The gold price has surged to new all-time highs denominated in all major currencies on the back of global uncertainty, inflation concerns, and a shifting macroeconomic landscape during an untenable global sovereign debt crisis.
Although bullion has historically served as a safe-haven asset, the recent rally is not merely a reaction to marketplace turbulence. But instead, to a confluence of economic and financial factors that reinforce its role as the ultimate form of payment with no liability.
Gold continues to outperform all asset classes during week four of what has been a disruptive and unpredictable Trump 2.0 presidential administration.
This week, uncertain global economic implications of new U.S. trade tariff threats, along with geopolitics that see a shaky Israel-Hamas ceasefire accord, continue to drive solid safe-haven demand for gold and silver.
In the meantime, U.S. inflation picked up for a fourth straight month in January amid another rise in food and energy costs, possibly setting the stage for a year of halting progress in the Federal Reserve’s battle to slow consumer price increases as President Trump rolls out a myriad of import tariffs.
The consumer-price index (CPI) rose a stiff 0.5% in the first month of 2025, the U.S. government said early Wednesday. This is the biggest increase since the summer of 2023.
The rise in consumer prices in the past 12-months edged up to 3% from 2.9%, leaving it well short of the Fed’s fantasy goal of 2% inflation. The yearly rate had fallen to a post-pandemic low of just 2.4% last fall before reversing course.
The so-called core rate of inflation that omits volatile food and energy prices rose 0.4% in January, a tick above expectations, while the 12-month increase in the core rate moved up to 3.3% from 3.2%. The Fed views the core rate as a better predictor of future inflation, which is moving in the wrong direction from its 2% mandate.
Immediately following the hotter-than-expected CPI inflation report, President Trump called on the Federal Reserve to lower interest rates in a post on his Truth Social platform Wednesday. "Interest rates should be lowered, something which would go hand in hand with upcoming Tariffs," Trump wrote.
The President's post following the CPI report hints at a potential battle between the Trump administration and the Federal Reserve. Any attempts to control the Fed would be gold friendly to say the least, while sparking a sell-off of U.S. treasuries and the U.S. dollar.
The Federal Reserve is independent and owned by big banks, while the central bank does not report to nor is it controlled by the U.S. federal government.
Just ahead of the higher-than-expected inflation data, Fed Chairman Jerome Powell told a U.S. Senate committee Tuesday the Fed is in no rush to cut interest rates more because it does not want to hinder the fight against price inflation.
Immediately after the disappointing CPI news was released on Wednesday, computer-based algorithmic trades took Gold Futures down $35 to quickly test support at $2900. But the weakness did not last long as willing human buyers erased the loss within the hour.
Importantly, Silver Futures remained well bid during the algo-related gold smash, then moved firmly back above the key $32.50 level as the USDX rose and U.S. equities opened 1% lower.
This week's hot CPI data and Trump’s social media post “put the Fed in a box,” said a mainstream media CNBC reporter mid-week. This is just more fuel for the ongoing precious metals bull market, as the Fed's "rock" has recently met President Trump's "hard place."
As gold continues to surge, two big banks have raised their gold price forecasts to $3000, citing the threat of trade wars and geopolitical uncertainty. Citigroup analysts now expect gold to top $3000 in the next three months, up from their previous $2800 forecast. The bank also raised its average 2025 price forecast to $2900. Swiss Bank UBS also raised its gold price forecast to $3000. The spot price has already eclipsed its initial forecast of $2850.
Also, consider that most mainstream analysts are not factoring in any kind of economic chaos, which is entirely possible given the U.S. will be required to re-fund $7.6 trillion of maturing debt (or possibly $9.2 trillion, according to some reports) in 2025 at higher interest rates.
As of February 13, the U.S. gross national debt stands at $36.47 trillion. Since 1993, U.S. debt has risen by 756%, while gold prices have kept pace, rising 697%.
According to the latest Monthly Budget Review from the Congressional Budget Office released on Monday, the U.S. is just four months into the fiscal year, and continues to borrow at an alarming rate.
The government has already borrowed a total of $838 billion this fiscal year – $7 billion per day – with $127 billion of that just from the month of January.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget stated, "The best way we can move forward is for lawmakers across both sides of the aisle to work together to improve our fiscal outlook. Enough is enough. We are on an unsustainable path and the time to fix it is now."
Meanwhile, the need for Congress to enact the fiscal 2025 spending agreement must be done by March 14 or the risk is at least a partial shutdown of the federal government.
House Republicans just released a budget resolution that proposes raising the debt ceiling by $4 trillion. Their plan also seeks to extend the 2017 tax cuts, increase border security and defense spending, along with offsetting the cost with cuts to other government programs.
But passing the resolution will not be easy. “There will be ongoing debates and discussions in the coming weeks, and we remain focused on working through the process to deliver on our promises made to the American people,” House Republican Speaker Mike Johnson stated.
With time running out, lawmakers face immense pressure to act. Failure to address the debt ceiling could push the U.S. into uncharted economic territory, testing the resilience of its financial systems and global leadership.
Henceforth, gold has been reacting to an "elephant in the room" marketplace question: Will governments, already dealing with a growing sovereign debt crisis, put further pressure on rising debt markets that are already strained with over $350 trillion of global debt?
With the debt clock ticking louder than ever before, some very creative, outside-the-box thinking is taking place at the U.S. Treasury and in the White House in dealing with this overload of U.S. debts and deficits.
Over the weekend, there was a Financial Times article by Gillian Tett titled, “The Unimaginable is Now Imaginable as Gold Gilitters” where she goes through some of the reasons for the record high price in gold that I have mentioned in this space over the past several weeks.
But then Tett said; “Some hedge fund contemporaries of Scott Bessent, the hedgie-turned U.S. Treasury secretary, are speculating about a revaluation of America’s gold stocks.”
Tett added, “Currently, these are valued at just $42 an ounce in national accounts. But knowledgeable observers reckon that if these were marked at current values – $2,800 an ounce – this could inject $800 billion into the Treasury General Account, via a repurchase agreement. That might reduce the need to issue quite so many Treasury bonds this year.”
To add more intrigue to this notion, Bessent offered these cryptic remarks from the Oval Office on February 3: “Within the next twelve months, we’re going to monetize the asset side of the U.S. balance sheet for the American people. We’re going to put the assets to work. . . . It’s going to be a combination of liquid assets, assets that we have in this country, as we work to bring them out to the American people.”
Although the idea of repricing U.S. gold reserves may never come to pass, with the legal ability to do so being in question, there is increasing evidence that Bessent and Trump are going to retool the financial system and that gold is going to play a role. And if so, the U.S. would be joining the BRICS nations that are already moving in that direction.
As investor interest in gold grows, gold miners have recently been delivering the expected outperformance relative to the metal. The stock prices of gold miners have started to play catch up this year after mostly lagging bullion’s climb in 2024.
The sector received another boost mid-week, following earnings season being kicked off with number two gold miner Barrick Gold (GOLD) reporting better than expected Q4 adjusted earnings and announcing a new $1B stock buyback program, moving the share price over 6% higher on Wednesday.
With Newmont Corp. being the lone gold miner contained in the S&P 500, we need to watch the NEM price action closely next week. The company posts its Q4 Earnings Announcement on February 20, after the market close.
Back in October, Newmont reported a weak set of quarterly results. The AISC rose from $1426 per ounce of gold to $1611. High contract service expenses and a rise in maintenance costs hurt profitability during the quarter. NEM plunged by 15% in the session that followed, pressuring the GDX fund and contributing to the industry’s Q4 underperformance to gold.
It goes without saying that as Newmont's Q4 goes, so goes the mining sector. For big money to begin entering the mining space in size, the world's largest and most liquid gold miner will be required to participate in the leadership to the upside.
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.
With both GDX and GDXJ becoming short-term extreme overbought this week, 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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