Seven Charts That Put the Gold Bull Market in Context

“We have gold because we cannot trust government.”

– Herbert Hoover

March 31, 2025 — Remember that long, boring stretch where gold couldn’t break resistance at $2,000/oz?

Here it is in the context of this century’s bull market — note the definitive breakout in early 2024.

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What’s driving the bull market? Central bank buying. And what’s driving that? Geopolitics. Emerging market central banks started planning for a post-dollar world when the Ukraine war broke out:

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While the above was happening, the BRICS countries’ cumulative GDP surpassed that of the G-7 developed countries. As Incrementum notes:

For years, the BRICS+ countries have had a considerable trade and current account surplus with the West. A steadily increasing share of gold in the currency reserves of emerging economies is the manifestation of this development. This is similar to the situation after the Second World War, when Europe, especially Germany and France, successively increased their gold reserves as a result of high current account surpluses. In contrast, U.S. gold reserves fell to almost one quarter, or just over 8,000 tonnes, as a result of the gold drain. While the U.S. experienced a gold drain in the 1960s, there are currently signs of a gold gain in the emerging markets.

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Not surprisingly, China, with its persistent trade surplus, has been a leading buyer of gold.

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As they accumulate gold, foreign central banks are dumping U.S. dollar-denominated debt.

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China is also encouraging its citizens to own gold. The resulting strong domestic demand is driving gold prices to a premium on the Shanghai Gold Exchange. This, in turn, is increasing the flow of gold from West to East. From Incrementum:

The enormous Chinese appetite for gold can be seen in the premium for Chinese gold compared to LBMA prices. The high domestic demand in China is also being fueled by China’s youth, who have recently discovered gold beans as an investment opportunity. In addition, import restrictions or tariffs on gold imports could keep prices in China artificially high. Another reason is likely to be China’s withdrawal from the LBMA gold auctions last year, which may have restricted the volume of gold flowing into China.

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Western investment advisors have yet to recognize the above dynamic. In 2023, 71% of their clients have virtually no exposure to gold, and that number has barely risen since then.

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A Bull Market With Legs

The trends driving the gold bull market — de-dollarization, inflation, and a looming currency reset — accelerated in the past year and have much further to go. Combined with the apparent cluelessness of Western investors, the result should be higher gold demand and rising prices in the coming decade. Keep stacking!

Regards,
John Rubino, Grey Swan Investment Fraternity

P.S. from Addison: The gold trade still has room to go. Please review our research on the gold bull and our investment recommendations here.

“I have always enjoyed Addyson’s thoughts and commentary,” writes Joan. D “

The second Trump administration is rapidly realigning the U.S. position in global politics; new policies (tariffs!) and advancements in AI are rebooting the entire U.S. economy, and — every day – your investments and your money are reflecting those changes…

We’ll have plenty of chances to point out things that make you go “hmmm…” and add a snarky comment or two.

Any first impressions? Please add your ideas or suggestions right here: addison@greyswanfraternity.com

“We have gold because we cannot trust government.”

– Herbert Hoover

March 31, 2025 — Remember that long, boring stretch where gold couldn’t break resistance at $2,000/oz?

Here it is in the context of this century’s bull market — note the definitive breakout in early 2024.

Turn Your Images On

What’s driving the bull market? Central bank buying. And what’s driving that? Geopolitics. Emerging market central banks started planning for a post-dollar world when the Ukraine war broke out:

Turn Your Images On

While the above was happening, the BRICS countries’ cumulative GDP surpassed that of the G-7 developed countries. As Incrementum notes:

Turn Your Images On

Not surprisingly, China, with its persistent trade surplus, has been a leading buyer of gold.

Turn Your Images On

As they accumulate gold, foreign central banks are dumping U.S. dollar-denominated debt.

Turn Your Images On

Western investment advisors have yet to recognize the above dynamic. In 2023, 71% of their clients have virtually no exposure to gold, and that number has barely risen since then.

Turn Your Images On

A Bull Market With Legs

Regards,
John Rubino, Grey Swan Investment Fraternity

P.S. from Addison: The gold trade still has room to go. Please review our research on the gold bull and our investment recommendations here.

“I have always enjoyed Addyson’s thoughts and commentary,” writes Joan. D “

We’ll have plenty of chances to point out things that make you go “hmmm…” and add a snarky comment or two.

Any first impressions? Please add your ideas or suggestions right here: addison@greyswanfraternity.com

Back in April, when we published what we called the Trump Great Reset Strategy, we described the grand realignment we believed President Trump and his acolytes were embarking on in three phases.

At the time, it read like a conceptual map. As the months passed, it began to feel like a set of operating instructions written in advance of turbulence.

As you can expect, any grandiose plan would get all kinds of blowback… but this year exhibited all manner of Trump Derangement Syndrome on top of the difficulty of steering a sclerotic empire clear of the rocky shores.

The “phases” were never about optimism or pessimism. They were about sequencing — how stress surfaces, how systems adapt, and what must hold before confidence can regenerate. And in the end, what do we do with our money?!

Relative to GDP, the net international investment claim on the U.S. economy was 20% in 2003. It had swollen to 65% by 2023. Practically every type of American company, bond, or real estate asset now has some degree of foreign ownership.

But it’s even worse than that. As the federal deficit has pumped up the GDP figures, and made a larger share of the economy dependent on government spending, the quality and sustainability of GDP have deteriorated. So, foreigners, to the extent they are paying attention, are accumulating claims on an economy that has been eroded by inefficient, government-directed spending and “investments.” Why should foreign creditors maintain confidence in the integrity of these paper claims? Only to the extent that their economies are even worse off. And in the case of China, that’s probably true.

As global government interest expense climbed, gold quietly followed it higher. The IIF estimates that interest costs on government debt now run at nearly $4.9 trillion annually. Over the same span, gold prices have tracked that burden almost one-for-one.

Silver has recently gone along for the ride, with even more enthusiasm.

Since early 2023, Japan’s 10-year government bond yield has risen roughly 150 basis points, touching levels not seen since the 1990s.

Over that same period, gold prices have surged about 135%, while silver is up roughly 175%. Zoom out two years, and the divergence becomes starker still: gold up 114%, silver up 178%, while the S&P 500 gained 44%.

According to the American Association of Individual Investors, the average retail investor has about a 70% allocation to stocks. That’s well over the traditional 60/40 split between stocks and bonds. Even a 60/40 allocation ignores real estate, gold, collectibles, and private assets.

A pullback in the 10% range – which is likely in any given year – will prompt investors to scream as if it’s the end of the world.

Our “panic now, avoid the rush” strategy is simple.

Take tech profits off the table, raise some cash, and focus on industry-leading companies that pay dividends. Roll those dividends up and use compounding to your overall portfolio’s advantage.

Back in April, when we published what we called the Trump Great Reset Strategy, we described the grand realignment we believed President Trump and his acolytes were embarking on in three phases.

At the time, it read like a conceptual map. As the months passed, it began to feel like a set of operating instructions written in advance of turbulence.

Silver has recently gone along for the ride, with even more enthusiasm.

Since early 2023, Japan’s 10-year government bond yield has risen roughly 150 basis points, touching levels not seen since the 1990s.

A pullback in the 10% range – which is likely in any given year – will prompt investors to scream as if it’s the end of the world.

Our “panic now, avoid the rush” strategy is simple.

Take tech profits off the table, raise some cash, and focus on industry-leading companies that pay dividends. Roll those dividends up and use compounding to your overall portfolio’s advantage.