A full tank?
or
Running on fumes?
The historic gold rush to all time highs is a gold investor’s dream, but raises questions. In dollar terms, gold has doubled in barely 2½ years, topped off by over 12% – more than an average year – in just nine days.
In the broader context, it has also solidly outperformed stocks so far this millennium.
Gold investors want to know, what do I do? Buy? Sell? I don’t like to be held in suspense and am not about to do it to you. The answer is I don’t know, and even if I did, the answer would be different for every investor. It might come in the form of another question: How much do you have now? If you had none at all, I might say you better get cracking. If it’s your entire nest egg, I might say you better get diversified. But this isn’t investment advice.
So instead let’s take a look at a case that says gold has a lot of gas left in the tank, and a case that says it’s running on fumes. Then I might ask you, are you invested so that you will come out all right in either scenario? Or anywhere in between?
Gold’s Historic Race to Reclaim Role as Preeminent Reserve Currency
Gold Price Forecast: Entering the Final Blowoff Phase Toward a Major Top
The first article is a fascinating history of reserve currency since mid-century. It’s not really about gold price forecasting. But it does point out that gold was once the pre-eminent reserve currency, and raises the prospect it might be en route to that status again. If it is, it still has a long way to go.
The second article is a detailed technical analysis that emphasizes gold’s strikingly overbought configuration, making the case that, in simple terms, it’s gone too far too fast, and that usually when things go too far too fast, they are prone to correct it.
But I may be making these pictures out to be more in conflict than they really are. As is often the case, superficially opposed outlooks can have common ground. It could well be that “a” top is at hand, but that after some period of retreat and consolidation, it continues on to yet higher highs. It could do poorly over the next few weeks and do well over the next few years. Or not. But that’s not necessary to know, and unknowable anyway.
It easier to say what gold won’t do: It won’t keep rising uninterrupted at this pace, and it won’t go to zero. It’s still cheap compared to US stocks, and expensive compared to other physical commodities. It’s still real money, and a lot of its appeal depends on how unappealing the artificial versions are. There is ultimately no limit on how high the price can go because there is no limit on how low the pricing unit can go. It has long been a good portfolio companion for stocks and likely will continue to be.
Full tank or fumes? Based on all the information I am aware of, the fundamentals, including the indebtedness of the US, suggest that in dollar terms gold continues to have a strong tailwind in the years ahead. The overbought condition and its partial dependence on unpredictable policy moves suggest a sizable correction could come at any time. Be prepared for the full range of potential outcomes and don’t get caught by surprise.
https://www.youtube.com/watch?v=y5lmEjnT-Kc&t=44s
Landlords dumping stock to buy GOLD
Mega’s Dispatch from England:- EV rethink?
Interesting development, Renault & Nissan use the same EV platform so i suspect Nissan (Bankrupt) will love this.
https://www.carscoops.com/2025/04/oil-giant-working-to-turns-evs-into-hybrids/
All of a sudden the real world has come crashing on on the “Woke/Net Zero” leaderships. Simply fact is the dream on no ICE powered cars, cars powered from 100% locally sourced power Eg Wind has turned out to be a somewhat wet one.
Its a vastly better idea to get your local population to be so good as to dump their OLD ICE cars for something like this. The engine looks very small & low tec, not turbo or supercharger i wonder what its BHP is?
I bought a Honda Civic hybrid about 25 years ago. Great little car; would do it again in a heartbeat. As a general prospect though, hybrids have an inherent drawback … two drive systems equals more complexity, more points of vulnerability and more maintenance. All electrics have many fewer moving parts and fewer places for things to go wrong. At least if they don’t complicate things with internet connections and software updates…
Another view
https://www.youtube.com/watch?v=r7UIEa2_Hg4
The federal debt is the most compelling bullish force for gold prices. That doesn’t assure gains in purchasing power for gold though. It is expensive relative to other physical commodities and it’s likely that others, for example copper, will outperform over at least some time frames.
But the debt means the Fed will be under immense pressure to inflate. Other currencies aren’t exempt … to the contrary, when the Fed inflates and the dollar depreciates, other issuers tend to follow suit, if only to keep exports competitive. Like stocks, currencies as a class have a tendency to move together, leaving exchange rates almost meaningless in terms of information about real changes in currency values. We have to look to the prices of other assets to draw inferences about what is really happening to currency values.
All things considered, hedging against currency depreciation (inflation) is best done with a combination of commodities, as well as stocks. The main portfolio utility of gold as compared to other commodities is that it has the least industrial character and a low correlation, or tendency to rise and fall in sync, with stocks, hence the remark that it’s a good portfolio companion for stocks, meaning a portfolio of stocks and gold tends to be more reliable and less volatile than a portfolio of stocks and other commodities. They’re less likely to be down at the same time. For more on this, please see The Impermanent Portfolio.
Another thoughtful perspective:
Gold is overbought, but remains well supported as US dollar weakens
The US has announced plans to impose levies on Chinese ships docking at US ports, threatening to shake up global shipping routes and escalate the trade war.
Under a plan put forward by the US Trade Representative on Thursday, all Chinese-built and owned ships docking in the US would be subject to a fee based on the volume of goods carried, on a per-voyage basis.
The fee is to go into effect in six months, with another phase restricting foreign-built vessels that transport liquefied natural gas to begin in three years. After six months, the fee for Chinese vessels would be set at $50 (£37.7) per net ton, or the volume of a ship’s revenue-earning space, and then increase incrementally over three years.
While not as bad as the plan for a $1m per ship fee each time it called at a US port that was floated earlier in the year, it will amount to a significant cost and marks the latest escalation in the ongoing trade war between the two countries.
Confirmation of the plan came as it emerged that Beijing has effectively mounted a boycott of US liquefied natural gas (LNG) in the latest escalation of the trade war between the two superpowers.
China halts US-made LNG imports
Imports of US-made LNG have been halted for more than 10 weeks, according to The Financial Times, with the last recent LNG tanker from Texas arriving in China on February 6. That was months before Mr Trump announced sweeping tariffs on countries around the world, including China, on April 2.
The boycott has been led by Beijing, which imposition of a 15pc tariff on US LNG on February 10. Since then, China has increased its tariff on US LNG to 49pc, effectively rendering the gas unaffordable for swathes of the Chinese market indefinitely.
Mr Trump has levied tariffs of 145pc on Chinese imports, while Beijing has responded with levies of 125pc on US imports in response. Neither side has shown a willingness to back down, with Mr Trump insisting China must come to the table to make a deal.
Trump needs to find a way to start de-escalating. He campaigned on a modest, broad, tariff and a lot of people supported it (including yours truly). But he’s since gone unhinged. Crushing China would do nothing to elevate America; to the contrary it would lower living standards in both. That this is happening when the economic cycle was already turning down and the Fed is politically paralyzed doesn’t help. Without some restraint, this could get as bad as the covid mess.
That said, it’s not at all clear what benefit there is in shipping nat gas around the world. Liquification and shipping use a lot of energy. Gas is a resource most efficiently used where it can be transported by pipeline. It’s hard to imagine there’s no closer source for China to find gas.
An excellent review from Adam Sharp at The Daily Reckoning:
The “Too Crowded” Gold Trade
And Mike Maharrey via Gold Eagle:
Can the Gold Bull Keep Up This Pace?
Do Indicators Point to Potential Further Stock Market Declines?
This article is outstanding. It is the only instance I’ve found in the current financial media recognizing the relevance of the yield curve phenomenon to our current economic configuration. Current-headline-obsessed amnesiac financial media has otherwise virtually forgotten about it.
Yes, we have plenty of disruptive tariff drama, but that’s no excuse for forgetting all economic history. Tariffs come and go, but the influence of the yield curve, stock valuations, debt, inflation and interest rates persists. The road that led us here leads where we go next.
https://www.youtube.com/watch?v=UkHCbDAlbuI
Peter Z view
Mega’s dispatch from England- The Tide turns?
For some years now Blighty has been made to have a flood of illegal immigration. Being an island & having a reasonable Border force to police it meant it was very effective. Yes we had people smugglers shipping truck loads here & there.
A major investment in hardware & in Home office INTEL closed off many avenues of approach.
However we recently had a Soros funded invasion via people crossing the English channel from France.
They gather on a French beach with a cheap crappy China made Rubber boat & outboard engine. With little more than a Smart phone GPS they set sail for the promised land. Once they get about 2 foot off coast of France they are a “British problem”.
When this was tried years ago Blighty was part of the EUCCCP & thus the agreement was that ALL those turning up in Europe claiming asylum were finger printed & Blighty had excess to this European wide database………those washing up on our beaches where shipped right back, sometimes the same day., but Blighty left Europe so no agreement to return in place & France was only too happy to see them go.
Pervious governments made a “song & dance” about setting up 3rd world camps to hold them, but always found tat they were “frustrated” by some Soros funded legal challenge. This made it “quite impossible” to ship out said scumbags.
The government welcomed these assholes, with 3rd World levels of intellect & a some what different approach to women & children. A bubble economy requires cheap labour & so what if there are some trouble…………..then something began to change.
Mega’s Dispatch from England:- part 2
Since Trump arrived i noticed a change in the way the British establishment are thinking.
Starmer our beloved leader has done the following:-
1. He stopped a move to give lesser sentence for rapes etc to a 3rd World person than ye old English type.
2. The Court has SUDDENLY said that trans women are NOT Women!
3. This- https://www.youtube.com/watch?v=ytqR2orvFqQ
You can see a pattern, “They” were going to fight this but they sussed that Trump + Elon were NOT going to allow mass censorship of the internet. Given that Blighty is now THE most taxed major nation in the West has the most expensive energy bills. The Economy is start to contract big time & much worst is to come.
The need for mass immigration is not what it was & the sheer cost of building infrastructure is something this nation can not afford. Suddenly reality has dawned on them
The Tide is starting to turn…………..lets see how far it goes out.
The economic connection between the bubble economy and mass immigration is probably not mere coincidence. Consider who gets an economic benefit. (Follow the money!) Corporations are under tremendous pressure for profit margins, and the higher the stock price the higher the pressure to justify it, especially for corporate insiders with stock option compensation. Paying lower wages is a notorious shortcut to higher profit margins, and third world immigrants, especially if they’re illegal, are easily exploited.
The possibility that illegal immigration is being funded by corporations through back channels is obvious.
Interesting chap
https://www.youtube.com/watch?v=ALnyAWz5l8I
For some context, nothing here contradicts the basic wisdom of diversifying a variety of asset classes, usually stocks, bonds and commodities (including the subject of this post, gold). And while I believe Treasuries are in a secular bear market, having ended a four decade bull market in 2020, there are still benefits to having as least some exposure. Returns from a variety of assets with low correlations can be greater than their average, as shown in Invest With A Demon. The same goes for stocks, which we have reason to suspect are in a cyclical bear market, if not a secular one. And besides statistical risk mitigation, it’s fundamental as well, as discussed in Perfecting Diversification.
This is an update of the second article cited in the post:
Gold Price Forecast: Blowoff Top Nearing Completion, 20% Correction Expected
The author continues to view this runup as a “Blowoff Top”, but elaborates on his outlook for the decline and explains that he sees the selloff as an event within a larger bull market. This fits with my “common ground” speculations.
Testing times @ Tesla
https://www.carscoops.com/2025/04/tesla-delays-cheaper-smaller-model-y-plans-stripped-down-model-3/
Some year ago i said that at some point the tide would turn on Tesla. Now lets not say they in trouble. VW are in trouble, cheap Russia gas gone & they are facing 25% taxes & the little fact that they are in debt, like $215 billion (Yes Billion) in debt!
Most of the older producers face the same issues, Tesla does not.
What it does face is on coming head winds:-
1. Elon on the “wrong” team.
Most MAGA types don’t & wont drive EV, lest a Tesla, the official staff car of the DNC. The DNC are now looking closely at why would they want one now?
2. Net Zero is now plain ZERO.
The main thrust of Net Zero is now over, Greta spends her time flicking though little RED books rather than Green ones. Even the British are winding it back in now, Germany building COAL powered power plants.
3. New EVs & new Tec coming.
Tesla had the market mostly to itself, China is already overtaking them Renault/Nissan about to play an ACE. The New Nissan leaf based on the joint platform with Renault. Not only have they sussed how to build a cheap(er) EV, but how to equip it with a VERY small ranger extender. So unlike Tesla they can offer an EV with Gas back up.
4.New generation of Performance hybrids.
Porsche new 911 hybrid is out, its got a small EV motor in the gearbox & an electric turbo. Stand on the Gas pedal & ZERO Turbo lag the electric motor keeps the car going forward while the gearbox changers up…….the days of a Tesla leaving a performance car dead are over.
5. Its no longer “New” or “Cool”
The Wow factor has gone, the 1st Tesla models were made with a lot of help Toyota. That engineering help is long gone. Tesla has different cars but they are all in fact one car. A car that 1st appeared in 2012. Tesla just updated the cars using a trick MG-Rover did here in the UK……they swapped the lights & bumpers. No new metal work, reskinning metal work is very expensive & Musk has choice to not do it.
6. The “Green Grift” is almost over.
Tesla has enjoyed massive grants, taxes on its enemies, simply shocking allowances. That money is over, the “C02 credits” will not be going their way for much longer.
7. The early cars are starting to die.
More & more tails of old Tesla’s failing & add in the promises EG its Self driving tec that crashed so often yet his ass has NOT been dragged into law court for years & even then he got a pass that i doubt any other car producer get.
However, that is starting to catch up with them.
8. The failed “Wonder weapons”.
Cypertruck is a joke, suddenly its to most “uncool” thing to have. Its totally useless at being a truck. The Bed is so small it cant even carry a push bike, bits falling off it. Build quality that would bad next to a Delorean! (the last attempt to build a Stainless steel car/note how well that went).
The Semi seems to have gone no where much, Roadster? & now the “Cheap” Tesla is dead.
Robo-taxi?……..China just banned that tec & that was using vastly better sensors lie LIDAR something Musk thinks is “unnecessary”. Vacuum rail?……superfast city to city rail?
To Sum up
His workforce is getting cut, he heading into a MEGA depression his cars are half baked expensive, old & uncool. The DNC has/will cut him the MAGA don’t want his cars. Oil is coming back, the performance advantage has gone or going. He is likely to targeted by bother European & China for retaliation, his cheap China made parts are going to cost vastly more.
Governments will no longer be able/willing to shower him in “Green Grift C02” tax credits.
Its not the beginning of the end, but i suspect the end of the beginning
Mike
Subsidies were a bad idea to begin with. Better to internalize external costs and let consumers, businessmen, and engineers work out the best way to minimize them. Politicians and bureaucrats are bad at it.
To the extent carbon emissions are a concern, tax them. This internalizes their external costs, bringing them into the market calculation. Eliminate crude and inefficient schemes like CAFE (corporate average fuel economy) standards. These dumb regulations fail to take into account things like the fact that a vehicle with 24 mpg carrying six people is more efficient than one with 48 mpg carrying two. Fuel efficiency isn’t determined by the vehicle, it’s determined by the user.
Lets assume we are unlucky enough to work for Tesla & we get the call from the “Dear leader”.
Cybertrunk sales have crashed & even the 3 & Y sales are drying up fast.
We need a “Model Pleb” & we need it right now…..so what to do?
Well the New battery should take us to 200 Wh/kg from 160.
So New battery, same battery output but the battery will be smaller, lighter & cheaper.
We no time or budget to go with a new small EV motor so just use the size in stock, but program it to cut its power output. Mr Pleb does not want or need 0-60 in 6.5……..8.75 is fine.
Top Speed? Limited to 100 mph, no more.
We need to add some range, might be possible to change the final drive ratio to help?
Tyres?…….one of the main complaints here in Blighty& elsewhere is the ride is too hard. We no time to change the springs or shocks, why not use that old GM trick & fit tyres with a higher profile? Thicker tyre=more flex, grip will fall off but this is a “Business car”……anything from a Taxi to an office worker.
I like to stick with Alloy wheels, steel if we must but narrower width & harder compound. We want to max miles per kw/hour thus something with low rolling resistance.
We need to keep Air con ,Heater seats & wheel will be availed by an “Over the air” update purchase. Seats cloth trim. WE wont be doing FSD thus wont need the large away of Cameras.
Now, most important we don’t want to rob ourselves of high end sales…..so we need in the nicest possible way ensure that no one thinks this is long range or M3P. Indeed i think Tesla has not made a good job of differentiating the models, its hard to tell a Base from a M3P.
So, we need badging, front back & sides…….what to call it?
“Mint” (Jet blue might kick off)……..”Pulse”………….yes we go with “Pulse”. In large badging in the front/rear bumpers & plastic badges where the cameras used to be in the front fenders. This will make it impractical to try to remove the badges to hid what it is.
As for the Cybertruck there is bugger all we can do there, sadly the ass has fallen of its sales only 18 months in! At lest with the other Tesla models he had years & years to recoup its tooling costs.
Mike
What are our thoughts on “Bitcoin”?
I can tell you mine.
Well, already have…
Digital Antigold
Going to Bed…………………GOLD just hit $3370!
Aye … seeing $3372 atm. If a correction is in the works, it sure hasn’t started yet!
I’m starting to wonder if something big is going on behind the scenes that practically no one sees. While I am glad to be heavily exposed to gold, these galloping price increases and what we discussed gold’s role is back in the iTulip days has me kind of worried. Year to date, gold is up over 26%, a Big Nothing when compared to things like cryptocurrencies, meme stocks, or even the high flyers of the Magnificent Seven but a pretty high rate of return for a commodity that hasn’t been in an anti-bubble for a few decades.
It could be any number of things, but some prime suspects:
The most prime is out of control federal deficits are going to pressure the Fed into monetizing and inflating more than ever. This could trash the dollar. Gold could be sniffing this out.
The confrontation between Trump and Powell. Bad as the Fed is, having the president in control of monetary policy could be even worse.
The stock market bubble (mostly US Big Tech) is deflating, which also could pressure the Fed to inflate. This ties in with gold’s tendency to be a good stock hedge.
China is retaliating against punitive tariffs by swapping US Treasuries for gold. This could help account for why treasuries aren’t playing their usual defensive role while gold is doubling its usual defensive role.
Something else. Feel free to nominate contenders.
All of the above.
08:02am……………. Gold $3390!
It seems that Elon standing next to Trump while he threatens China IS having an effect on Tesla sales in China…………….who would have guessed?
https://carnewschina.com/2025/04/21/tesla-china-sales-staff-work-without-days-off-in-13-hour-shifts-to-combat-market-decline/
Mike
I think Musk has parted ways with Trump on tariffs.
https://www.cnn.com/2025/04/08/business/elon-musk-peter-navarro-comments-tariffs/index.html
12:21 Gold went as high as $4405
I think that’s still a ways off…
Been as high as $3420!
Haha but not 4405
To sum up, I think both points of view are valid. Gold still has a golden long term outlook but short term is very overbought and could crash at any time.
Gold’s Historic Race to Reclaim Role as Preeminent Reserve Currency
Gold Price Forecast: Entering the Final Blowoff Phase Toward a Major Top
The update of the second article confirms my speculation about how they are not inconsistent.
Gold Price Forecast: Blowoff Top Nearing Completion, 20% Correction Expected