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

By then the receipts on my desk had arranged themselves into a sort of chorus. I heard, faintly, another refrain—one from Kentucky. In the first days of the shutdown, Senator Rand Paul stood alone among Republicans and voted against his party’s stopgap, telling interviewers that the numbers “don’t add up” and that he would not sign on to another year that piles $2 trillion onto the debt.

That, I realized, is what the tariff story shares with the broader budget theater: the habit of calling a tax something else, of shifting burdens into the fog and then celebrating the silhouette as victory. Even the vote tally made the point: he was the only Republican “no,” a lonely arithmetic lesson in a crowded room.

Senator Rand Paul, (R. KY), who was the sole Republican to vote against a continuing resolution, seems to care about the actual finances of the government. “I would never vote for a bill that added $2 trillion in national debt,” Paul said in various interviews over the weekend.

The $2 trillion he’s referring to is the lesser of two proposals made by the national parties… and would accrue during this next fiscal year.

Oy.

We liked what Liz Wolfe at Reason wrote on Friday, so we’ll repeat it here: “One of the dirty little secrets of every shutdown is that everything remains mostly fine. Private markets could easily replace many federal functions.”

It’s a strange kind of confidence — one where Wall Street soars while Washington goes dark.

The Liberal Democratic Party victory has sent Japanese stocks soaring, as party President Sanae Takaichi – now set to become Japan’s first female Prime Minister – is a proponent of stimulus spending, and a China hawk. The electoral win is a vote to keep the yen carry trade alive… and well.

The “yen carry trade” is a currency trading strategy. By borrowing Japanese yen at low interest rates and investing in higher-yielding assets, investors have profited from the interest rate differential. Yen carry trades have played a huge role in global liquidity for decades.

Frankly, we’re disappointed — not because of the carry trade but because the crowd got this one so wrong!

Back in the Global Financial Crisis (2008), we recall mass layoffs were driving desperation.

Today, unemployment is relatively low, if climbing.

Affordability is much more of an issue. Food, rent, healthcare, and childcare are all rising faster than wages. Households aren’t jobless; they’re stretched. Job “quits” are at crisis-level lows.

In addition to the top 10% of earners, consumer spending is still strong. Not necessarily because of prosperity, but because households are taking extra shifts, hustling gigs, working late into the night, and using credit cards. The trends hold up demand but hollow out savings.

It’s the quiet form of financial repression. In an era of fiscal dominance, savers see easy returns clipped, workers stretch hours just to stay even, and wealth slips upward into assets while daily life grows harder to afford.

The $2 trillion he’s referring to is the lesser of two proposals made by the national parties… and would accrue during this next fiscal year.

Oy.

It’s a strange kind of confidence — one where Wall Street soars while Washington goes dark.

Frankly, we’re disappointed — not because of the carry trade but because the crowd got this one so wrong!

Back in the Global Financial Crisis (2008), we recall mass layoffs were driving desperation.

Today, unemployment is relatively low, if climbing.