Well, folks, the markets are at it again. The three major U.S. markets are all down, the VIX is rising, and gold and silver, those eternal safe havens for the nervous and the prescient, are heading back up.
Gold’s flirting with $3,438 per ounce, up a tidy $12.30, while silver’s not far behind, climbing to $37.78, a gain of $0.45. And what’s got these shiny metals so chipper? The usual suspects: a wobbly dollar, a shaky economy, and a Federal Reserve that’s starting to look like it’s playing poker with a bad hand.
First, the dollar. It’s been taking a beating. After Friday’s dismal jobs report—73,000 jobs added against expectations of 115,000, with a massive 258,000 shaved off prior months—the greenback took a 2% dive against the yen and 1.5% against the euro.
Today, it’s trying to catch its breath, but the market’s not buying it. Futures are now pricing in a 75% chance of a Fed rate cut in September, up from 38% before the jobs data hit. A weaker dollar makes gold and silver, priced in those increasingly less mighty bucks, look like a bargain to foreign buyers.
When the dollar goes down, hard assets increase in relation to the dollar. That’s how it works.
Then there’s the economic backdrop, which is about as cheerful as a rainy Monday in Baltimore.
The unemployment rate’s crept up to 4.2%, and the three-month job growth average is a measly 35,000—numbers that haven’t been this grim since the pandemic’s dark days.
Add to that President Trump’s tariff tantrum, slapping 10% to 41% duties on imports from dozens of countries, and you’ve got a recipe for uncertainty that gold and silver thrive on.
Investors are buying. Global ETF gold holdings hit 3,616 tonnes, a 41% jump in assets under management this year. Silver, with its dual role as a haven and an industrial darling is up 29.25% year-to-date.
Now, let’s talk gold miners. Owning the miners is like owning a call option on gold that won’t expire.
Australian gold miners, like Newmont and Northern Star, are doing rocking with low oil prices and high gold prices.
Newmont’s stock has been a standout, with analysts cheering its leverage to gold’s rally. But it’s not all champagne and caviar. Earnings reports from the sector show a mixed bag—costs are creeping up as miners chase higher-grade ore to capitalize on these prices. The World Gold Council notes a 3% year-on-year demand increase to 1,249 tonnes, driven by geopolitical uncertainty, but margins are getting squeezed as operational costs rise. Silver miners, like First Majestic, are also feeling the heat, with CEO Keith Neumeyer banging the drum for $100 silver to justify new investments. That’s a stretch, but with silver at a 13-year high, he’s not entirely dreaming.
The Fed’s in a pickle, too. After holding rates steady at 4.25%-4.50% in July, dissenters like Michelle Bowman and Christopher Waller are pushing for cuts, and the jobs data might force Jerome Powell’s hand. Meanwhile, Trump’s firing of the Bureau of Labor Statistics head and Adriana Kugler’s resignation from the Fed’s board are stirring up fears about central bank independence. Gold bugs love this stuff. They see a weakening institutional framework as another reason to hoard the shiny stuff.
So, what’s the takeaway? Gold and silver are dancing to the tune of a faltering dollar and an economy that’s starting to creak. The miners are cashing in, though not without their headaches. With Citi raising its three-month gold target to $3,500 and J.P. Morgan eyeing $3,675 by Q4, the bulls are charging.
If you’re not stacking, you might be missing the party. At American Stock Investor, we’ve been buying all year. Avino Silver and Gold (ASM) is up 288% since my first recommendation. Discover Silver (DSV.TO) is up 282% since October. And Silver Storm is (SVRSF) up 66%. I invite you to join us and start profiting today.
All the best,
Christian DeHaemer
