With the marketplace remaining in a state of uncertainty, especially regarding U.S. trade and tariff policies, the psychological $3000 level in Gold Futures continues to be a magnet after posting its 8th all-time high in 2025 on Thursday.
Despite being technically extreme overbought, weakness in the gold price continues to attract willing buyers as a disruptive Donald Trump U.S. presidential administration continues to make waves in the U.S. and around the globe.
Marketplace risk aversion amid recent U.S. trade tariff threats as tensions rise between the U.S. and Europe, influenced both gold and silver to decouple from the stock market Thursday to continue rising as equities experienced profit-taking.
Escalating tension between U.S. President Trump and Ukraine President Zelenskiy is also making markets nervous, as Trump appears to be aligning more with Russian President Putin regarding talks on ending the Russia-Ukraine war.
Trump blasted Vladamir Zelensky on Truth Social this week for “playing Biden like a fiddle,” stating that is the only thing the Ukraine president seemed to be good at. He accused the former comedian of ruling Ukraine as a dictator and denying the people the right to an election.
Adding to the wind at gold's back is an unprecedented widening of spreads between spot and futures prices for both gold and silver, due to economic anxiety and sharply increased demand over the past few weeks, particularly from Asia.
Futures contracts that are normally rolled over or cashed out are instead demanding delivery of bullion. Each futures contract represents 100 ounces of gold. Fearing tariffs and a trade war, traders are rushing to convert to physical gold and get it out of the U.K. before tariffs hit.
This has led to tightness in the London over-the-counter (OTC) market, pushing up short-term gold leasing rates, which in turn has lent further price support. This has also led to dealer shortages of investment products in some countries.
More than 20 million troy ounces, worth about $60 billion, have entered the depositories of New York’s Comex exchange since the day of the U.S. presidential election, with much of it originating from the London gold market.
With supplies dwindling in London, there is also a rush for central banks to borrow gold. The Bank of England (BoE) published that it could deliver the gold, which is currently awaiting delivery but with much longer lead times than normal of 4 to 8 weeks.
According to this chart showing the LBMA London Gold Holdings, we should not expect this to end any time soon. The one to focus on is the available stocks shaded in green. None of the other categories are available for delivery, which includes ETF holdings, BoE holdings, and reserves.
Following reports of Treasury Secretary Scott Bessent hinting at possibly revaluing gold mentioned in this space last week, mixed messages regarding this topic came from the Trump administration on Wednesday.
To begin the week, Elon Musk called for an audit into the Fort Knox gold reserves, currently stated at 4,580 tons. The tech billionaire and DOGE chief announced his intentions on Monday afternoon through a pair of posts on his X platform, implying that he doubts whether the $425 billion in bullion is really there.
The last comprehensive audit of the depository took place in 1953. In 1974, a handful of journalists and members of Congress were granted a brief tour—an event often mischaracterized as a full inspection. Since then, only routine “vault seal checks” have been conducted, stopping short of an exhaustive audit.
Treasury Secretary Scott Bessent has insisted it's all there, then said revaluing U.S. gold reserves is “not what I had in mind” when discussing monetizing assets for the sovereign wealth fund during President Trump's executive order signing into existence in the oval office on February 3rd.
Nevertheless, Trump supported an audit on Wednesday after it was revealed there is no yearly review for the world-renowned stash at Fort Knox in Kentucky, leading to wild online speculation that some or all the depository’s 4,580 tons may not be accounted for.
"We’re going to go into Fort Knox to make sure the gold is there… do you know about that?" Trump said to a reporter aboard Air Force One, according to a video posted to X by Musk. "We hope everything is fine with Fort Knox, but we’re going to go into Fort Knox, the fabled Fort Knox, to make sure the gold is there."
Apparently, this was just pure speculation as to whether a gold revaluation will happen. Yet, in a world with growing debt and inflation, that could easily morph into stagflation, widespread tariffs, supply chain issues, currency wars, and central banks accumulating record amounts of gold, the safe-haven metal has been a successful hedge against growing instability and potential economic chaos.
Stubborn inflation and President Donald Trump's hardline trade policies have rekindled fears of stagflation, which would pressure a range of assets. This toxic mix of sluggish growth and relentless inflation that haunted the U.S. in the 1970s has been flagged periodically over the past 50 years. But stagflation has not materialized as a real threat to investor portfolios.
While economists and portfolio managers are not ready to say that this time is different, the dreaded scenario has crept back as a key risk for investors in recent weeks, as the prospect of trade wars and punitive tariffs with fears of a sovereign debt crisis cast a shadow over U.S. growth.
A Bank of America survey of global fund managers on Tuesday showed the proportion of investors expecting stagflation - defined by the bank as below-trend growth and above-trend inflation - over the next year stood at a seven-month high.
In the 1970s, stagflation was generally bad for the stock market but positive for gold and commodities. Here is a chart comparing inflation during 1966–1982 with inflation today from 2014–present.
The inflation trajectories are eerily similar as inflation is picking up, just as it did in 1976. And in mid-1976 to January 1980, the gold price rose from $106 to $850 along with interest rate hikes to 20%, as the Fed remained behind the curve until inflation was finally contained.
Meanwhile, on the heels of number two gold miner Barrick Gold (GOLD) reporting better than expected Q4 adjusted earnings to kick off earnings season last week, top gold miner Newmont Corp (NEM) beat expectations this week as well.
After the market close on Thursday, the lone S&P 500 listed gold producer and sector bellwether reported Q4 gold production increasing 9.2% over the year earlier to 1.90 million ounces, while price was up 31.9% at $2643 per ounce. Free cash flow for the year was $2.9 billion, including a record $1.6 billion in Q4 alone.
More importantly, all-in-sustaining-costs (AISC) for gold, an issue under much scrutiny in 2024 as inflation kept miner costs elevated, were down 1.5% at $1463 per ounce.
Back in October, Newmont reported Q3 AISC rising from $1426 per ounce of gold to $1611. NEM plunged by 15% in the session that followed, pressuring the GDX fund and contributing to the industry’s Q4 underperformance to gold.
As I type this missive, GDX is consolidating recent outsized gains. Following the historic 13-year cup & handle Gold Futures breakout above $2100 in March 2024, the miners have formed similar technical patterns following record profits reported by the top two gold miners.
Strong monthly closes next Friday above key multi-year resistance $43 in GDX, and $54 in GDXJ, would create a 4-month handle for the 4-year miner ETF cups already in place.
Follow through buying with convincing volume would target $60 and $85, respectively, following potential cup & handle breakouts. And a strong monthly close above 13-year resistance at $35 in silver would target the $50 all-time high reached in 2011.
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 following a monthly close above the 640 neckline. More follow through buying next month could create a powerful rally and technically cement a strong accumulative 2.5-year base in the beleaguered junior sector.
With gold stocks set to breakout of a huge accumulative 4-year base, the beaten down and left for dead in 2024 mining sector is ripe for a 2025 mean reversion.
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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