Something’s Up With Gold

It should not come as a surprise if you’re invested in or have been following gold and silver over the past few years, that the price of gold is currently on a tear. While it has steadily risen since 2020, only taking a brief downturn in early 2020 and then again in late 2022, it hasn’t looked back since and is closing in on breaking $3000 US an ounce. It’s up over $800 US an ounce from this time last year.

Of course, its upward trend recently is due to many factors. The war between Russia and Ukraine, which started in February 2022, and the attack on Israel by Hamas in October 2023 has all caused uncertainty in the world, as in, teetering on the edge of World War III uncertainty.

Then there’s the economic downturn the world has been facing since the pandemic shut everything down for two years. We have all been suffering from high inflation ever since, especially in the price of food and housing. It would also be safe to say the economies of most countries around the world are still stabilizing from the mess the pandemic, and the handling of it by their governments, caused.

It’s not only investors who have been on a gold buying spree but central banks have been actively buying gold en masse since the global financial crisis of 2008 with the subprime mortgage fiasco. A June 2024 survey by the World Gold Council explains what central banks have been up to, why and what their continued consumption of gold will be, moving forward:

An increasingly complex geopolitical and financial environment is making gold reserves management more relevant than ever. In 2023, central banks added 1,037 tonnes of gold – the second highest annual purchase in history – following a record high of 1,082 tonnes in 2022.

Following these record numbers, gold continues to be viewed favourably by central banks as a reserve asset. According to the 2024 Central Bank Gold Reserves (CBGR) survey, which was conducted between 19 February and 30 April 2024 with a total of 70 responses, 29% of central banks respondents intend to increase their gold reserves in the next twelve months, the highest level we have observed since we began this survey in 2018. The planned purchases are chiefly motivated by a desire to rebalance to a more preferred strategic level of gold holdings, domestic gold production, and financial market concerns including higher crisis risks and rising inflation.

https://www.gold.org/goldhub/data/2024-central-bank-gold-reserves-survey

Since November 2024, the US has brought in over 12 1/2 million ounces of gold and over 45 million ounces of silver from London vaults into US vaults and JPMorgan has recently delivered $4 billion worth of gold into the New York Comex market for February contracts. Many countries around the world have also been repatriating their gold since 2014, all this, according to Andy Schectman of Miles Franklin Precious Metals Investments.

Then there is the recent executive order signed by President Trump for the creation of a Sovereign Wealth Fund to which Trump’s Treasury Secretary Scott Bessent said, “We’re going to monetize the asset side of the U.S. balance sheet for the American people.” This move has led to the speculation that the US government may be considering re-evaluating its gold stocks, which are currently valued at $42.22 per ounce. This article explains how it could happen: How the U.S. Treasury Can Cash In Big Using Its Gold Revaluation Account.

And now, just this week, there are open calls for Elon Musk’s DOGE to audit Fort Knox which hasn’t been officially audited since 1974. Fort Knox has 147.3 million ounces stored at its location and overall, US gold reserves stand at 8,100 metric tons, the highest in the world. But does Fort Knox still have all of it?

It would be a little naïve to think that something isn’t going on with the sudden interest in gold and its rise on the COMEX over the past year. Usually, people invest in gold as a hedge against inflation and central banks, as a hedge against uncertainty. Banks don’t like risk.

There is a lot to be said about all of this hoarding going on and I haven’t even mentioned Russia and China. China has 2,264.3 metric tons of gold in the books, but they far surpass what the US has and that should also say something. Two things come to mind: de-dollarization and BRICS.

As Andy Schectman explains in his latest appearance on Kitco News, something is coming and “Insiders” know the plan is in motion.