Gold’s Extraordinary Monster Upleg Continues Unabated as American Stock Investors Remain on the Sidelines
As gold’s upleg defies all expectations and soars to record levels, American stock investors are conspicuously absent from the action. Despite gold’s remarkable gains and strong momentum, the investors have largely ignored this unprecedented bull run. However, the time will come when gold’s performance will catch their attention and lure them back into the market. The return of American stock investors could be the most bullish argument for gold today.
Since early October 2023, gold has surged an incredible 59.6% in a relentless upleg that has surpassed all expectations. With no significant corrections along the way, this upleg has been nothing short of extraordinary. In the past 16.2 months, gold has achieved 50 new nominal record closes, showcasing its strength and resilience in the market.
Despite its impressive gains, gold has not yet regained its popularity among American stock investors, as evidenced by the lackluster performance of gold miners’ stocks. While gold has seen a phenomenal 27.2% increase in 2024, gold-stock ETFs have failed to keep pace, indicating a lack of interest from traders.
One of the key indicators of American stock investors’ indifference to gold’s upleg is the behavior of gold-ETF holdings. The two largest gold ETFs in the world, GLD SPDR Gold Shares and iShares Gold Trust, are both based in the US. Despite holding significant amounts of physical gold, these ETFs have not seen a substantial increase in investor interest.
As we look at the data from the World Gold Council’s Gold Demand Trends reports, we can see that GLD and IAU have a combined share of 39.3% of all gold ETF holdings, far surpassing their competitors. These ETFs have revolutionized gold investment and have played a crucial role in shaping the modern gold market.
The mechanics of gold ETFs explain their impact on the gold price, as their shares are traded independently of the actual gold supply and demand. When American stock investors buy or sell gold-ETF shares, it affects the price of gold, creating a feedback loop that can amplify price movements.
It is clear that American stock investors play a significant role in the gold market, and their actions can have far-reaching consequences for the price of gold. As gold’s upleg continues to defy expectations, it will be interesting to see if American investors will finally take notice and join the rally.
Overall, the lack of participation from American stock investors in gold’s monster upleg is a notable trend that could have significant implications for the future of the gold market. As gold continues to reach new heights, it is crucial for investors to stay informed and consider the potential impact on their portfolios.
Unprecedented Gold Upleg: What Drove It and How You Can Profit
In a surprising turn of events, gold experienced a staggering upleg of 33.2% reaching $2,424, while GLD+IAU holdings plummeted by 5.8%, or 73t. This begs the question: Why were American stock investors not capitalizing on gold, and who was driving its price higher in their absence?
The answer lies in the AI stock bubble that captivated investors in June. With US stock markets booming, led by tech giants like NVIDIA, investors saw no reason to diversify their portfolios. However, history shows that gold has always been a reliable alternative investment during times of market exuberance. As stock markets reach new heights, interest in gold tends to wane, only to resurface when stocks falter.
The global gold market is massive, with a market capitalization of around $19.8t, dwarfing other assets like Apple and NVIDIA. As the US stock market teeters on the brink of a bubble, with elite stocks trading at unsustainable valuations, the AI stock bubble is showing signs of bursting. NVIDIA’s recent stock crash is a harbinger of what’s to come for overvalued tech stocks.
As stock market valuations normalize and tech giants like NVIDIA face mounting losses, investors will look for alternative investments. Gold, with its proven track record as a safe haven asset, will become increasingly attractive. American stock investors, who currently have minimal exposure to gold, have ample room to reallocate their capital and take advantage of gold’s upward momentum.
By reallocating just a fraction of their capital to gold, investors can help fuel another upleg in the precious metal, potentially driving prices even higher. Gold, historically considered a vital component of any investment portfolio, is poised to make a comeback as stock markets falter.
In summary, the recent surge in gold prices, coupled with the decline in GLD+IAU holdings, points to a potential shift in investor sentiment towards the precious metal. As the AI stock bubble deflates, gold is likely to emerge as a favored asset class for investors looking to diversify their portfolios and safeguard their wealth. Now is the time for American stock investors to consider adding gold to their investment mix and benefit from its upward trajectory in the coming months. World Central Banks Ramp Up Gold Buying, Diversifying Away from US Dollar Dominance
In 2024, central banks globally added a staggering 1,045 tons of gold, marking their third consecutive year of 1,000+ ton purchases, according to the World Gold Council (WGC). This surge in gold acquisitions more than doubled the average annual purchases from 2010 to 2021, which stood at 473 tons. The move reflects central banks’ concerns over the devaluation of the US dollar due to Federal Reserve money printing and reckless US government spending.
Furthermore, some central banks fear the geopolitical weaponization of the dollar, prompting them to shift towards gold as a safer investment. Indians, known for their cultural affinity for gold, capitalized on a significant opportunity when the government slashed gold-bullion import taxes from 15% to 6%, providing an effective 9% price reduction. This policy change led to a resurgence in gold purchases in India, alongside strong demand from Chinese consumers.
The WGC’s latest reports show that Indian consumer gold demand rose by 5.5% year-over-year in 2024, reaching 803 tons, the highest level since 2015. Meanwhile, Chinese consumer gold demand dipped by 10.6% year-over-year to 857.1 tons, still below the peak levels seen in 2013. Despite these fluctuations, both countries have ample room for sustained demand growth in 2025.
Looking ahead, the gold market is poised for continued strength, especially if Chinese investors, central banks, and Indian buyers maintain their robust demand trends. The absence of significant net buying from American stock investors suggests potential for even greater upside as they reallocate funds into gold.
While gold itself remains a crucial asset for diversification, investors should not overlook gold stocks. The undervaluation of gold miners’ stocks compared to the metal presents a unique opportunity for investors. As gold prices climb and American stock investors pivot towards gold, the revaluation of gold stocks is expected to drive significant gains.
In summary, the ongoing gold bull market, fueled by strong demand from key global players and the potential influx of American investors, indicates a positive outlook for gold and gold stocks. As investors seek to diversify their portfolios and capitalize on the gold market’s momentum, the time is ripe for strategic investment in this precious metal and related equities.