Week three of the Trump presidency has brought more chaos and uncertainty into the marketplace, along with 4 more daily all-time highs in the gold price, adding to the 40 new highs posted since March 2024.
The Trump 2.0 trade war, along with fears of an all-out regional war in the Middle East, has gold's perfect storm continuing towards its initial target price of $3000 per ounce.
With the new U.S. president issuing a barrage of executive orders and stirring trade wars with some of the world's largest economies – it’s no wonder investors are seeking to park their capital in the safe-haven metal.
Adding to the existing geopolitical chaos, President Trump also stated this week that the U.S. will be taking over the Gaza strip after a press conference with Israeli Prime Minister Benjamin Netanyahu. As for the nearly 2 million inhabitants, well, they have been asked to leave.
Just ahead of a Trump Administration about-face to delay tariffs on Canadian goods for one month, Canada stated it would retaliate with similar charges on goods totaling $155B early Monday.
According to a recent report by the Bank of Canada (BoC), a U.S. 25% tariff with full retaliation would lead to a 2.5% hit to real GDP in 2025 and 1.5% in 2026, hence leading the Canadian economy into recession.
In retaliation for the U.S. 10% tariffs on Chinese goods, China's finance ministry said that starting Feb. 10, it would impose levies of 15% for U.S. coal and 10% for crude oil, farm equipment and some cars.
In addition, China has also drawn up plans to disrupt key mineral supply chains in the U.S. and curb business operations of U.S. companies on the mainland.
Google has also been singled out for antitrust violations, and new export control orders have been issued on tungsten and other critical minerals used in electronic, aviation, and defense industries.
The announcement came just minutes after an additional 10% tariff across all Chinese imports into the U.S. came into effect at 12:01 a.m. EST on Tuesday.
After President Trump made the decision to impose 25% tariffs on Canada and Mexico on March 1, as well as the immediate 10% levy on China, Europe remains next in his sights.
The European Union will soon reach the top of Trump’s to-do list, and it might not be quite so easy for the EU to strike a deal to avoid tariffs.
The moves by Beijing and Washington escalate tensions between the world's top two economies and effectively renew a trade war that began in 2018 during President Donald Trump's first term.
Tariffs are by their nature inflationary and create considerable uncertainty in the marketplace. As history has shown with the trade wars of the 1930's, there are no winners.
Trade wars were a major contributor to the Great Depression turning recession into a depression. As European governments were suffering from a debt crisis, the Fed lowered U.S. rates in 1927, trying to deflect capital inflows back to Europe.
With the recent announcement of U.S. Q4 GDP increasing at a lower than expected 2.3% rate, we can also add stagflation fears to the bullish gold cocktail after last week’s U.S. PCE Index advanced 2.6% after rising 2.4% in November.
Meanwhile, central banks continue with massive bullion acquisitions. In its annual and fourth-quarter Gold Demand Trends report, published Wednesday, the World Gold Council said that central banks bought more than 1,000 tonnes of gold in 2024 for the third year in a row. This accounted for roughly 20% of total demand last year.
One thing is clear. Geopolitical and financial chaos, exponentially rising sovereign debt levels, and marketplace confusion surrounding returning trade wars will remain a feature of President Trump’s policies, which will go a long way in supporting the precious metals complex.
During Trump’s previous presidency, gold prices moved up over 70%. When Trump took office in January 2017, gold was trading at less than $1200 per ounce. Before the end of his term in January 2021, the safe-haven metal had registered a high of $2089 per ounce by mid-2020.
With precious metals sector risk having shifted to the upside, following a gold breakout above the October peak at $2800 being confirmed last week, the fuse has been lit in a severely depressed mining space that has a lot of catching up to do after massively underperforming on average over the past decade.
As stated in this space last week, the key ingredient missing from this phase of the gold bull market has been Western retail investment demand, especially from the United States, as investors have been distracted by AI and crypto.
President Trump is entering the year with equity valuations at the highest level for the start of any U.S. presidency. A chart linked here, shows that S&P CAPE ratios being the highest ever for the start of a presidential term.
In second place was the G. W. Bush presidency back in 2001, where we saw the internet/dot.com bubble top followed by the crash of 2000–2002. G. W. Bush managed to oversee another steep stock market sell off when the sub-prime loan housing crash hit in 2008. In both instances, the stock market fell +50%.
However, also in both instances for G. W. Bush, the Fed came to the rescue, lowering interest rates and providing a tidal wave of liquidity into the markets (QE) and the banking system to prevent an even bigger crash. The Fed injections of massive liquidity created a major precious metals mining sector bull run each time during the aftermath as well.
From a spike low in late 2001 at $35, the HUI Gold Bug miner index reached $500 by late 2007 for a whopping 1,325% gain. And from a spike low at $150 in late 2008, the HUI rose 325% after reaching an all-time high of $638 by late 2011.
Thus far in 2025, not only is the gold complex beating the S&P 500 as the Trump trade war begins anew, but it is also outperforming Bitcoin, which saw a sharp drop below $95k over the weekend.
The leading cryptocurrency has been struggling since hitting new all-time highs above $100k per token last month. On Sunday, as equity markets were starting a new trading week deep in the red, Bitcoin dropped sharply to a low of $91,530 per token.
The Trump 2.0 tariffs have become a growing concern they could become the pin which pops the largest equity bubble in U.S. history.
Overreliance on technology stocks, the threat from Chinese artificial intelligence start-ups like DeepSeek amid historically high valuations have created cracks in the high-flying U.S. stock market, which has been led by the MAG7 equity craze.
AI leader Nvidia (NVDA) set a one-day record loss of market cap in a company last Monday, when the stock lost $568 billion during a single trading session.
NVDA appeared to recover until the end of the week, when tariffs were introduced on Canada, Mexico, and China that has set in motion a trade war where everyone is a loser.
Although tariffs on both Canada and Mexico have been delayed, for now, Nvidia is already down over 20% since reaching an all-time high to begin 2025, the definition of a bear market.
With wildly overvalued AI stocks and bitcoin coming under pressure recently, investors are beginning to rotate their profits from those sectors into historically undervalued mining shares.
The 26-member S&P/TSX Gold subindex ($SPGOLD) was up 15% in January — five times better than the broader S&P 500. Five of the top 10 performing stocks in the Canadian benchmark are gold related equities, including Kinross Gold (KGC), which led the group with a 21% gain.
Once the stock market begins its inevitable correction of outsized gains, in the AI sector and bitcoin in particular, FOMO will eventually switch from these bubble valuation sectors into the under-owned gold stock complex.
Following the historic 13-year cup & handle Gold Futures breakout above $2100 in March 2024, both silver and the miners are set to breakout of similar technical patterns in Q1 2025.
A weekly close in February above key multi-year resistance at $35 in silver, $43 in GDX, and $54 in GDXJ would create a 4-month handle for the 4-year miner ETF cups already in place, along with a 4.5 year cup in the silver price.
Further out, strong closes above $43 in GDX and $54 in GDXJ with convincing volume would target $60 and $85, respectively, following potential cup & handle breakouts. And a strong weekly close above $35 in silver would target the $50 all-time high reached in 2011.
After both GDX and GDXJ rose above key resistance levels Wednesday at $40 and $50, respectively, many junior gold and silver stock trains have been leaving the station one by one.
With both GDX and GDXJ becoming short-term extreme overbought on Thursday, many swing-trader mining speculators are in the process of rotating recent outsized miner profits into beaten down quality juniors on their respective watch-lists.
The weekly Canadian TSX-Venture chart (CDNX), where 50% of its holdings are small-cap junior resource stocks, has formed an uber-bullish 2.5-year accumulative inverse head & shoulders basing pattern.
This mostly left for dead index would signal a breakout after closing above the 640 neckline on a weekly closing basis later today. More follow through buying next week could create a powerful rally and technically cement a strong accumulative 2.5-year base in the beleaguered junior sector.
At Junior Miner Junky, my subscribers and I are well prepared to set sail on a sea of opportunity for outsized gains after loading our highly leveraged junior portfolio boat with 20 quality small-cap gold and silver related stocks.
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