Gold continues to run...

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The Gold Bull Continues To Run

Gold jumped nearly $40 on Friday, extending its amazing rocket ride higher. It’s up again today, despite strong headwinds.

Perhaps the most amazing thing about this rally is how unrecognized it remains, and how few understand what’s driving it.

The gold bull continues its stampede higher.

The latest big move came last Thursday. With the gains extending into the after-market and as the holiday weekend began, gold jumped $38.

As that move began Thursday morning and we were about to dispatch our April issue of Gold Newsletter, I posted this on X:

My post was actually intended to make two points:

1)  For gold bulls, it was just another day and another big move in gold. Ho hum. We’re getting used to this.

2)  For those outside the gold universe, it was another day of a new gold bull market for which they were either completely ignorant or blithely ignoring.

That last point is perhaps the most amazing aspect of this remarkable rally. There’s been little coverage of it in the financial media, and what there has been has usually been way off target in their explanations of what’s driving the move.

For instance, CNBC reported today that expectations for a Fed rate cut in June was behind gold’s most recent surge higher.

Balderdash!

As we’ve been showing you in recent letters, demand from China — the People’s Bank of China along with domestic buying — has been powering gold higher.

The organic, domestic Chinese demand is due to the lousy performance of their real estate and stock markets.

China’s central bank buying is (along with demand from other central banks) due to a growing recognition of the global debt trap, with debt-service costs being unmanageable at current rate levels...and — perhaps most importantly — due to the U.S. government’s weaponization of the dollar.

In future issues, I’ll explore this factor in more detail, but the bottom line is that central bank gold demand soared after the U.S. imposed severe sanctions on Russia following its invasion of Ukraine.

Governments are trading their dollars for gold in the wake of that event, to insulate themselves to some degree from dollar hegemony.

And this gold demand is largely programmatic — the bureaucrats just buy and buy, regardless of whether the price is much higher today than yesterday.

Now we’re starting to see Western investors joining China and the other central banks, and these speculators are prone to chasing a price trend higher.

In short, what we’re witnessing is a “perfect storm” for gold...a mix of insatiable buyers who will buy just as much, or even more, as the price rises.

Catching A Breath...

All this said, this morning’s ISM purchasing managers index (PMI) came in at 50.3, higher than the expected 48.5, dampening the market’s expectations for a Fed rate cut in June, or even a total of three for this year.

As a result, the U.S. stock market is down significantly, while the Dollar Index and 10-year Treasury yield are up strongly.

Add in the closed London bullion market, and that’s a helluva headwind for gold today. So it’s not surprising that gold is down from its overnight high of $2,266.

But it’s also very encouraging that, despite the fact that every other market is selling off, gold is still up about $5.00 today.

Make Sure You’re Along For This Ride

The evidence couldn’t be more clear that we have entered the next secular bull market for gold.

In this letter as well as in our Gold Newsletter paid-subscription publication, I’ve been outlining the extraordinary macro fundamentals that will create a multi-year run to far, far higher gold prices.

All those factors remain in place, and will begin to impact the metals over the coming months.

Largely unexpected was how desperate central banks would be to trade their dollars for gold. This has supercharged the gold bull market...and made the situation much more urgent for those who need to get positioned.

There’s still a window of opportunity that remains open: The junior mining share market is showing sparks, but has yet to fully catch fire.

In Gold Newsletter and our Gold Newsletter Alert service, some of our most recent recommendations have begun to soar higher (one doubled in price in March alone).

I’m telling you this because in our April issue, published last Thursday, I unveiled four exciting new junior mining stock recommendations. (One of these is especially urgent.)

If you’re not yet a subscriber, I strongly recommend that you sign up now by clicking the link below. In this kind of market, just one of our stock recommendations could pay for the cost of subscription hundreds of times over.

Gold is taking a bit of breather today. I urge you to take advantage of this moment while you can.

All the best,

Brien Lundin
Publisher, Gold Newsletter
CEO, the New Orleans Investment Conference

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