For the first time in history, we saw gold 4,000 USD/OZ. Such a violent appreciation of the royal metal suggests that the world of finance loses confidence in the dollar and US government bonds faster. Gold really returns to the system as the only sure money.
On Wednesday at 9:14, the course of the most active time contract for gold on the New York commodity stock exchange was recorded after 4,058.50 USD for the Trojan ounce. Earlier it was 4 059.30 USD/OZ. And it was a new record of all time. However, we saw the values with the four in front for the first time in Tuesday afternoon.
Not only exceeding the next round level deserves attention, but also The pace at which gold goes up. Just in mid -March – less than 7 months ago – we celebrated the level of 3,000 USD/OZ. From the beginning of 2025, dollar gold quotations went up by over 53%. If such a result could be “brought” (or even corrected) by the end of the year, then the “barbaric relic” would record the highest annual rate of return on 46 years. So from 1979, when in the atmosphere of speculative mania more than he doubled at the price.
Anyway, we are already in a situation where the dollar price of gold went up by over 100% relative to the state of February last year. So it has doubled in less than 20 months. In addition, gold is so far the best class of asset this year, even beating the NASDAQ 100 (+18% YTD) giants or our WIG (+36%) dominated by the technological giants.
The beginning of the gold era or the end of the dollar era?
Analysts are trying to explain today's increase in gold prices with the risk of “closing the government” in the United States. This is the first “Shutdown” since 2018 and it results from the fact that the majority of the federal budget was not included in the congress.
In the previous months, such a strong bull market on the royal metal market was attempted to explain the change in the monetary policy of the federal reserve, which in September after a 9-month pause returned to the series of interest rate reductions. The market speculates that as early as next year, feet in Feda may fall around 3% and will almost equalize the current CPI inflation in the United States. In this way, dollar interest rates would be near zero. And gold is usually doing well surrounded by low or decreasing real interest rates in the USA. Lower feet reduce the alternative cost of keeping gold, which does not pay interest.
Current political confusion in the USA, a change of fed's policy or weakening of the dollar are, however, only the top layer of “foundations” standing for a bull market for several years on the gold market. More and more investors are diversifying in the direction of precious metals In fear of long -term dollar stability and the world financial system.
– In our opinion, the triumph of gold prices in recent years is a manifestation of loss of trust. (…) In recent years, there has been a loss of trust in fiducibut at international and institutional level, which accelerated changes in the international financial system. Their result is a retreat from traditional secure assets and the search for an alternative transaction and thesis medium (i.e. for the accumulation of property) by you and their bodies (central banks, assets managing, etc.) – wrote in the Monday report economists of Bank Pekao (thickening from the editor).
And it's hard to disagree with them. For over three years, central banks have been increasing the ore reserves for power, buying over a thousand tons of gold a year. They do this not only of fear of dollar stability and American treasury bonds, but also wanting to avoid the consequences of Russia when in March 2022 the West crossed Rubikon and frozen Russian foreign currency reserves. And the gold kept in the national treasures “freeze” or confiscaned.
– The last dozen or so years have brought a significant increase in the frequency and range of the use of financial sanctions. The domination in the sphere of finance has been more and more often turned into weapons in the last two decades and its culmination was the sanctions introduced by states developed to Russia since 2022, including the confiscation of the foreign currency reserves of this state kept abroad. It creates a bright and strong stimulus for the rivals of the US and the rest of the West to disconnect from the Western financial system – note Pekao analysts.
Who will repay the long uncle alone?
The galloping growth of public debt in all largest economies of the world also speaks for increased gold purchases. This happens in the conditions of low economic height, which raises concerns about the maintenance of increased inflation by central banks in the perspective of the rest of this decade. Therefore, gold is a kind of system security here and the only way to escape from the accelerated decline in the purchasing power of the fiducinating money.
But the factor that directly drives the golden bull market in recent weeks is the massive influx of cash to ETF/ECN funds. Now the “street” from the West enters gold, investing primarily in “paper gold” in the form of ETF units. In September, $ 26 billion came to ETF's “zlotys” of ETFs-according to data from the World Gold Council. This is nominally the largest monthly influx in history. As a result, stock exchange funds Only in September they purchased 145.6 tons of gold. For comparison, they bought 472 tons of ore for the previous eight months. The acceleration of demand from ETFs was therefore very dynamic.
It is no accident that the influx of fresh cash comes primarily from North America. American investors are becoming more and more worried about the state of US public finances. Uncle itself is already indebted to nearly $ 38 trillion, i.e. the equivalent of over 120% of GDP. This debt increases quickly and the administration in Washington seems to not control this process anymore, year after year indebted to about 6% of GDP.
– Simply put, the US is currently spending 40% more than they collect in taxes. Such accumulation of debt service costs begins to push other expenses from the budget. The debt of the United States is very serious – warned Ray Dalio on Tuesday, the legendary manager of the Bridgewater Hegding Fund and the Parity Funds pioneer.
Gold returns to the financial system. And in a big style
Other financiers also point out that galloping gold ratings are a reaction to the crisis of the credibility of American tax bonds. For the previous one hundred years they were seen as a credit risk instrument, because no one even imagined the bankruptcy of the United States government. Therefore, they were commonly accepted as collateral in all financial transactions.
In the case of this type of security, the basis is full trust and high liquidity. And Treasuries are losing the first. Gold may return to this place, which as part of the third version of the baseli rules has been razed in banking regulations with cash and tax bonds. But this applies only to the golden golden gold – that is, the physical metal kept in a bank treasury. And this is what central banks, commercial banks and private investors compete for such goods today.
– Gold $ 4,000 is clear that the world reevaluates the hierarchy of safe security. It is about losing confidence by the system in neutral paper assets and turning to something that cannot be printed, impose sanctions on it or go bankrupt. And that is why gold is valued higher and higher as only a truly neutral asset that remained in the dawn of politicized money and fragmentary trust-it was written on the X Endgame Macro profile.
– The American customs policy AD 2025 and its envelope are the greatest challenge for world commercial and financial order from its interior, from the state that has been his greatest beneficiary, champion and creator. Chronic institutional problems of the United States (whose symptom is the ongoing suspension of the functioning of the federal government) also worsens the US perception as a high -quality financial asset provider. All this puts in question whether this country will be willing to continue to maintain world order – add Economists Pekao.
Even if the gold rally observed over the last weeks and months is perhaps exaggerated and too fast, there are powerful and deeply buried foundations behind it. The world simply needs gold again as support and security in the face of growing uncertainty and risk associated with the situation in the United States finances. Hence, all forecasts about how far they will go dollar Gold prices, in my opinion, don't make much sense at the moment.
https://www.youtube.com/watch?v=jpzedm4dvbu
