Gold broke out to new highs on Friday: $3,237/oz. It is proving one of the prime beneficiaries of all the market mayhem, and no surprise.
Gold is your hedge against government, and this is all a creation of government.
Where to park capital? Equities are all over the place and will continue to be for the foreseeable future. With US authorities transparent about wanting it lower, the US dollar is not the safe haven it’s been since 2007 in market sell-offs. As for treasuries, they’ve become a weapon in the trade wars.
Inert gold, on the other hand, is neutral. It doesn’t care which side of the trade wars, the culture wars, or any other wars you’re on, and at the moment, it seems everyone wants a piece.
China, we learn thanks to the sleuthing of analyst Jan Nieuwenhuijs, bought another 570 tonnes in 2024. Who knows how much more it has bought in 2025? To put that 570-tonne number in perspective, the UK’s total holdings are 310 tonnes.
What’s driving it all?
This move in gold started shortly after the US confiscated $300 billion in Russian state holdings after Russia’s invasion of Ukraine. It hasn’t been driven by retail. Central bank buying has pushed up the price.
If you’re not on Team US or Team G7, why own assets they can confiscate, like dollars or treasuries?
Own gold instead. The US would have to invade you to take your gold—or send in Kelly’s Heroes.
In 1950, gold made up 70% of international reserves. In the noughties, it was just 10%. The dollar, meanwhile, reached 60%, with the euro at another 20%.
Now gold is at 20%, the dollar at 45%, and the euro at 15%. The trend is clear, as this cool little video from Nieuwenhuijs and Money Metals shows:
In my opinion, we’ll be at 40% five years from now.
Here’s gold since late 2022. Every pullback has been bought. It’s as though someone with deep pockets is saying, “Buy the pullback every time it hits the 50-day moving average (red line).”
The UK seems to have been forgotten in this global rout, but I have little doubt the chickens of our shocking national finances and woeful productivity will soon come home to roost in the form of a sterling crisis. That’s when we overlooked Britishers will be mighty glad we have our gold.
Gold is now £2,475/oz. Another year of this, and we’ll be north of £3,000.
Summer is approaching, and May to August is typically when gold is weakest. Take advantage of pullbacks, is my advice. Do what the Chinese are doing. They’re smarter than we are (when it comes to gold, at least).
With oil having cratered, we should finally see gold miners fetch a proper bid. (They are already moving a little). Energy can represent 15% to 40% of mining costs. Lower costs and a higher price for the final product should mean they make more money, and thus higher share prices. (I’ll cover miners again soon, I promise, though I am worried I’ll jinx it)
Here’s something Charlie Morris observed—and you really should subscribe to his gold newsletter, Atlas Pulse; it’s top dog in a crowded field - it’s free. GDX is the largest gold mining ETF by far. Despite higher gold prices, it’s seen outflows of 25% over the past year. When inflows start, these things will rocket. The sector is tiny relative to the capital out there.
Here’s three years of Brent, FYI. It’s almost the reverse of gold. Good for mining.
If you’re interested in buying gold, by the way - and you should own some, if you don’t already, given everything that is going on - the bullion dealer I recommend is the Pure Gold Company. Pricing is competitive, quality of service is high. They deliver to the UK, the US, Canada and Europe or you can store your gold with them. More here.
A 2-minute video for your Sunday entertainment
I’ve got lots of content coming up over the next fortnight. I’ve just returned from two days of bitcoin conferences, so I’m fired up about that. I’ve got that gold mining piece to write. I have a lot more to say about gold. I have a fab video to share with you which I will send out tomorrow. And I want to explore where we should deploy capital in all this market mayhem: which sectors will do well in tariff wars, and which won’t. So, plenty to come.
In the meantime, as it’s the weekend, enjoy this silly little 3-minute vid I put together for my comedy Substack - not to be taken seriously - about alien invaders on planet Earth stealing our gold at the dawn of civilization. (Click the image below)
Finally, if you’re interested in gold and haven’t already seen it, here’s my guide to investing int he shiny stuff.
Only very slightly off-topic. I have been thinking about how to convert my assets such as they are into things of real value. The fact is all my assets are in effect digital. I have gold cash other precious metals proxy bitcoin and some Rolls-Royce shares. But these are all just digital. If the world as we know it comes to an end or the horrible central bankers politicians globalist et cetera decide to grab it all there isn’t much I could do about it. Whereas if I liquidate all these assets turn them into cash and bought actual stuff that had real value. I might be safe. Well safer. So I started thinking of headings-
food,
energy,
Housing/land
transport.
I just wondered if you could suggest any other categories that would be worth thinking about? I’m old and not that bothered so apart from suicide pills I’m not sure I’m very concerned about health.
This is an only slightly lighthearted enquiry.
Perhaps another way to think about this is to wonder if I could turn everything I have into something of real value to give to my children, what would that thing be? I suppose Krugerrands might be an answer. Years ago, someone suggested black peppercorns were quite a good store of value.
Housing and land very hard to pass on without paying heavy taxes. Food perishes. Cars lose their value. Energy dissipates. Metals corrode. Gold and bitcoin probably the best bet.
Dominic
Classic cars do not lose their value, quite the opposite, and there's no CGT on them. I have friends who have made a pile in this sector. 'Worth looking at. (If only I had a garage).
Yes, they can do well if you know what you are doing and have somewhere to keep them, but Dave just said transport - he didn't mention the classic bit!
All I meant by transport was as a generic heading. So one could consider a bicycle, a great invention, a sailboat, also a great invention, may be a steam engine but that starts requiring engineering talent I don’t have, an old-fashioned diesel because they just keep running and you can feed them with practically anything from chip fat to soya sauce.
And I forgot to mention hang gliders, a particular favourite of mine. A bit of bamboo, some polythene and a Hill and you’re away. Unfortunately not for long and only while the sun shines. But still, effectively free energy, just like yachts and bicycles.
A boat is good from the point of view of leaving in an emergency. Priceless. Keep it stocked 😉
Unfortunately, in my case the sea is a two hour drive away 😂
Haha same here really. That's where the motorbike you mentioned becomes useful!
The important thing about classic cars is that they have no electronics. With the right kit you can keep them on the road. Good luck with anything after 1990s something. I bought a bantam motorbike in 1971. I’m no mechanic but I kept it on the road until I smashed it up completely. With a Vernier scale, a bit of sandpaper and lots of help from friendly motorcyclists. If you can’t fix it yourself, it’s virtually useless.
I should’ve said that all the possible stores of value should obviously be sustainable. So not a shed full of potatoes, but the ability to grow them year after year. And the problem with bitcoin, is give me one that is literally a token that I can offer someone in exchange for food or fuel or a gun. As it is bitcoin is completely dependent on there being a global digital infrastructure. Not much use when there isn’t one, or at least one you can trust.
And with bitcoin, every transaction is recorded, so no anonymity. Good for security and resilience but bad otherwise.
"These are all just digital", you said.
Well, you can still buy share 'direct' and get the paper certificate via Shareview Equiniti.
The drawback is that these can't be within an ISA.
If you're worried about the 'end of days', some actual in hand metals may be a good start? In a 'prepper' scenario, some mid/ lower value coinage that is internationally recognised. Some gold and some silver. Silver is useful in this respect because if you're trying to trade for some small essentials, 'Have you got change for a Britannia?' may not work out 😉
“internationally” no. By my neighbour definitely. So something shiny and yellow might work. But something they actually need and can use is possibly a better bet.
Alcohol miniatures. From memory, made good currency in hyper-inflation Argentina. Unlike a sack of potatoes, alcohol keeps. And if matters get too gloomy, you can drink the stock. You could even make a party of it. But I think a solo decline with an array of empty bottles better reflects the gloom.
Yes of course 😊 It would depend on what disaster you're planning to get through, what causes it and how long it's likely to last. There are 2 general schools, hunker down (which is where your neighbour trades would be useful), or leave. Internationally recognised small denominations of coinage have the benefit that they would be useful for both and keep value irrespective. I would imagine that what ever takes out digital would result in a situation more serious than temporary shortages of toilet rolls and baked beans. That's my take on it anyhow 😁
More like cb’s (commander bastards) direct the charge. Of the Light Brigade … of the heavy metal head-bangers.
There is no hedge against gov. Because of alllll the lil’ inner guvnah’s running around the treadmill.
Recall the recall: FDR trimmed those hedges into an even scarier topiary than the one in The Shining. Afterwards they called it WW2. That predated & presaged recent “Russian” “confiscation.”
So there’s no hedging short memory, or amnesia, either.
No hedging fact we are all “Russians” “now” & that the “lessons”Solzhenitsyn learned were never broadly conveyed - or could be. The arch villainy of the village people drowns the archipelago over & over every time.
But AUld lang syne has gills, apparently.
S/he who has the gold makes the rules-based ordering about.
S/he has the gold.
The Krugerrands in Ayn Rand’s purse may as well be lamé.
Eh?, rhetorical the Canadian Truckers of the Johnny B/Goode/Commonwealth whose funds were froze (remember Canadian Michael J. Fox doin’ it in Back To The Future? Bill Murray, who may as well be “Canadian,” became a musician, too, in Groundhog Day) … but making metal transactions “illegal” is just as easy & crusts of bread to snitches is even easier.
https://www.youtube.com/watch?v=T_WSXXPQYeY
Kelly’s Heroes was a lot of absurd fun. Unsolvable fun it would be to try reverse engineering all that stolen gold back to its rightful original owners. Maybe there’s a smoking guns file - like for JFK, eh?
Dominic, GDX appears to have gone up by MORE than gold over the past month (19% vs 8%) and over the past year (44% vs 32%), so now does NOT seem like a good time to buy the ETF......?
It has, but that is despite outflows.
https://x.com/AtlasPulse/status/1911111893760041218
As a hobby I have enjoyed collecting antiques sterling silver flat and hollowware. It is often available below the intrinsic metal value despite being a couple of hundred years old. You occasionally scoop something really good, i.e. a 1704 John Sutton sparrow beak jug for $400, these have sold in Zurich for +30k Swiss! I have also put together a decent collection by women silversmiths, very rare and representing 144 out of 18,000 registered marks. There may be a problem with liquidity, but I have not tried to sell any.
Oil and gold are usually well correlated. Hopefully oil is going to do the catching up.