Gold’s Love Trade

To everything there is a season, including markets.

Every sector gets its turn as the crowd’s favorite, then eventually needs time to cool off. That appears to be happening now.

The “Magnificent Seven,” the old market leaders, are no longer leading with the same authority. Investors have rotated toward chipmakers and other companies more closely tied to the AI infrastructure buildout.

At the same time, the enormous AI spending plans of the hyperscalers are raising harder questions about where the profits will actually show up.

That kind of rotation usually rewards a little contrarian thinking. Instead of chasing what has already worked, investors will do well looking at sectors that have recently lagged.

Gold fits the bill.

After a sharp run earlier this year, the metal has pulled back hard, silver has been punished even more severely and sentiment across the precious-metals trade has cooled.

But gold’s seasonal pattern tends to improve in July and more broadly, in the back half of the year:

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Seasonality for gold prices is about to kick in. Grey Swan guest Frank Holmes calls it the “love trade.” Higher into the end of the year, following higher demand for holiday gift giving across the West, India and China. (Source: EquityClock)

Frequent Grey Swan guest, Frank Holmes, CEO of U.S. Global Investors, describes one factor in the seasonal demand for gold as the “love trade,” a cultural demand for gold, in contrast to the “fear trade,” which is driven by economic anxiety, financial stress and government policy.

The love trade is rooted in human tradition, celebration and the desire to preserve wealth across generations, especially in countries like China and India, where gold is deeply woven into culture, family status and personal finance.

Demand for gold rises around major life and cultural events, including India’s wedding season and the Chinese New Year, when families buy physical gold as gifts in the form of necklaces, bangles and other jewelry.

In much of Asia and the Middle East, gold is not treated merely as an investment ticker on a screen, but as a tangible store of family wealth, held in jewelry and bars rather than paper assets. “Indian women alone,” Holmes says, “own extraordinary amounts of gold, far more than the official reserves held at Fort Knox.”

In moments of crisis, that cultural habit also reveals gold’s practical value: 24-karat jewelry can become portable, durable money when banking systems fail, borders close, or families need to carry wealth with them to secure safe passage out of danger.

After seasonal weakness in the early part of 2026, investors have a rich selection of high-cash-flow producers and miners to choose from.

Many of these companies are still posting strong year-over-year increases in revenue and earnings. And investors can pick and choose the best management and companies in strong political jurisdictions for gold mining right now.

We’re going to dig into Q2 earnings later today on Grey Swan Live! with contributor Shad Marquitz at 2 p.m. ET. Shad will show that the trend of higher prices for bullion has created strong balance sheets for some of his favorite mining stocks. The market gods have given us a lovely gift… low stock prices for great, well-endowed gold and silver plays.

Today’s Grey Swan Pro looks at a gold play with rich properties in North America and Turkey, and is still reporting strong year-over-year numbers making it attractive for a rebound play today — details here.

~ Addison

P.S. This afternoon, for Grey Swan Live!, we’ll be tapping Shad Marquitz’s expertise in precious and industrial metals, mining and energy to zero in on the base layer of Jensen Huang’s “5-Layer Cake” – strategy for the AI intelligence economy buildout.

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Specifically, the “Sovereign Bloc” strategy was established when President Trump issued an executive order establishing Project Vault.

Background: The 5-Layer Cake is a bottom-up supply chain strategy focused on physical technology and infrastructure. The Sovereign Bloc is a geopolitical risk strategy focused on domestic resilience, national control, and regional trade ties.

If the 5-Layer Cake strategy is about owning the best flour, ovens, and frosting recipe to make a highly profitable treat, the Sovereign Bloc is about a country deciding it wants to own the bakery and grow its own wheat, so no other country can stop it from eating.

To everything there is a season, including markets.

Every sector gets its turn as the crowd’s favorite, then eventually needs time to cool off. That appears to be happening now.

At the same time, the enormous AI spending plans of the hyperscalers are raising harder questions about where the profits will actually show up.

That kind of rotation usually rewards a little contrarian thinking. Instead of chasing what has already worked, investors will do well looking at sectors that have recently lagged.

Gold fits the bill.

After a sharp run earlier this year, the metal has pulled back hard, silver has been punished even more severely and sentiment across the precious-metals trade has cooled.

But gold’s seasonal pattern tends to improve in July and more broadly, in the back half of the year:

Turn Your Images On

After seasonal weakness in the early part of 2026, investors have a rich selection of high-cash-flow producers and miners to choose from.

~ Addison

Turn Your Images On

Specifically, the “Sovereign Bloc” strategy was established when President Trump issued an executive order establishing Project Vault.

Copper and resources are sending us a cleaner market signal than AI stocks.

Channeling Ludwig von Mises, we observe this morning that price is not just a number; it’s information. Price reflects what buyers and sellers collectively believe: demand, scarcity, fear, speculation, disappointment, future expectations and available supply.

When prices rise, and inventories fall at the same time, the message is usually straightforward: buyers need the stuff, and there is not enough of it.

A low VIX does not predict disaster. It measures complacency. A serial skeptic will read it as the calm before a storm. We shook off that feeling this morning and opted to pursue an opportunity instead.

Here goes:

A VIX reading below 15 means the market is not pricing in much near-term trouble, even though there are obvious risks still sitting in the room: Iran, oil prices, memory chip speculation, circular financing, high valuations, epic high concentrations, spiking long-term interest rates, a regime change at the Fed, a meltdown in Japan and a historic deficit and rising national debt.

Money is not flowing in a clean, straight line from outside investors to productive businesses. The firms at the top are investing in and buying from each other.

Microsoft and OpenAI are the easiest examples to follow.

Microsoft says OpenAI has contracted to purchase an additional $250 billion in Azure services, while Microsoft continues to account for $13 billion in funding commitments to OpenAI as an investment.

At this stage, it’s a stock picker’s market.

We expect space, robotics and some more visible tech startups to remain sources of speculation. After weakness in the first half of 2026, we’re also due for a strong rotation of capital into natural resources, precious metals, critical minerals and energy.

Copper and resources are sending us a cleaner market signal than AI stocks.

When prices rise, and inventories fall at the same time, the message is usually straightforward: buyers need the stuff, and there is not enough of it.

Here goes:

Money is not flowing in a clean, straight line from outside investors to productive businesses. The firms at the top are investing in and buying from each other.

Microsoft and OpenAI are the easiest examples to follow.

Microsoft says OpenAI has contracted to purchase an additional $250 billion in Azure services, while Microsoft continues to account for $13 billion in funding commitments to OpenAI as an investment.

At this stage, it’s a stock picker’s market.