We’re all back from Disney World after enjoying 3 days of a company getaway. I’ll post some pictures of the team and their families later this week, including a shot of some of us a little bit sunburnt and a bit humbled by the Bay Hill golf course.
As we talked about last Wednesday before we traveled to the “Happiest place on earth” there’s never a good time to step away from a small business. And we could not have picked a more volatile time to go on a company retreat than we just saw over the past 5 days.
Gold is down ~5%. Silver, true to form, down 10%.
Gold stocks got rocked in line with the metals.
Inflation came in higher than expected, higher than any print we’ve seen since May 2023, back when the Fed was still fighting persistent inflation from the Covid era.
After expecting the Kevin Warsh era to mean lower rates, elevated inflation is fueling speculation that we’re due for a rate hike. Remember, the Fed has a stated target of 2% inflation. It can’t seem to get there with rates where they are right now.
For the record, the Fed really can’t raise rates much from here. U.S. debt is in the “runaway train” phase right now. Raising rates makes Treasury interest expense even less affordable. Warsh is really stuck between equally unpalatable, intractable options.
And of course, the Trump administration is still teasing an escalation of military intervention in Iran.
The war, inflation, the closure of Hormuz, the threat of further market disruption or the promise of a resumption of normal if/when the conflict ends seem to be chasing the market from one extreme to another. Fear, then hope, then confusion between the two.
It’s not pretty.
This kind of market makes it really difficult to decide what the hell is going on.
Looking at the past week of price action in gold and gold stocks makes it look bleak.
It’s a good time to step back and to look at the bigger picture.
Consider all of the little news blurbs I just mentioned: inflation higher, ongoing war (that will be paid for by printing dollars), uncertainty in the markets, disruption in the oil markets…
If you were to come up with a recipe for higher gold prices in the long term, you could scarcely come up with a better formula.
Zooming out from the past week to instead look at the past 6 months, 12 months or 5 years of gold prices, you see a much different trend forming.
You don’t see uncertainty about gold, but rather, uncertainty about the dollar.
You see a currency in real trouble.
The only thing that has fundamentally changed about the story for gold is that the world’s best gold companies are now slightly less expensive than they were a week ago.
In the long arc of this gold bull, it’s a blip.
It’s very easy to get bogged down by bad news in the world and the markets – but the whole point of what we’re doing here at Golden Portfolio is to position our portfolios to benefit.
It’s inevitable that the dollar is going to continue to get crushed. Every bit of news, data and facts point in the direction of people and institutions ditching the dollar.
All we can do is make moves to prosper from it. Kevin Warsh can’t stop the dollar’s destruction. I can’t. You can’t. China can’t. The IMF can’t.
It’s a mathematically doomed currency – and it brings me no joy to say it.
But the future is bright for our gold stocks.
I hope that’s why you’re here: to put yourself on prosperous footing during this currency collapse.
Best,
Garrett Goggin, CFA, CMT
Lead Analyst and Founder, Golden Portfolio
