bank buying.

Gold's Record Highs and Fundamental Drivers [00:00]

• Gold has reached fresh record highs, surpassing $4,100 per ounce.
• The speaker attributes this rally more to fundamentals than to fear-driven investor behavior.
• Geopolitical factors, such as potential tariffs and the seizure of assets, are influencing central banks to seek safer havens.
• China, holding $760 billion in US treasuries, is seen as a significant buyer of gold bars for security against potential asset seizure.

The move to all-time highs isn't just about fear, it's about fundamentals.

This section establishes the current record-breaking performance of gold and introduces the central thesis that fundamental economic and geopolitical factors, rather than mere panic, are driving the rally. It highlights the strategic shift of major holders of US debt towards gold as a more secure asset.

Central Bank Buying and Dollar Dominance [00:21]

• Central bank buying is identified as a crucial trend supporting gold prices.
• The US dollar's position as the world's reserve currency has been fundamentally shifting since the weaponization of SWIFT in 2022.
• Tariffs introduced earlier in the year further intensified this trend, accelerating the transition away from the dollar.
• Nations are seeking to reduce their reliance on the dollar and increase their gold reserves as a safeguard.

The central bank buying is enormous because if you think about it, the US dollar as the world's reserve currency fundamentally started to shift after that weaponization of Swift in 2022.

This part elaborates on the structural shift in the global financial landscape, emphasizing how geopolitical actions have eroded confidence in the dollar, thereby boosting demand for gold as a reserve asset.

US-China Trade Tensions and Gold's Appeal [01:55]

• US-China trade tensions are described as pouring more fuel on the fire of existing market concerns.
• Previous tariffs and sanctions created apprehension, and any additions to these measures further encourage a move away from the dollar.
• Gold is seen as a desirable reserve asset to buy amidst these escalating tensions.

Any addition to that just makes people want to transition off the dollar faster and buy more gold as a reserve asset.

This segment connects the ongoing trade disputes between the US and China directly to increased demand for gold, framing it as a direct consequence of these geopolitical frictions.

Gold Price Targets and Investor Risks [02:20]

• Gold has surpassed $4,000 and is nearing $4,100.
• The speaker projects gold prices to reach $4,500 by the end of the year and potentially $5,000 or more a year from now.
• Near-term risks for investors include potential retracements due to the rapid price appreciation.
• However, these risks are mitigated by the Fed's anticipated interest rate cuts, which are generally positive for gold.
• Accelerating central bank buying also provides a supportive fundamental for gold.

Obviously the price has obviously moved a lot. So whenever you see an asymmetric move like that, there's always the risk that it will retrace.

This section provides concrete price targets and outlines the potential challenges and supportive factors for gold investors in the near future, balancing optimism with caution.

Factors Supporting Gold: Fed Rates, Deficit Spending [03:01]

• The Federal Reserve's plans to lower interest rates are a positive factor for both bonds and gold.
• Accelerating central bank buying further supports gold prices.
• Deficit spending is identified as another significant driver, weakening the dollar due to the substantial national debt ($37 trillion) and ongoing deficits (e.g., $1.9 trillion).
• These are described as structural factors that are unlikely to change drastically in the near future.

And then you also have deficit spending, which is the other big driver, which is also weakening the dollar because, you know, when you have 37 trillion in debt outstanding, and you're running a $1.9 trillion deficit.

This part delves into the macroeconomic underpinnings supporting gold, highlighting the influence of monetary policy and fiscal irresponsibility on currency strength and commodity value.

Near-Term Positive Catalysts for Gold [03:56]

• A potential positive catalyst would be the Fed deciding to loosen policy and cut rates more than previously indicated.
• Conversely, if the Fed cuts rates less or not at all, it would not benefit gold prices.
• A weakening dollar is consistently a strong positive for gold on a relative basis.

So, I mean, if the the Fed decides that they're going to loosen policy and cut rates more than they've already indicated, that would certainly be a net positive for gold.

This section focuses on the immediate future and the specific actions by the Federal Reserve that could further propel gold prices upward.

Gold ETF Flows and Investor Behavior [04:26]

• Gold ETF flows have been relatively flat for the past couple of years, despite rising prices.
• However, year-to-date, ETF flows have significantly increased.
• While not as large as central bank net buying, these flows represent an additional component of the current rally.
• The price escalation has attracted more buyers, indicating a phenomenon where people are more inclined to buy gold as its price rises.

The price escalation has attracted more buyers. It's certainly one of those situations where it's kind of a bit of the opposite of the store sale. People like buying gold more when the price goes up.

This segment discusses the impact of retail investor sentiment and behavior on gold, noting a shift in engagement with ETFs as prices climb.

Approaches to Gold Investment [05:08]

• All three common approaches—physical gold, ETFs, and miners—can have value.
• An example is the GY ETF (Golden Enhanced Yield ETF), which uses gold futures to gain price exposure and invests in investment-grade corporate bonds for income.
• This fund has reportedly gained over 50% year-to-date.
• Physical gold is the cheapest from a storage and fee perspective but involves potential discounts on selling and premiums on buying.
• Gold stocks have become more attractive due to widening profit margins resulting from gold price increases outpacing mining costs.

So, we we've kind of approached this on our own. So, we've created one ETF. It's called the GY ETF, golden enhanced yield ETF.

This part offers practical advice on how investors can gain exposure to gold, detailing different strategies and their respective pros and cons, including a specific fund example.

Signals for Weakening Gold Fundamentals [06:36]

• Potential catalysts that could weaken the constructive view on gold include government deficit reduction efforts.
• Earlier in the year, discussions about cutting $2 trillion in spending were seen as a positive for the dollar and negative for gold, though these did not materialize.
• A shift towards free trade, involving the dropping of all tariffs, would also be a net negative for gold.
• The Federal Reserve reversing course and hiking rates significantly (e.g., by 50 basis points over the next few months) would be a major bearish signal.

Now, they didn't follow through with that, but if they decided to reverse course and try to do massive Doge type cuts, that could certainly have an impact.

This section outlines specific hypothetical scenarios and policy shifts that would cause the speaker to revise their optimistic outlook on gold.

Silver's Performance and Drivers [07:41]

• Precious metals, including silver, are on a historic run, with silver topping $50.
• Silver's performance has been strong, nearly matching gold's gains since November 2023.
• Expected Fed rate cuts are seen as a catalyst, stimulating both the industrial and safety aspects of silver.
• The silver-to-gold ratio, which has been out of balance, is now narrowing as silver catches up.
• Silver's dual role as an industrial metal and "poor man's gold" is driving its current rally, coupled with the perception that gold might be overvalued.

Silver is obviously just reached a new all-time high. And the interesting thing is when you look at the performance, um, I flipped positive precious metals in November of 2023 on this show actually.

This part extends the discussion beyond gold to include silver, detailing its recent surge and the underlying factors contributing to its upward momentum.

Gold's Technical Analysis and Future Targets [10:05]

• Over the past two to two and a half years, gold's corrections have been sideways in price.
• This technical observation, coupled with fundamental factors, suggests a strong underlying psychology and demand.
• The speaker is not willing to "pick a top" on gold but anticipates a potential downside correction.
• A correction to $3,500-$3,600 could set the stage for a 2026 target of $5,200.
• If corrections are sideways, a target of $4,700 to $5,200 by 2026 is considered.

So for me now, we are looking for a downside correction in gold today, tomorrow, that could be the exhaustion.

This segment shifts to a more technical view, using price action and historical patterns to forecast future price movements and set ambitious targets.

Palladium and Platinum Outlook [13:01]

• Platinum's outlook is considered less favorable due to its primary use in internal combustion engines, a sector facing evolution.
• Despite recent dips in electric car purchases, a rebound is expected, and manufacturers may find ways around expiring tax breaks.
• Palladium, being a rarer earth and precious metal with diverse uses, is expected to continue its rally.

I don't feel like platinum is going to catch up because it only has really one use and that's a use that's kind of evolving away, right?

This final section provides an assessment of other precious metals, differentiating between platinum and palladium based on their industrial demand and future market prospects.