GOLD COMMENTARY
By Rich Hoblyn – Hoblyn Cutts – 04/02/2025
Since publishing the first commentary a few weeks ago the news in the Precious Metals space has been breathtaking, as has the speed of the Trump 2.0 presidency in regard to clearing out Deep State, especially in regard to DOGE which has exposed USAID etc. Mainstream US media are panicking on every level as more and more revelations of systemic corruption comes to light.
It’s pretty clear that the West is caught in a spiral of debt right now and governments have got the unenviable task of trying to control inflation, whilst stimulating economies, driving new investment whilst handling the impending asset bubble exhalation. Let’s face it, the markets in Western economies have been fed low interest rates for far too long. QE & QT to a degree may have reached the pinnacle. Real money, or to be exact, gold and silver, may ultimately come to the rescue in America and this perhaps explains why bullion is in a major shift at last. Anyone who has followed the story of the Fort Knox bullion accountability over decades will realise the significance of the demands inside Comex etc. “Unallocated” accounts must now be seriously concerned about the ability of certain billion houses to convert holdings to physical. Premiums in regard to metal lending seem to be at crazy levels. Many will have to arbitrage their way through this in the foreseeable future but it will take deep pockets to get through this. There’s a view that LBMA has failed & that the Bank of England isn’t up to the task. I disagree ! Firstly, the onus is on the customers to ensure that they understood what “unallocated” actually inferred. Saving on expensive insurance, security & checking etc must come at a price (“Caveat Emptor”) and secondly many inside the bullion industry appear to be absolutely clueless about the demands on the settlements clerks & custody clerks etc in regard to shifting 35,000 400oz bars out of antiquated vaults.
There’s been alot of blame attached to Trump’s threats of tariffs on Canada, Mexico, EU etc but in truth this crisis in confidence and crisis over uncontrolled debt has been eating away at the foundations of Wall Street and Threadneedle Street for many decades.
Kitco just highlighted the following (edited)
<strong>”During Trump’s previous presidency, gold prices moved up over 70%. When Trump took office in January 2017, gold was trading at less than $1,200 per ounce. Before the end of his term in January 2021, the safe-haven metal had registered a high of $2,089 per ounce by mid-2020. With precious metals sector risk having shifted to the upside, following a gold breakout above the October peak of $2,800, the fuse has been lit in a severely depressed mining space that has a lot of catching up to do after massively underperforming on average over the past decade. The key ingredient missing from this phase of the gold bull market has been Western retail investment demand, especially from the United States, as investors have been distracted by AI and crypto. President Trump is entering the year with equity valuations at the highest level for the start of any U.S. presidency. S&P CAPE ratios are the highest ever for the start of a presidential term. Thus far in 2025, not only is the gold complex beating the S&P 500 as the Trump trade war begins anew, but it is also outperforming Bitcoin, which saw a sharp drop below $95k over the weekend. The leading cryptocurrency has been struggling since hitting new all-time highs above $100k per token last month. At the weekend as equity markets were starting a new trading week deep in the red, Bitcoin dropped sharply to a low of $91,530 per token. The Trump 2.0 tariffs have become a growing concern they could become the pin which pops the largest equity bubble in US history.Overreliance on technology stocks, the threat from Chinese artificial intelligence start-ups like DeepSeek amid historically high valuations have created cracks in the high-flying U.S. stock market, which has been led by the MAG7 equity craze. AI leader Nvidia (NVDA) set a one-day record loss of market cap in a company last Monday, when the stock lost $568 billion during a single trading session. With wildly overvalued AI stocks and bitcoin coming under pressure recently, investors are beginning to rotate their profits from those sectors into historically undervalued mining shares.”</strong>
So where are markets heading ? It’s clear that Nvidia may have called the market correction and there are clearly signs that the banks are under extreme pressure right now. The Fed & CB’s have been far too complacent for far too long. Meanwhile there is a clear squeeze being encountered in physical metals trading. The pull and push between US & China is occurring daily and London is right in the middle of an almighty scrap. High prices are driving margins and profits up for global miners. Barrick may be nursing troubles in Mali but Newmont, Freeport, Gold Fields, Kinross and others should be reporting record earnings very shortly.
As the asset bubbles go through extreme stress for the remainder of 2025 and beyond it’s clear that there might be an extraordinary rotation into miners from AI, cryptos, tech & general equities incl. real estate hereon.
The battle has only just started and life itself has just got very interesting. How Trump navigates the US economy through the turmoils is going to be fascinating to watch.
Hoblyn Cutts @hoblynkingGOLD @hoblyncuttsGOLD has a US$6,000pto target price which is constantly under review. Silver is at US$40
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