Gold & Silver Could Make A Big Move If This Happens!

Key Concepts

• Precious Metals Performance (Gold & Silver vs. S&P 500)
• Tariff Misinformation and Market Impact (Copper vs. Gold/Silver)
• Geopolitical Events (Russia-Ukraine War) and Precious Metals Prices
• Monetary Policy (Money Supply, Interest Rates, Quantitative Tightening)
• Mining Stocks (GDX, GDXJ) as Indicators
• Institutional Investor Sentiment
• Gold Revaluation (Mark-to-Market, Historical Examples)
• Federal Reserve Paper on Gold Revaluation
• Debt-to-GDP Ratio
• Lebanese Revaluation Example
• US Revaluation in 1973

Precious Metals Outperform Despite Market Predictions

Despite widespread predictions of a market top for gold and silver since October of the previous year, both metals have continued to demonstrate strength, outperforming the S&P 500 on a 12-month basis, even as the stock market approaches all-time highs. This trend is not recent, dating back approximately five years. Data presented shows that investing $500 monthly since January 2021 in gold, even with a 10% premium above spot price, resulted in a 50% gain, surpassing the S&P 500 when factoring in dividends. Silver, also calculated with a 10% premium, performed similarly to the S&P 500.

Tariff Situation and Market Volatility

The video addresses concerns about potential price crashes in gold and silver due to conflicting reports on gold tariffs. A recent example is the 50% tariff on copper imports to the USA, which caused importers to rush to buy copper, spiking its price to nearly $6 per pound. However, the White House later clarified that the tariffs did not apply to raw copper materials, leading to a 23% price drop to $4.52 per pound.

The speaker argues that a similar scenario is unlikely for gold and silver. The White House's statement about misinformation on bullion tariffs, issued while markets were open, caused a temporary pullback in gold and silver prices, but these were followed by rapid recoveries, with both metals finishing marginally up on the day. Evidence for this stability is seen in the after-hours trading of the large gold miner ETF (GDX), which closed up at $58.15 per share versus its closing price of $58.60 per share, indicating no significant concern about a tariff-related price drop.

Geopolitical Events vs. Monetary Policy Drivers

The impact of potential peace talks with Russia on gold and silver prices is discussed. The speaker reiterates that while wars can cause temporary price spikes in precious metals, as seen after the start of the Russia-Ukraine war, these effects are not sustained. The price of gold pulled back aggressively six weeks after the war began due to the Federal Reserve's fight against inflation, interest rate hikes, and quantitative tightening. This behavior was mirrored by silver, indicating that money supply, interest rates, and resulting demand changes are the primary drivers of precious metals prices, rather than geopolitical issues, which have a less sustained upward influence.

Monetary Policy and Precious Metals Bull Market

With global money supply reaching new record highs and market observers pricing in potential interest rate cuts by the Federal Reserve in the latter part of 2025, the speaker asserts that precious metals are at the beginning of a significant bull market. This is further supported by the strong performance of mining stocks, with the GDX and junior miner ETF (GDXJ) outperforming the NASDAQ and breaking out to new 52-week highs. This trend suggests growing institutional investor confidence in the sustainability of gold and silver prices and expectations of further price increases.

The speaker recalls a four-month warning given on May 4th of the current year, predicting a major upward move for gold and silver after a summer consolidation. They encourage investors to maintain their purchasing schedules, acknowledging potential pullbacks. The speaker believes that with central banks and other investors buying steadily while sellers are diminishing, new 52-week highs for both gold and silver are likely in 2025, with potential targets of $3,750 for gold and $42 per ounce for silver.

Gold Revaluation and Federal Reserve Paper

A significant development discussed is a paper published by the Federal Reserve on the topic of gold revaluation. This addresses a viewer question about the implications of gold being revalued to a lower market price, such as $1,000 or $2,000 per ounce.

The speaker clarifies that revaluing gold to offset the US government's $37 trillion debt would require a revaluation to approximately $141,000 per ounce. However, this would represent a revaluation of the US dollar downwards relative to gold, not an increase in gold's intrinsic value. Such a move could lead to hyperinflation, a collapse of the US dollar-based global financial system, and a significant increase in gold's price in dollar terms.

Given the desire of the US and its allies to maintain global financial influence, a collapse of the system is unlikely. The most probable scenario for preventing global panic is a "mark-to-market" revaluation of gold. This would add nearly $1 trillion in assets to the US government's balance sheet, bringing the debt-to-GDP ratio below the critical 120% threshold and allowing for future revaluations to stabilize the ratio.

The Federal Reserve paper, written by principal economist Colin Weiss, explores the option of revaluing the US's 261.5 million troy ounces of gold reserves from $42.22 per ounce to the current market price. This idea is also being discussed in Belgium. The speaker views this as a growing interest in gold revaluation, acknowledging its status as money.

However, the paper also includes a warning, citing Lebanon's experience. In 2002 and 2007, Lebanon revalued its gold to pay back debts equivalent to 11% of its GDP. While providing temporary relief, this did not solve the fundamental issue of overspending. The revaluation ultimately worsened Lebanon's problems, leading to hyperinflation and a crash in the Lebanese pound's value, which has lost over 98% of its purchasing power against the US dollar since 2023.

Regarding a revaluation to a lower market price, the speaker argues this makes more sense and aligns with the US action in February 1973, when gold was revalued to $42.22 per ounce despite the market price being over $60. This strategy increases assets on the balance sheet, makes debt appear more manageable, and signals market confidence in the US dollar by not fully recognizing its devaluation reflected in gold's current price.

The speaker reassures that a revaluation to a lower price than the current market would not necessarily cause a price crash. In February 1973, despite the revaluation below the market price, gold prices rose by 30% and silver by 21.7%. Gold revaluation is seen as a bullish signal for precious metals holders, as it acknowledges the inherent value of gold and the limitations of fiat currencies, ultimately driving prices up in both the short and long term, regardless of the arbitrarily set revalued price. The floating spot price of gold has increased from $60 per ounce in February 1973 to $3,400 per ounce today.