I’ve been calling gold up for some time now and it looks likely that it will hit $3,000 soon enough. Overall, gold not only looks bullish, the whole setup of increasing global tension seems strategically bullish until further notice.
A lot of gold gets mined each year but when you look at the overall market cap of gold the real state of affairs of the free float of gold is very far from the number of $14 trillion of all the gold in the world. Most of it can be classed as locked up, most of it is literally, locked up.
Here is the chart:
I do have a fair amount of the stuff, but if I wasn’t the sort of investor that dislikes commodities this chart would be irresistible. It has the classic ballistic form that says boom/bubble is here.
As gold rises, eyes move to silver because the two are linked. The history of this linkage goes back to ancient times and at one stage was a mere 5:1 with gold. In the 19th century it became 20:1—20 ounces of silver to one ounce of gold and in time went to 40, then at the peak hit above 120 in 2020. That is because pretty much any mineral you dig has silver in it and out it pops willy-nilly from the likes of lead and copper refining. These days the ratio is 80:1. That said, 50:1 is no stranger this century.
Here is the silver and gold chart together:
Silver is what they call “the fast horse,” which is to say when the precious metal market moves it moves most. It’s the commodity equivalent of a high beta stock.
From my frame of reference, gold is moving more than silver, because it’s a governmental move, with silver a more retail option. When retail wakes up to the move in gold, silver will switch in to outperformance mode.
I am accumulating silver on this basis. Gold is going up and so will silver, but if precious metals switch to boom/bubble as it looks like, then silver will go into overdrive. That will be a big move. However, it’s good to remember or focus on the possibility that precious metals will never be currency again and that what goes up like a rocket generally comes down like a rock.
However, that is a long way off, if the gold ballistic actually does come to pass.
Also, do not forget that platinum is languishing and if tension continues to grow between superpowers, then platinum will be added to reserves as like gold it’s good for payment and heavy enough to sneak around the planet in the way countries like to transact their gold in times of extreme pressure.
Yet for now I’m keeping it simple. However, if platinum starts to motor, I’ll be diving in.
Disclaimer: I own gold and silver.