Published on February 18th, 2025
Gold prices in US Dollars continue making record highs. What does it mean? We quote those that follow the market closely and provide our own opinions.
Record gold prices
If we look at prices over the last 10 years, the current gold pricr move is explosive. After seeing Nvidia and Tesla recently, we know these exponential moves can go much higher.
What’s driving the gold price higher?
Total global gold demand in 2024 reached a record-breaking 4,974 tons, surpassing the previous year by 1%. This spike, valued at $382 billion, was largely driven by central banks, which added over 1,000 tons of gold to their reserves for the third consecutive year.
For context, between 2010 and 2021, central banks increased their gold holdings by an average of 473 tons per year. The latest 1,044.6-ton increase is more than double that figure, marking the 15th consecutive year of expanding reserves.
Goldseek.com
The last paragraph mentions this gem.
As the global financial landscape continues to shift, gold remains a trusted hedge against uncertainty, currency devaluation, and economic turbulence. If 2024’s record-breaking trends are any indication, the yellow metal may still have plenty of room to run.
Goldseek.com
Let’s list some ways there is global uncertainty and economic turbulence.
- US announces 25% tariffs on good neighbors and highly integrated partners Canada and Mexico
- US announces steel and aluminium tariffs of 25%
- US seeks to annex a sovereign country Canada as the 51st state, buy Greenland from Denmark, take the Panama Canal by force from Panama
- US and Russia collude together to dump Ukraine and Europe and divide Ukraine for themselves
- The US proposes occupying the Gaza strip and forcibly moving Palestinians to Jordan and Egypt
- The rule of law and democracy in the US has shifted towards the unitary executive, justice for sale, billionaires, oligarchs, corruption, fascism, and a bureaucratic coup
- Europe has to make a major decision on if, how, and when to support Ukraine against Russian aggression
- What is unknown is if the US ever reneges on debt payments or engages in a selective default
- US debt is likely to rise as economic growth slows, prices increase from tariffs, and the 2017 tax cut is extended while the people face austerity
- Interest on US debt already exceeded one trillion dollars last year
Given all the above economic and political uncertainty, it does seem like gold prices going up will continue in the near term.
How do we take advantage
There are three things we are doing. Buying paper gold, such as the exchange traded fund, GLD, buying GDX, which is an ETF that owns large gold producers, and looking to buy Canadian gold and silver Maple Leaf coins, to support our northern neighbor.
Here’s another look at gold prices, this time in inverse.
This shows the depreciation of the US Dollar against gold. The gold supply increases very slowly. The dollar supply is about to increase rapidly, as the US Treasury sells more debt to pay off bankrupting billionaire tax cuts whose greed knows no bounds or limits. And what happens when debt supply increases? Most likely US 10-yr interest rates go up.
A return of stagflation is not off the table according to the 2001 Nobel Memorial Prize in Economics Science winner Joseph Stiglitz. And gold does very well in stagflation.
“Almost all economists agree that the tariffs will increase prices,” said Stiglitz, a professor at Columbia University and former World Bank chief economist who won the Nobel Memorial Prize in Economic Sciences in 2001.
“I could certainly see a scenario where we get to stagflation — we get inflation and a weak economy,” he added. “I cannot see a really robust economy because I just see the global economy suffering so much from the uncertainty that Trump poses.”
Joseph Stiglitz, Huffpost
In an earlier quote Stiglitz says the following.
In an interview published by The Guardian on Monday, Stiglitz also argued the United States is becoming “a scary place to invest” because of Trump’s mission to slash public spending, which is shredding established contracts with the government and prompting fears of the risks of doing business in America.
Joseph Stiglitz, Huffpost
If you make a contract with the US government and you gret stiffed, is that good for economic confidence or economic growth or helping thr average person? Nope.
What does gold have to do with fascism?
Given the scope and scale of political and economic uncertainties, with fascism and authoritarianism rising and war continuing, buying gold to protect your finances and freedom from inflation and corruption makes a lot of sense. Don’t invest in the fake maga gold scams but with real dealers from real national mints. Buying gold is a protest against the economic, business, and political practices of the United States. It also provides some small support to those under threat from the US, such as Canada and Mexico when you buy their precious metal coins.
Today’s word of the day: fascism
fascism: a populist political philosophy, movement, or regime (such as that of the Fascisti) that exalts nation and often race above the individual, that is associated with a centralized autocratic government headed by a dictatorial leader, and that is characterized by severe economic and social regimentation and by forcible suppression of opposition.
Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power.
Benito Mussolini
Sincerely yours,
smilingdad
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