Taking a Reverse View On Gold

If data shows a strong correlation between obese people and the consumption of diet soft drinks, then conventional wisdom might lead us to speculate that perhaps artificial sweeteners are contributing to the problem. Cause and effect. 

But if you reverse the argument you have a very different insight … perhaps the obesity came first and the switch to diet drinks is an attempt to control their metabolism issue – so diet soda consumption is the consequence of the problem … and not the cause. This paradox is called “reverse causality”. 

Now try the same exercise with the gold market.

It is clear that gold prices have roughly doubled in 18 months and the cause is thought to primarily be unreported central bank buying – the explanation is clear and the arguments well-rehearsed ... de-dollarisation, inflation expectations, geopolitical uncertainty etc etc. This points us straight to China and perhaps a few of their BRICS friends. There is some data to suppose this but it's thin and largely anecdotal.  

Now reverse the issue … and let me give you a mandate to acquire as much gold as you possibly can over the next 10 years and at the best possible price … what would you do ? And how might your actions be manifested ?

To start with, discretion would be essential... (and articles like this, unhelpful). If the world knew there was a universal buyer in the market and prices only likely to rise, then the market would rapidly escalate … and you would have failed in your mission. For that, a big tick in the box … commonly available statistical data shows very little to account for the rapid appreciation in the price. 

Then you might consider opaque ways of acquiring physical gold. Not easy, it is a finite market and the effects of your buying can normally be observed through subtle and often ignored measures such as logistics rates, refining terms, backlogs for delivery, import stats etc … sectors very rarely monitored or reported on. So far, so good. Nothing to see here … go about your business. 

Likely you would deal through a very narrow network of trusted suppliers … and yes, those that say don't know … and those that know, don't say. 

What other measures would you instigate ? Take command of the price discovery process ? Build your domestic brands internationally ? Let the market know just how central you now are ? Definitely not. In much the same way that you don't see Chinese branded cars prominently on the streets of London or New York, why frighten the horses ? The US may relish hard power, others achieve market domination through soft power. 

You would closely observe the gold price action too. The laws of supply and demand dictate that your desire to acquire gold would eventually manifest itself in rising prices … but once it was declared that gold was technically “overbought” you would ease back and then brief periods of consolidation or even some profit-taking would provide good cover for your true desire. Observable price corrections would be present, but rare … too good a chance to fill the coffers at an attractive price … so prices would rise but not get ahead of themselves and dips would be short and brief … sound familiar ? It might also explains gold's ambivalent correlation with traditional price drivers.

By tradition the East has been price-sensitive to rising prices, especially the jewellery sector and hence it is usually met with reduced demand in rival Asian markets … great, more for us. Over the last 3 years the world's former largest market - India - has seen jewellery demand fall by about 10% which has been offset by a rise in investment demand … in short, they are not part of this story. 

What should our central bank report by way of gold purchases … how about some (to sound plausible) but not too much. Over the last 18 months China has officially reported purchases of 316 tonnes out of about 1600 tonnes acquired by central banks globally – so less than 20%. Sounds about right.

As a manufacturing power-house, what should we do about gold refining capacity ? Build it … but quietly. In 1991 there were 48 London Good Delivery Gold Refineries of which only 1 was Chinese … today there are 66 LGD refineries and 15 of these are Chinese (17 if you include Hong Kong). 

What about PR and Comms ? Well, if you wanted to be tricky you might encourage anti-gold sentiment in the West … not saying they are behind this but anyway, the West does a pretty good job in ascribing gold with an “alternative” status and remember “cash for gold” … we in the West have a tendency to cash out. 

The flow of gold from the West to the East has been the story of several hundreds of years … in Marco Polo's time we received spices for our precious metals, today we simply fill the shelves of Walmart. 

A little like Sherlock Holmes who approached problem-solving by eliminating the impossible and whatever remains is the cause, however improbable (eliminative induction) … in gold you end up with the same answer … and it is that China is discretely acquiring significant amounts of gold. In the 1960's gold was about 5% of total global financial assets - by the 1980's it was just under 3% - and  today it is still less than 1% ... which suggest the world at large has still not caught on about the powerful role it has to play in wealth preservation. 

When my wife asks me where we should go on holiday, rather than listing the usual obvious countries I sometimes reverse it by asking what do you fancy doing ? If the answer was say “kayaking” or “water sports” that might throw out the Dordogne Valley in France … which was never on the former list … which just shows how reversing things can sometimes generate a new way of looking at things … but in gold's case it merely seems to confirm them.  No ship Sherlock. 

By Ross Norman

Source: Metals Daily

Gold Could Reach $4,000 in 6-9 Months

Gold, which rose 2% this week to reach $3,357 an ounce Friday, could potentially climb to $4,000 an ounce in the next six to nine months, according to the State Street Global Advisors Gold 2025 Midyear Outlook.

Gold may even test the $5,000/oz. range in the next 12-24 months, according to SSGA.

Volatility in the markets — fueled by the Trump trade war, U.S. debt, and a weaker U.S. dollar — coupled with continued central bank purchasing of gold, are four of the main drivers of gold’s appreciation, according to Aakash Doshi, State Street’s head of gold strategy.

“The early days of the Trump administration have corresponded with heightened U.S. economic uncertainty, consumer anxiety, and a weaker U.S. dollar — buttressing investor demand for gold as a tail risk and geoeconomic hedge,” Doshi wrote in the midyear gold report.

“The post-pandemic period has been especially rife with structural shifts that remain unresolved,” Doshi continued, noting that since the World Health Organization declared the global coronavirus pandemic on March 11, 2020, gold has risen 98%.

In the first five months of 2025 alone, gold has risen 25%.

Institutional and retail investors alike are gravitating to gold as a low-volatility, portfolio-diversifying safe haven, according to the asset management firm.

Until there is clarity on the global trade war, inflation, U.S. political and military retrenchment, the $36.2 trillion U.S. deficit, and the U.S. dollar, the State Street gold strategists note, gold will continue to be an attractive alternative investment.

“In this environment, gold has the potential to stand out as a resilient store of value because it has no liability, does not depend on repayment, and does not require yield to justify its role in a portfolio,” Doshi said.

By Lee Barney

Source: NEWSMAX

Annual gold price forecast tops $3,000 for first time

Analysts in a quarterly Reuters poll have forecast an average annual gold price above $3,000 for the first time, with global trade friction and a swing away from the U.S. dollar powering demand.

The poll of 29 analysts and traders returned a median forecast of $3,065 per troy ounce of gold for this year, up from $2,756 predicted in a poll three months ago. The estimated price for 2026 rose to $3,000 from $2,700.

Spot gold prices have risen by a quarter so far in 2025, almost equalling the 27% increase recorded for the whole of 2024. Bullion, often seen as a store of value during uncertain times, has averaged $2,952 so far this year, according to LSEG data.

"Gold looks set for what can only be described as another epic year," said independent analyst Ross Norman. "Like in the early 2000s, gold is seeing buying on price strength which can have the effect of feeding upon itself."

Bullion broke above the $3,000 mark for the first time in mid-March and topped $3,500 last week as the trade battle between the United States and China, the world's two largest economies, boosted safe-haven demand, on top of persistent central bank buying.

Although the gold price has since eased to $3,273, analysts expect it to remain supported by the wild swings in U.S. tariff policies and what are likely to be protracted trade negotiations. [GOL/]

"Gold's fortune will continue to depend on other markets' misfortune," said Ole Hansen, head of commodity strategy at Saxo Bank. Bullion will remain supported, according to Hansen, as long as the focus remains on de-dollarisation and the impact of U.S. tariffs on global growth and fiscal stability.

At the same time, analysts warned of a crowded trade, while the high prices are curbing jewellery sector demand.

"Price risks persist given the physical market is wavering and central bank flows – while positive – are slowing, while an unwinding of tariff risk and fading recession risk can stall gold's safe-haven appeal," said Standard Chartered analyst Suki Cooper.

Silver, meanwhile, has underperformed gold with a rise of 12% so far this year, as it doesn't benefit from central bank buying while investment demand has been dampened by growth worries. Half of total demand for silver comes from the industrial sector.

The poll forecast an average 2025 silver price of $33.10 per ounce, unchanged from the previous survey. It has averaged $32 so far this year.

Analysts lifted their 2026 silver price forecast to $34.58 from $33.45, expecting a structural market deficit and the global clean energy transition to provide support.

By Anmol Choubey

Source: Yahoo

Gold/Silver Ratio Hits 100 to 1

If you can tell much about a person from how they behave under adversity, then so it is for metals.

When things are going swimmingly we can all look the part, but throw in a tariff-fuelled panic and things can change shape quite quickly. It is during price corrections such as the current one where markets show their true character. Just how strong is underlying sentiment. 

So what did we learn …

Seen through the silver lens … well we sensed silver was largely coming along for the ride but was not terribly enthusiastic. The merest whiff of a correction and silver was off and over the hill. Despite some compelling fundamentals and more than its fair share of hyperbole from its supporters, the reality is its support base was quite thin. The specs ran for the exit in an undignified and disorderly rush. The gauge to measure the relative price of gold to silver today nudged 100:1, the highest in 5 years (which was an all time high at 113. 

To show just how out of line things are for silver, consider that it is 14 times as abundant as gold and the true ratio should therefore be 14:1 and not 100:1 ... interestingly this was also the price differential in Roman times between respective gold and silver coins. 

The odd thing is silver has a good story ; five consecutive years of supply deficits, a tight market with lease rates nudging 6% and significant flows out to NY (and with no central banks to help out in extremis). (Unfounded) fears that it would be subject to tariffs also failed to make a discernible impact. Speculative positioning on COMEX looks encouraging at a near five year high and likely this is where we saw the sell off. 

I don't mind saying I am long silver in my pension and that position currently has a large question mark over it. 

It is also a truism to say you can also tell something about a person from the company they keep ; well it is starting to look like gold is dis-associating itself from silver. 

In a normal sharp sell-off one might expect or hope for a 50% bounce between highs and the low to validate that the market is actually in rude health … and we got that … or near enough. From a high of $3164. to a low of $3058 we should expect $3111 – and we are at $3107. 

It does beg the question why is gold and its alter ego silver on different paths and I think it underscores this is not a normal investment lead rally – it is a very narrow central bank one .. which favours the one … and not the other. 

My reading … all good for gold and we expect a steady price recovery in due course … while for silver, it needs to take itself aside and have a good hard think. 

By Ross Norman

Source: Metals Daily

Investors are finally paying attention as ‘gold thrives on uncertainty’

Gold prices continue to consolidate around $2,900 an ounce, but the precious metal has plenty of upside potential as investor demand continues to pick up, according to one market strategist.

In an interview with Kitco News, George Milling-Stanley, Chief Gold Strategist at State Street Global Advisors (SSGA), said that although interest in gold-backed exchange-traded funds (ETFs) has lagged in the current bull market, sentiment is quickly starting to shift as investors see new potential in the precious metal.

February was an unprecedented month for the gold ETF market as North American investors flooded into the marketplace. According to data from the World Gold Council, 72.2 tonnes of gold—valued at $6.8 billion—flowed into North American ETFs last month, the largest single-month inflow for the region since July 2020 and the strongest February on record.

Milling-Stanley said that with growing economic uncertainty and geopolitical chaos, investors are turning to gold as a safe haven and inflation hedge. Specifically, the bulk of investment capital has flowed into the SPDR Gold Shares (NYSE: GLD), the world’s biggest gold-backed ETF. State Street is the sponsor and manager of GLD.

Data from GLD shows that more than 20 tonnes of gold flowed into the ETF on Feb. 21, its biggest one-day increase in over three years. GLD holdings have increased by nearly 22 tonnes this year. Milling-Stanley said the inflows were valued at $1.9 billion.

Although GLD has seen a solid rise in its holdings, Milling-Stanley said there is still plenty of room for investment demand to grow. GLD’s gold holdings currently stand at 894 tonnes, down 33% from their all-time highs in December 2012. GLD holdings are down 30% from October 2020, the peak of the previous bull market.

Milling-Stanley said that he expects investment demand to continue to grow as the gold market has three significant drivers supporting the rally.

He pointed out that central bank gold purchases have been a paradigm shift in the global marketplace. Central banks have bought more than 1,000 tonnes of gold in each of the last three years as they have diversified away from the U.S. dollar.

Milling-Stanley added that a sharp rise in economic uncertainty and the growing threat of a recession will make gold an attractive safe-haven asset. At the same time, persistent physical demand in Asia supports higher prices.

“ETF investors have been a little late to the party, but I am glad to see that they have finally joined,” said Milling-Stanley. “?I think there's a very good likelihood that we will see investment demand continue to grow. The reasons behind gold’s rally are not going away; they're just getting stronger by the day.”

Milling-Stanley reiterated his 2025 price forecast, assigning a 50% probability that gold will trade between $2,600 and $2,900, and a 30% probability that prices could reach as high as $3,100 an ounce.

“We are seeing a lot of uncertainty, and the one thing I can say with complete confidence is that gold has always thrived on uncertainty,” he said.

By Neils Christensen

Source: Kitco

London Gold Shortages ???

Luntz : “We have put our words on steroids and amped the language up so high that unless we communicate in overdrive and hyperbole, we believe—perhaps correctly—that nobody will hear us.”

God the media do love a good panic don't they … but I suppose that's what sells … although one might have hoped for better from the Financial Times. Claims – no assertions – that London is running out of gold seems to have gripped the minds of the commentariat … but let me add a few thoughts :

Dealers in New York are 'standing for delivery' for physical on futures contracts that are normally either rolled month by month or cash-settled on fears that tariffs will be imposed on gold imports to the US. 

Yes, about 435 tonnes of gold has moved from London via Switzerland to New York vaults over the last few weeks which is worth about $82 billion. My first thoughts are – OK, to put that into perspective, that's actually about a couple of average trading days volume or turnover for the London gold market – interesting, but only maybe.

Firstly though, as for shortages … well London is sitting on about 8710 tonnes of gold according to the latest LBMA vault stats and the drawdown has not exactly moved the dial (see below). Yes, less than half of this is owned by other central banks, but the majority is ready and available 

 Second thought – so this is a logistical and conversion problem … fine ounces of gold are needed in one location (New York) > which needs to be converted into another form (in Switzerland) > and then shipped across the pond. Of course there are limitations on the Swiss refineries melting capacity to convert 400 ounce gold bars into the kilobars, as well as limitations on metal handling. Again … big deal. You've been in a car … temporary log-jams happen. 

Some refiners I met at the World Money Fair in Berlin last week suggested their kilobar capacity is currently booked out for the next 8 weeks or so to meet that demand.

And if 435 tonnes of kilobars are now in New York then surely the problem is as much about surpluses on one side of the Atlantic, as much as so-called 'shortages' on the other. Taking the 10 year average, the US purchases only about 20 tonnes of physical gold bars each year – so 22 years worth of bullion bars have just washed up on their shores. Likely as not, like last time (covid), these bars will simply be flown home to London (via the Swiss refineries where they are converted back into standard 400 oz bars) over the next few months. Nice business for some. 

And the reality is that over the last 2 months gold miners will have generated about 600 tonnes of fresh new metal … and with premiums on kilobars running high, it follows that much of that production will have been cast into (32 oz) kilobars rather than (400 oz) market bars to satisfy the US demand.

Yes, the Bank of England may have extended delivery periods just now but there are many other LBMA vaults in London as well as other international locations where metal can flow into the US. 

For sure some traders will have been caught out by the move and large profits and indeed losses will have been made – but there is also an unintended side effect. The scale and speed of the drawdown in gold has reduced liquidity in the market temporarily and the cost of borrowing gold has rallied from sub 1% to north of 10%. This has a detrimental impact on gold borrowers which includes bullion dealerships, jewellery groups, gold miners and others who optimize their working capital by borrowing gold rather than owning it outright ... yes, the very infrastructure that interfaces with gold consumers and makes our markets possible is being damaged. 

As you may have heard said ”a lie can travel halfway around the world while the truth is still putting on its boots.” So true. 

By Ross Norman

Source: Metals Daily

Precious Metals Forecasts 2025

GOLD

Average: $2888

High : $3175

Low : $2630

To know the future, you need to understand the past.

But with little or no consensus as to why gold achieved a 27% gain in 2024, it makes it especially hard to gauge whether the trend will prevail ; institutional (ETF) demand is flat, investment demand is lacklustre, while reported central bank demand is below the last 2 year levels. Worst of all and most perversely, gold's inverse correlation with many traditional macro drivers are out the window. 

Arguably, dollar strength and rising treasury yields may have only served to temper the rate of gold price increase - and hence them moving in parallel, suggesting to us that gold prices could accelerate again once the handbrake is off. This indicates to us good underlying strength in the market.   

Likely the significant price rise was down to unreported central bank buying as sovereign nations de-dollarise, coupled with outlandish Asian OTC derivatives plays. If we are right, then we see no reason for a change in mode in 2025 and the gold rally remains intact, but perhaps a little less so.

In 2025 the world may be more convivial, US economic prospects and the dollar brighten, plus we may well see an echo to inflation as we did in the 1970's – but we think this matters less than it should. The high conviction buying looks set to remain, even if the motive remains a matter of debate.

 ______________________________________________________________

SILVER

Average: $34.16

High : $38.46

Low : $29.10

Sometimes unkindly referred to as the 'cinderella metal' (because it often misses the ball) … silver did receive the memo in 2024 and posted a solid 33% gain on the year. Arguably though it should have done even better because, as gold's alter ego, it would typically be expected to significantly outperform during the seismic shift these metals are seeing.

Worryingly, while industrial demand is strong and rising sharply … and with the market set for yet another year with a supply deficit, physical investment demand is declining while institutional demand via the ETF is relatively lacklustre. Parallels with gold are clear. To mix metaphors, this is not yet a market firing on all cylinders. 

We estimate the supply deficit will be around 250 million ounces in 2025 satisfied by a commensurate drawdown in pipeline metal. That can only happen for so long.

Well at least silver is not an 'ugly sister', but to be clear, nor is this yet a fairy tale story either … and like cinderella popularity … or indeed an All Time High may take a little while. 

____________________________________________________________

PLATINUM

Average: $1046

High : $1175

Low : $900

If price predictions were only a matter of understanding fundamentals, then estimating supply deficits (or surpluses) then surely platinum would be the bookies favourite. But life is not like that. 

The good news is the broad economic outlook looks positive (although China is struggling just now) and with rising industrial production the broad demand for platinum can only rise. This provides a positive backdrop given the diverse range of applications where platinum is involved. 

More narrowly, last year's structural changes in the market in response to the low basket price for PGMs takes time to come through and these are now starting to bite. Additionally we expect to see a rowing back in ambitions for net zero and by extension EV's with the Trump administration – this would be to platinum's advantage, conferring some resilience to ICE engines and by extension, revving up sentiment. 

Meanwhile the one-off releases of inventory seen in 2024, coupled with high recycling levels suggests to us that the negative price impacts are behind us, setting the stage for a supply deficit of about 525koz. If we are right, then platinum is set for gains in 2025. 

_____________________________________________________________

PALLADIUM

Average: $968

High : $995

Low : $920

For palladium much of the bad news is already baked into the current price. 

Fundamentally demand is declining but mine production has also eased, leaving the palladium market roughly in balance. 

That said, the smelter rebuild in Russia has been faster than anticipated and hence we expect total mine production to remain relatively static and not a fall as had previously been expected.

Under the Trump administration the world will likely become more 'pro-oil' and less 'net zero', which could impact sentiment towards the PGMs positively even though actual demand will lag events. However, any significant price move to the upside will likely be muted given the large above ground stocks which could be readily deployed. 

After the heady days at a $3400 level, palladium seems to have found a floor, and while although longer-term fundamentals look positive, they look markedly less bullish than platinum’s.

By Ross Norman

Source: Metals Daily

SOUTH KOREA : The number of individuals investing in gold has increase

'Mixed money' due to the preference for safe assets 80 Billion Private Investments in December.

As financial market instability continued in the impeachment process, the number of individuals investing in gold, a representative safe asset, has increased significantly.

The number of individuals investing in gold has increased significantly as financial market instability continues in the impeachment process. As investment volatility has rapidly grown, with the impeachment of Yoon Suk Yeol's president being passed by the National Assembly after the December 3 emergency martial law incident, it is believed that money is flocking to representative safe assets.

According to an analysis of gold trading data on the Korea Exchange on the 16th, individual investors net purchased 80 billion won worth of gold through the exchange until the 13th of this month. From the 4th to the 13th, after the emergency martial law crisis broke out, the amount of gold purchased by individuals amounted to 62 billion won (501kg). It swept 12.1% of this year's total net purchases (512 billion won) in eight trading days.

During the same period, banks, securities firms and other institutions bought twice as much gold (34 billion won). Considering that individuals sold 4 billion won of gold during the same period last year, the atmosphere has changed significantly.

Currently, there are four ways to invest in gold: 

1 - gold transaction through the Korea Exchange 

2 - gold bar real transaction 

3 - gold banking (gold investment bank account) 

4 - gold spot exchange-traded fund (ETF) investment. 

Among them, real gold transactions are gold transactions through the Korea Exchange and real investments in buying real gold bars.

When selling a gold bar, you do not pay any tax on the profits from the sale, but you have to pay VAT (10%) and sales commission (5%) when you purchase it. VAT and fees are not returned when the real gold is sold.

Gold transactions through the Korea Exchange are basic to conduct financial transactions on a 1g basis. Although there is no tax on profits from trading, there is a transaction fee of 0.2 to 0.3%. Investors can also withdraw gold bars in real life if they want. However, in this case, a 10% VAT and a fee of 20,000 won per gold bar (100g, 1kg unit) are charged, so it is good to pay attention.

Baek Seok-hyun, an economist at Shinhan Bank, said, "Gold prices have been rising sharply this year, but in the long run, it is still worth the investment," adding, "The strategy of dividing the period and buying in installments is effective."

By Kim Junghwan

Source: Maeil Business Newpaper