Banks

As political parties, currencies, stocks, bonds and other bubble assets fall, the indisputable winners will be gold and silver.

When a single stock soars, we often lose sight of the bigger picture. NVIDIA, for example, allows us to overlook the fact that banks are facing record losses due to the collapse of the bond market.

For over half a century, the United States has surpassed the United Kingdom as the leading international power. Its military and monetary strength, the first two of a hegemonic country, remain unrivalled. The Biden administration seeks to maintain this superpower, but the world is changing.

US markets hit new highs thanks to the rise of technology stocks, notably NVIDIA, while European households prefer bank savings. At the same time, China and other BRICS countries are increasing their gold reserves, moving away from the dollar.

Since the October 2023 gold low of just over $1,600 gold is up but is anyone buying? Well no, certainly none of the normal players. Gold Depositories, Gold Funds and Gold ETFs have lost just under 1,400 tonnes of their gold holdings in the last 2 years since May 2022.

The fact that the price of gold remains above its break line is a signal that the Fed will not be able to keep rates at this level for very long without jeopardizing the refinancing of US debt.

China is trying to slow down the gold-buying craze, while economic pressures in Japan and the United States keep gold as an attractive asset despite high stock market valuations.

In the economic turmoil, the FGDR's deposit guarantee scheme is an illusion in the face of real risks, emphasizing the importance of diversifying one's financial assets to guard against banking crises.

The price moves in the coming months and year are likely to be spectacular. The combination of technical and fundamental factors can easily drive gold well above $3,000 and silver to new highs above $50.

The dual situation of the Bank of Japan stalemate - whose credibility is currently being tested by the markets - and the ongoing currency war are clearly benefiting gold.