No asset price rises every day. Pullbacks are part of investing. This move off the highs for Gold and Silver is normal, and to be expected. Take advantage of the discount to buy more, because Gold will continue higher until the masses come, and they aren’t here yet.
This Gold rally is different from others over the past 50 years. Never before have we had our foreign trade partners buying tonnes of Gold. Gold now makes up about 30% of Central Bank assets, surpassing USD’s for the 1st time since the late 1990’s. The US weaponized the dollar in 2022 when they sanctioned Russia freezing hundreds of billions of US dollar debt over the Ukraine war. Foreign Central banks now prefer to hold Gold in their own vault versus USD reserves that could be seized at any time. The trend toward Gold, and away from the USD, will only accelerate.
Trump and Bessent also support a higher Gold price. Our leaders know they can revalue the US’s 8,133 tons from historic $42/oz peg to the current Gold price instantly creating trillions to offset public debt.
The US’s alleged 261 mil Gold ounces are worth $11 billion at $42/oz peg (for now we won’t get into questions about Ft. Knox’s Gold), $1.045 trillion at $4,000/oz Gold, and $2.614 trillion at $10,000/oz Gold. The only way out is through growth, and Trump knows this. “We are becoming a country that is so rich, so powerful,” he said. “With the kind of growth we have now, the debt is very low, relatively speaking. You grow yourself out of that debt.” You better buckle up because the markets aren't about to crash down. They are crashing up, acting as the reciprocal to the sacrificial USD.
We also have the US embracing Crypto. Crypto stablecoins are a Pandora’s Box that our political leaders understand little about. The Genius Act allows stablecoins as long as they don’t pay any interest. The US expects stablecoin assets to fill the gap in US debt purchases. The problem is, you can transfer stablecoins to multiple independent defi platforms where you can stake your stablecoins and receive 6% interest. Stablecoins are going to ignite a bank run on the entire US financial system.
Gold is down 11% from the $4,360/oz peak just a week ago.
Silver is off 15% declining to $46/oz from $54/oz.
The average large cap Gold Miner is selling at a 1% discount to gross profit based fair value using the current Gold price, production and AISC. Gold Miners peak at 40% premium to fair value seen in 2020 and 2022. We aren’t here yet.
Most Gold developers are trading for 75% discount to NAV based fair value.
The Lassonde Curve shows us that a Miner is worth the most at 1st production when EV should rise to match NAV.
The average royalty is trading at a 10% discount to gross profit based fair value. The average Royalty Co also peaks at 40% premium to fair value. This is a great opportunity to load up for the next leg higher.
The GLD ETF tracks Gold, so when money comes into an ETF shares are created. When money leaves, shares are destroyed. You can track shares to measure investment demand. GLD shares outstanding remains low at only 356 mil versus the 2011 peak of 450 mil. Gold has had a big move here. You could expect GLD shares to climb well above 450 mil high for any sort of meaningful peak.
SLV shares are at 543 mil. Well below the 2021 Silver squeeze value of 730 mil. Despite all the hype about Silver breaking $50, investors still aren’t allocated to Silver.
Look at GLD market cap at 0.22% of the SPY’s market cap. At the last Gold peak GLD market cap rose to 0.75% of the SPY. That indicates a Gold price 3X higher than current.
We have bearish “market professionals” coming out of the closet for the 1st time in years. Zeberg and Harry Dent have been looking for a deflationary crash for decades where Gold will fall to $800/oz. Zeberg is actually looking for a $8/oz low in Silver. You can be sure we are near the low when these two feel comfortable enough to post their ridiculous, always wrong, forecasts.
It’s true natural systems left on its own will devolve due to entropy, but our economy isn’t a natural system. We have a Fed that can print as much as they want to stave off any upcoming crisis. We have Trump and Bessent with the pedal to the metal determined to lower rates to 1% and devalue our dollar following Fed member Miran Mar a Lago Accord playbook.
2008 was a horrible time for everyone. Look for Trump and a subjugated Fed to proactively stave off any impending crisis. Regional banks are in trouble due to a crashing commercial real estate market. Not to worry, the Fed will bail them out. Credit card and auto loan delinquencies are at all time highs. Never fear, the Fed will come to the rescue. When stable coins cause the biggest bank run the world has ever seen, the Fed will print trillions to fill the gap.
Trump is a businessman. He only is focused on profits. In time everyone in the US will be a millionaire, the DJIA will rise to 100K, but Gold will be at $10K and a bottle of Coca Cola will cost $20. Expect US asset prices to crash higher, and Gold to outperform, as the USD loses more and more value through official economic policy every day.
GP believes Gold and Silver will bottom very soon, possibly today. We have the Fed on Wednesday, and futures options expire today. Look for the COMEX to take out all the stops from long trades initiated earlier this month in a high volume push lower for a tradeable bottom.
Best,
Garrett Goggin, CFA, CMT
Lead Analyst and Founder, Golden Portfolio