The Gold Mania Isn't Over Yet (New Forecasts)
Your News to Know rounds up the most important stories about precious metals and the overall economy. This week, we’ll cover:
- Gold passes $4,300 in yet another fundamental step-up
- The first credible $6,000 gold forecasts just went live
- Hours of work required to buy an ounce of gold hits 100-year high
Enough talk about gold price! It’s the fundamentals that matter
AP News reports that gold soared past $4,300 to climb as high as $4,326 before pulling back, a little.
I’m seeing support around $4,250, which itself is an all-time high barely a week old.
The AP article offers the usual assortment of reasons why this happened, not pointing out anything clearly. For example:
- Anxious investors seeking a “safe haven”
- The (now) third-longest federal government shutdown in U.S. history
- The ongoing trade war – most recently, “unsustainable” tariffs on China
- Global economic strain
- Concerns about slowing job creation and economic growth in the U.S.
- The Gaza and Ukraine conflicts
- Last but not least, the prospect of lower interest rates
The AP article left out record central bank gold buying and record investor demand… Regardless, to be perfectly clear, there’s no single reason for gold’s recent price surge. These are all factors, yes. The bigger story is what I've been saying for a very long time: Gold's run is almost entirely powered by a global repricing of risk.
In other words, it’s not so much that gold is going up in dollar terms – rather that gold’s price is rising relative to (nearly) ALL OTHER financial assets.
Nobody else is really talking about this. Every time I see an analysis that starts to head in the right direction, it veers away. The real message? The mainstream simply isn’t ready to accept my interpretation.
That’s perfectly fair. I’m making a bold claim. And essentially I’m citing the same evidence as the AP report – the only difference is, I’m saying let’s take a step back. What do all these factors have in common?
Here’s the thing: No single one of these factors is the notorious black swan driving gold’s price right now. Arguably, central banks buying over 1,000 tons of gold a year is perhaps the biggest single factor, and perhaps one of the most important ones. But that just reinforces my point!
When central banks, the institutions that print currency, stop trusting it, where does that leave us?
All those factors deal with the demand side. What about the supply side?
Well, both gold and silver have well-known supply challenges (the latter more so). See the Silver Institute’s work on the supply/demand imbalance. And the truth is, market infrastructure isn't equipped to deal with over 1,000 tons of gold bullion flowing into central bank vaults every year. (Especially not with the Basel III agreement, which is placing plenty of squeeze on banks to replace their “gold exposure” with properly vaulted, physical gold bullion.)
It has indeed been a tale of physical and tangible since the start of the run, and the U.S. dollar, like other fiat currencies, is just one form of economic fiction that gold is shoving aside.
Today, you might feel that $4,300 an ounce is a bad time to buy gold. I won’t argue with you. I’ve come to believe that, if you’re concerned about the price of gold, you might be interested for the wrong reasons.
After all, significant portion of gold’s price is nothing but a reflection of the dollar’s declining purchasing power. And I just don’t see a path where the dollar gains purchasing power – considering the national debt, $1 trillion-plus annual interest payments, the ongoing deficits and so on.
Working Americans are already heavily exposed to currency risk in the form of lost purchasing power. I wish people spent more time considering that angle – because it’s a lot more important than the price of gold today.
Credible $6,000 gold forecasts are based on nothing but business-as-usual
From statements to interviews to now an ominously titled blog, The Golden Reckoning, we're seeming to get to a $6,000 gold price target.1 How realistic is it? Well, we always knew figures like $6,000 or $10,000 gold were unavoidable, because the dollar will continue to decline – that seems inevitable (as I discussed above).
What people are now trying to figure out is whether this can happen in the relative short-term. Say 2026 to 2028, a couple of years but before the end of the decade.
A forecast of $6,000 gold seems high, bold and perhaps a little rash. But can we blame them? To get to $6,000, gold would only need to replicate a small part of the fundamental drivers we’ve seen over the past two years.
It would "only" need to gain $1,700 from this point. When gold was $2,600 ($1,700 less than today), it was considered overpriced. Analysts wondered where the $2,000 target got left behind. And frankly, when big investment houses make bold forecasts for gold, you have to remember they’re talking down most of their products…
Last week, I covered a big bank bull forecast of $4,300 then $4,900, as they seemed to think $5,000 was just a bit too far… Since then, gold has soared over $4,300 much sooner than they expected. Meaning that forecasts of $4,900 now need to be revaluated – and that's how we end up with $6,000 gold predictions.
Stephen Innes, the blog's author, gives a pretty in-depth backup of his forecast. Also opening with central banks, he further elaborates by saying that gold's share in global FX reserves is now 30% compared to 24% not that long ago.
One more leap of exactly that magnitude will leave gold just above $5,800, where it will overtake the U.S. dollar as the world's largest reserve asset. At least in nominal terms – the dollar-price percentage of gold as global reserves rises when the dollar declines, and when demand drives gold price higher. This is one big way gold has been crowding out dollars lately – based on price even more than gold buying.
So $6,000 gold is a lot more than just an eye-catching figure. Innes thinks that’s the level at which the U.S. dollar can no longer seriously be considered global reserve currency. Once you’ve lost that status, my friends, history shows you're not getting it back. Ask the British, or the Spanish, or the Portuguese or the Dutch.
What we’re seeing today is a sort of split… The U.S. dollar still enjoys a dominant role in international payments (50%, according to the Federal Reserve’s 2025 report).2 Dollars are still used for transactions – just not so much for savings. This is what Nassim Taleb meant when he said, back in June, gold is “effectively the reserve currency.”3
Here, take a look:
BGG - Transcript
Well I’m just saying that this is an event a default that would trigger you know an instantaneous drop. But it’s harder to hedge against something like like the slowing decline of the dollar.
Yeah. But what. OK.
So that that is a but that would end up being reflected in stocks. The slow decline of the dollar and effectively the main the second risk. So the first one is a deficit.
The second one is effectively that the dollar is losing its status as a reserve currency. What proof do you have of that though. You can see the accumulation of gold in the reserves and the behavior of gold over the past 12 months.
And it didn’t start with with Trump’s policies. Of course it started with Biden when he froze the accounts of people connected to Putin. Right.
So. So. So.
And of course thinking that it’d be limited there. But people not connected to Putin. OK.
Decided to stay away from a euro and a dollar. And gold is effectively now the reserve currency. So transactions take place in dollars euros usually dollars and at the same rate.
However they get converted back into gold. And when we can see it from the accumulation of reserves. You know it’s interesting.
Citigroup just this morning said the gold rally might hit a timeout this year. They said that it could start to retreat after running to near record highs. What do they know.
How do they know. How do they know. Well that’s my question to you.
If you are afraid of where the U.S. deficit is if you are concerned about the dollar and at this point geopolitical risk are you stockpiling gold. Even at this level. OK.
I’m not a central bank so. But I mean I think that with what’s going on now particularly with the new administration the perception of America is the riskiness of America has increased. So.
So on top of you know that that move into gold that started with Biden we have now a move to gold by people who are afraid of these policies including central banks around the world which doesn’t look like it’s going to let up. Especially central banks around the world. So the dollar is a good transactional currency because people can label things in it but not necessarily a storage currency.
And this is what we’re facing now. Just over the last 24 hours we’re hearing that Millennium for example is one of the firms that is looking to sell a stake at a 14 billion dollar valuation. These massive multi strats and non banks have been much bigger in the market.
Do you ever worry about systemic risk with the way things are going. Much less much less with hedge funds. And I kept advocating for the transfer of risk from banks to hedge funds because hedge funds don’t have the skin in the game problem.
OK. Bankers of course they you know they have very little to lose and and they prone to bailouts on top of that. Hedge funders have their money in it.
So I think the risk management is much more rational with hedge fund than it has been with banks. Banks they use just models to cover you know their reputation and nothing else. What do you think though about the opacity of private markets especially as they continue to grow.
I mean they’re bulging right. Everybody’s racing to put money into private credit and it has been for years. And yet it doesn’t.
There’s no like Carson Block looking at these. OK. If you know if there is no bailout potential then opacity isn’t harmful.
You see because those punished will be those who put money in it. That’s the functioning of a normal functioning of a market. However if there is a potential bailout then we need to know what we may have to bail out.
You see. So this is where where I would I would I would you know look more into the details of what we are insure as taxpayers what we are. But so Nassim that’s better off bank right.
That’s better in the shadow banking system. If it comes to you know a bank branch near you then it’s a problem. But the banks are lending more to the non-banks.
That’s a problem. Banks became utilities progressively after 2009 2008 2009 after that period. People understood that they’re not they should not be taking risks and progressively money went where it should go.
You know it’s interesting. The hedge fund industry by and large throughout the course of this year we’ve been talking about it a lot. They’ve done OK.
Actually everybody has held up through the course of all of this volatility. My question to you. You were talking about the big risks that the U.S. is posing.
Yeah. What about the Trump administration’s strategy. Is there more volatility ahead.
So let me tell you long term. This is why I think that we need to worry maybe not about the stock market. It may express itself elsewhere.
We need to worry because the approach is not really rational. First of all they’re amateurs doing numbers to start with. The other thing is when we have 4 percent unemployment.
Think about it. You have 4 percent unemployment. It means the economy.
What are you going to do now with these tariffs. Try to shift business from high added value into low added value. This is what we’re invited to do.
What that depressed. That will depress GDP. So in other words like asking a surgeon you know just for balance to clean the streets one day a week.
OK. I mean of course it would depress GDP. That’s exactly what the Trump administration is going to get us to do.
I can honor. I understand there’s there’s maybe necessary in many areas. There’s need to be symmetric and stuff like this.
So this we understand. But the way they’re going about it makes no sense. Can you understand you know the reasoning behind it.
Because these are people you know that Trump has around him. Scott Besant Howard Lutnick Stephen Miller who they’re not idiots right. They’ve done well in their careers.
They went to Ivy League schools like what are they. Why are they doing this. Where there’s a difference between.
I mean they’re not idiots and they’re not specialists in that area. And they’re probably OK in what they’ve done in the past. Although I’m not sure all of them.
Yeah. Peter Navarro. I apologize but I’ll have to say that in his own domain he hasn’t fared well.
OK. The other ones had had some kind of performance in an area that is orthogonal. Others uncorrelated to the current performance.
It’s like asking a dentist to do brain surgery. OK. May it may may may do better than average.
I’m not sure. OK. So so none of them really is a specialist of the area that they’re discussing.
And this is where I find myself agreeing with the economists. OK. That basically it makes no sense.
And the approach is irrational. You see the idea of confronting China is irrational. But now now let’s think about the what what are going to be the effect.
Well there are two things they’re doing. The first one tariffs on things that we don’t produce. I mean it’s got a tax.
The not the middle class but it’s got a class where it’s among the poor the poor because aggressive. And then and then compensating that with a tax break doesn’t work if you don’t pay taxes. Well my question too is you have the Treasury secretary saying that OK well maybe artificial intelligence will make this economy maybe more productive.
Do you buy that. Maybe. Maybe.
Maybe. Maybe you can work jobs. Maybe for Christmas we’ll get Santa Claus coming in and distributing money.
A lot of things can happen with maybe you see whether as the French would say with maybe you can put Paris in a bottle. All right. So the the the idea of these that the tariffs may be sound the way they’re going about it is about that.
It’s like trying to wreck the boat voluntarily. That’s the first one is tariffs. The second one is immigration.
I don’t know if you realize the structure of American businesses and American labor. Last time we had a labor shortage. We saw what prices did.
OK. People have large loans. Everything is based on cheap labor.
OK. Coming from Latin America Latin America or elsewhere. Everything is based on it.
So trying to constrain that source of labor may make sense in the long run. But like in Japan for example they have small houses. Here people have mansions.
You won’t be able to find people to mow the lawn or do things. And then if you have to wait for artificial intelligence. OK let me know when it comes and revise my opinion.
For the time being for the time being we don’t have cheap robots. Yeah. So there’s a lot of dangers in these policies because it’s not that they didn’t think of the second order effects.
As tempting as it is to point to a list of factors driving gold’s price, each of those factors is only a single facet of a broader trend.
A trend we ignore at our peril.
116 hours of work for an ounce of gold?
MSN tells us that, these days, it takes 116 hours of minimum wage work to buy an ounce of gold. That's the highest figure in over 100 years, just a hair under three consecutive weeks of federal minimum wage work. (Before taxes, obviously!)
Previous highs from 1930, 1980 and 2011 would require 80 hours of work, but what we really want to be focusing on is the early 1900s, when a couple days of work would get you an ounce of gold.
That is the thing to focus on, because back then, and especially if we go into the 1800s, people were being paid with real money. Gold was either synonymous or officially interchangeable with the U.S. dollar.
If you got gold or silver coins in the U.S. for your labor, you could stash them away for however long. That was saving. You can't really do that with what is called the U.S. dollar today.
If you do that, your wealth will be all but obliterated over any length of time. Stretch it to a century, and it will be truly that.
Instead, to save these days, you have to make informed financial decisions, figuring out how to buy gold, where to store it and so on. Unless you yourself take action, you are losing money.
Now is also a good time to remind people that gold hasn't just tracked the purchasing power of the U.S. dollar in the sense that we're told.
You might find yourself repeatedly running into arguments like "an ounce of gold bought you X in the early 1900s, and it does the same now."
Except that ounce is getting harder and harder to come by. That's the part they leave out, and one that can't be underscored enough.
Let's not lose track of that the next time we hear that consumer, employment or economic data came in positive.
BGG - About the Author
Sources
- The Golden Reckoning, by Stephen Innes, published 19 October 2025. https://thedarksideoftheboom.substack.com/p/the-golden-reckoning
- The International Role of the U.S. Dollar – 2025 Edition, by Carol Bertaut, Bastian von Beschwitz, and Stephanie Curcuru. Published 18 July 2025. https://www.federalreserve.gov/econres/notes/feds-notes/the-international-role-of-the-u-s-dollar-2025-edition-20250718.html
- Gold 'Effectively The Reserve Currency' Says Nassim Taleb (Full Interview). Bloomberg Podcasts, 18 June 2025. https://www.youtube.com/watch?v=E5F4Vffnc_E
BGG - CTA Option 2
