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Perspective
By Rich Checkan
I have written about gold now for over thirty years. I am amazed that I have found something to say about it month after month over three decades.
The reality is that circumstances and events may change year after year, but gold does not. Nor does gold’s role in your portfolio change.
That is because gold was, is, and always will be the world’s only real money.
If you have read anything I have written over the years, you surely have heard me say something to the effect that buying gold is the biggest no-brainer in the history of mankind.
As long as Congress overspends, the gold price is going higher… period.
It is a simple cause and effect relationship…
Congress spends more than they receive in revenue. The Treasury issues more debt to cover the shortfall. The result is an expansion of the money supply… more U.S. dollars in circulation. The value of each dollar is diluted. They are in effect “worth-less.” So, it takes more of them to buy anything of value… especially gold.
At one point over the years, I referred to that loss of purchasing power as the “Incompetence Tax.” It is the extra bit of dollars we pay for anything we buy simply because Congress was incompetent. They were not fiscally responsible, so we pay the price of consumer inflation.
I couple weeks ago, a good friend, Dennis Miller, included a quote in his e-letter that made that point very succinctly and eloquently. The quote was from the renowned economist, Milton Friedman.
Here it is…
“Keep your eye on one thing and one thing only; how much government is spending, because that is the true tax… If you're not paying for it in the form of explicit taxes, you're paying for it indirectly in the form of inflation or in the form of borrowing. The thing you should keep your eye on is what the government spends, and the real problem is to hold down government spending as a fraction of our income, and if you do that, you can stop worrying about the debt.”
(I highly recommend subscribing to Dennis’ newsletter… Miller on the Money.)
Milton Friedman is spot on.
If you track government spending, you know that every bit of what they spend is going to come out of all of our pockets eventually. Governments produce nothing. Their job is to provide a certain order to society, but they rely completely on us to fund it.
So… everything they spend is a bill we must pay.
If they cannot collect enough revenue in direct taxation from us, they will come up with the money in another way. That’s why debt and inflation are really and truly just another form of taxation.
Why Do We Put Up With That?
If we were handed the bill for some of the cockamamie programs our government spends our money on, we would absolutely refuse to pay it.
I can hear it now… “I’m not paying for that!”
That is why we never see that transparent bill.
Instead, we pay the bill through increased debt and price inflation. Somehow, a gradual increase in prices over time is acceptable to us. And it is even more acceptable to us if our wages keep up with the rate of inflation.
But the reality is that prices should actually fall over time as we become better and more efficient at producing whatever it is we produce. And… our wages have not been keeping up with the “Incompetence Tax” levied by Congress.
The result is a debt that is touching $40 trillion, and Congress still is showing no signs of becoming competent… becoming fiscally responsible.
Do Not Be Fooled
For me, nothing illustrates the impact of the “Incompetence Tax” better than the chart above.
The powers that be would have us believe the U.S. stock market is on a tear. The Dow Jones Industrial Average (DJIA or the Dow) has been making new all-time highs in U.S. dollar terms for as far back as I can remember.
However, what nobody discusses openly is the fact that the dollar we use to measure that Dow has lost an immense amount of purchasing power. Basically, what we use to measure value or worth, the U.S. dollar, is losing considerable value over time.
So, how much of the Dow’s increased value is attributable to stocks becoming inherently more valuable, and how much of that increased value is a result of the U.S. dollar’s weakening over time?
The chart above answers that for us.
When the Dow is measured in gold, the ultimate wealth preservation tool, you will see that the current value of the Dow is only worth about two thirds of the value of the Dow at the peak of the Dot.com bubble.
We have achieved many new nominal highs in U.S. dollar terms. But the inherent value of the stocks on the exchange are worth less than they were worth in 1999… and by a good bit.
Take Advantage of the Biggest No-Brainer
When the collapse of a currency is slow enough to be difficult to notice day-to-day, few people see it happening right before their eyes.
When the collapsing currency is out-performing other mismanaged and collapsing currencies, few people see it happening right before their eyes.
When the collapsing currency causes you to buy just a little bit less at the grocery store over time, few people see it happening right before their eyes.
BUT… if you measured everything in gold, you would see the collapsing purchasing power of the U.S. dollar for what it is. You will see firsthand the impact of Congressional incompetence.
As Milton Friedman says, you will see very clearly your tax bill – no matter how it is presented to you – as long as you stay focused on government spending.
Another easy way to do that is to keep your eye on the expansion of the money supply. I have recommended doing that many times over the years.
If spending goes up… you need gold.
If direct taxation goes up… you need gold.
If the money supply goes up… you need gold.
Spoiler alert… you need gold!
It is the best way we know to preserve your purchasing power… to Keep What’s Yours!
Even better, buy gold right now… at the low end of the trading range after a bull market correction. Gold here at $4,000 is dirt cheap. Silver at $57 is even cheaper!
We would love to help you consider what is best for you.
Take advantage of a free consultation to look at all your available options. Send us an email. Call us toll free at (800) 831-0007.
It is time. We look forward to hearing from you.
—Rich Checkan
Editor's Note: Adrian Day is president of his eponymous money management firm, offering discretionary accounts in both global markets and resources. To see if a managed account might be right for you, visit adriandayassetmanagement.com. Adrian Day invites you to attend his private meeting in Denver on September 25th at 4 p.m., for a wide-ranging and open discussion on all topics economic and investment. It is complimentary, but please register here: https://adriandayassetmanagement.com/events/.
Feature
This is a Perfect Contrarian Indicator
By Adrian Day
Gold mining and royalty companies continue to report record profits, despite a drop in the price of gold and increase in costs, driven by oil. First-quarter results were mostly records across the board, while second-quarter earnings from those that have reported are largely modestly above expectations, with only one or two disappointments. For the latest quarter, the average price of gold was almost 8% below the first-quarter average, while the oil price was above $100 for most of the period. Yet many companies saw solid results.
The Leader Increases Production and Lowers Costs
Agnico Eagle, for example, the second-largest gold miner in the world and the latest to report, saw a small production beat, which, together with lower-than-expected operating costs, saw record free cash flow and a record capital return (dividend and share buybacks). All-in Sustaining Costs (AISC) at $1,459/oz, even lower than the first quarter and last year ($1,517), were helped by the high U.S. dollar (reducing costs outside the U.S.) as well as strong by-product prices.
So despite a 25% drop in the gold price from the January peak, Agnico was sufficiently confident to reiterate its full-year guidance.
This is a clear illustration of the resilience of the gold mining companies, which have strengthened their balance sheets after three years of strong and growing cash flows. So even as the gold price has dropped sharply this year, with AISC just over $1,450, there is still a huge profits cushion with gold over $4,000.
The gold miners have experienced nine consecutive quarters of increasing cash flows, and no other industry sector comes close.
Valuations Are Near Historical Lows
And yet they continue to trade at low valuations. On every metric one cares to look at, valuations of the top 20 miners today are in the lowest quartile of the past half century. On critical metrics, some companies are essentially trading at all-time low valuations. Agnico, for example, is within a hair’s breadth of its price-to-free cash flow multiple, setting up an unusual dichotomy given high prices and strong cash flows.
The same discussion applies to the large royalty companies. The increased production at the miners is flowing through on royalties and streams. They do not benefit from miners’ cost control, of course, but nor will they suffer as costs increase. If the valuations appear high, they again are low on an historical basis.
Are the royalty companies expensive?
Franco-Nevada, for example, which alternatives with Wheaton as the largest royalty and streaming company, trades at 34 times earnings and over 5 times book…rich indeed!
But it’s p/e multiple is essentially the lowest in its history, as is its price-to-cash flow multiple. And this at a time when its return on equity is the highest it has ever been, and by a wide margin.
So based on its own history, Franco is undervalued when it is gushing cash.
My intention here is not to discuss specific companies in detail, but to provide enough to recognize that the companies are performing well in this environment, generating huge amounts of cash, and are undervalued.
A Perfect Set Up
Prices of the gold stocks have dropped 40% this year, valuations are low (with prices declining more than fundamentals), and sentiment is extremely negative. The Bull/Bear Sentiment Index has bounced off its lows–it actually hit a zero bullish reading a little over a month ago–but remains weak. Again, the GDX gold-miner ETF has seen some inflows in the last month, there have been net outflows over the past three months.
Prices down, low valuations, and weak sentiment: that is a perfect contrarian indicator. And all three have improved in the last couple of weeks, suggesting the bottom has been seen and making it an ideal time to buy.
Editor's Note: Frank Holmes is the CEO of U.S. Global Investors —a company that produces quality analysis concerning gold, precious metals, natural resources, and emerging markets—in conjunction with his work as a fund manager. Frank is a long-time friend of ours, and we've chosen to share his article originally published June 12, 2026. For more articles like this from Frank and other leading experts, you can subscribe to the U.S. Global Investors newsletter here.
Hard Stuff
Gold Miners Are Printing Cash at $4,000 Gold
By Frank Holmes
Brent crude crossed above $100 a barrel this week, all due to a 20-mile-wide stretch of water some 6,500 miles away from the U.S.
Tanker traffic through the Strait of Hormuz—the Persian Gulf bottleneck that carried roughly a fifth of the world’s seaborne oil before the fighting started—has fallen to virtually zero. Before the war, some 80 vessels made the transit on a good day. The recent high-water mark is 25.
Now Iran is working a second front, leaning on its Houthi allies in Yemen to threaten the Bab el-Mandeb, the southern gate to the Red Sea. It’s about as narrow as Hormuz. With Saudi Arabia pushing more barrels through its East-West pipeline to the port of Yanbu, an attack there would put something like 4.5 million barrels a day at risk. And unlike Hormuz, it would foul container traffic bound for Suez, sending Europe-Asia freight the long way around the Cape of Good Hope.
Meanwhile, the U.S. Strategic Petroleum Reserve is at its lowest level since 1983. President Trump authorized releasing up to 172 million barrels back in May to hold prices down. It worked, for a while, but traders are now talking about “tank bottoms,” the point at which pulling more oil out gets physically difficult.
Why Gold Hasn’t Rallied on the War
Gold is supposed to be the asset you own when wars break out and tankers stop moving, so I get why some investors have been frustrated in recent months. Instead of soaring, the yellow metal has been stuck near $4,000 an ounce, down roughly a fifth since the strikes on Iran began in late February, and well off its January record near $5,600.
The reason for this isn’t a mystery. Oil prices have increased, pushing up inflation and interest rate expectations. Gold prices, as a result, have been pressured.
You can watch it in the bond market. The U.S. 10-year yield touched 4.71% this week, its highest level since January 2025. German bunds hit levels not seen since 2011. The Federal Reserve and the Bank of England both meet next week, and both are expected to hold rates steady while flagging the risk of hikes down the road.
Longtime readers know I’ve argued for years that the single most important variable for the gold price is the real interest rate. When real rates climb, the metal has tended to struggle because, unlike fixed income, it doesn’t bear interest.
The foreign share of U.S. Treasury holdings has also fallen from about 56% in 2008 to 30% at the end of 2025. The marginal buyer of government debt is now a price-sensitive American, and those buyers demand more compensation in higher yields. I don’t believe this will reverse significantly when the shooting stops.
China Is Buying the Weakness
The People’s Bank of China bought 15 tonnes of gold in June—its largest single-month purchase since October 2023—bringing official holdings to 2,346 tonnes. That represents 20 consecutive months of accumulation, the longest streak on record, according to the World Gold Council (WGC).
Focus not just on what China is doing, but how. Its rate of accumulation has accelerated as the price of gold has fallen. The country added 40 tonnes in the first half, during which gold lost close to 30% of its value from its all-time high in late January. Analysts at New York-based hedge fund Zweig-DiMenna calculate roughly $5.7 billion of Chinese purchases in H1, most of it in the second quarter, against about $2 billion in all of 2025, when gold was rallying hard.
I believe China could be making a bet for the ages, if John Paulson’s forecast turns out to be accurate. The legendary hedge fund manager, who made billions shorting the subprime mortgage market in 2007, told CNBC this week that he believes we’re still in the early innings of a long-term gold rally.
“As people lose faith in paper currencies, gold as an alternative will continue to grow,” Paulson said, adding that the metal “is becoming the most apt reserve currency in the world, replacing fiat currency.”
Miners Are Printing Cash at $4,000 Gold
I want to highlight another comment Paulson made during his interview. Investors, he said, could stand to benefit even more by maintaining exposure to gold miners on top of the metal. I agree, which is why I’ve long recommended a 10% weighting in gold, split evenly between physical bullion and gold mining stocks.
Gold has averaged roughly $4,700 an ounce so far in 2026 against all-in sustaining costs (AISC) of below $2,000. Even at $4,000, that’s an extraordinary margin, and it’s showing up as free cash flow, net cash balance sheets and buybacks. Scotiabank expects meaningful share repurchases from Newmont, Barrick, Agnico Eagle and Kinross. RBC’s Josh Wolfson describes producers as operating from a position of strength.
As projected, Newmont reported record free cash flow in the second quarter, generating $2.2 billion after producing some 1.3 million ounces. The Denver-based company also announced a $0.26-per-share dividend. Newmont and Barrick, which is scheduled to report next month, are expected to post combined second-quarter profits of around $3.5 billion, which would be massive.
The World Remains Underweight
By historical standards, gold investment remains grossly underweight. As a percent of portfolios, gold accounts for low-single-digit exposure. With metal prices off 30% from their record high, now might be time to consider accumulating.
Keeping your exposure to between 5% and 10% and rebalancing regularly helps with discipline. No need to have an opinion on the Strait of Hormuz.
China’s central bank isn’t trying to time the market, and I don’t think you should either.
Editor's Note: Nomi Prins is a best-selling author, financial journalist, and former global investment banker. Prinsights Pulse is a new, free publication that’s curated by Nomi Prins. Designed for everyone from executives at large institutions to individuals seeking to enhance their financial understanding, this powerful newsletter provides essential insights into economic trends that affect us all. Click here to discover more of Nomi's insights.
The Inside Story
The Fed Holds Rates, the Hill Spends Money
By Nomi Prins
The Federal Reserve has left rates at 3.50 to 3.75% for the seventh month in a row, at Kevin Warsh’s second meeting as chair of the central bank. After inflation turned lower in June, the rate hold surprised no one – though cracks have emerged as three policymakers voted in favor of a quarter point increase.
The hold served as a direct follow-up from Warsh’s data-dependent stance at the June FOMC meeting and inflation-fighting posture at his Congressional hearings this month.
“For some households, businesses and market professionals, five years of high inflation have left a mistaken impression-that’s hard to shake – that the Fed’s implicit inflation target was somehow above 2%,” Warsh claimed while speaking with reporters following the FOMC decision. “Let me reiterate: there is no soft inflation target. There is no soft implicit target, not on this committee’s watch. There’s only a target, and it’s 2%.”
It turned out that inflation dipped in June for the reason we discussed all spring, which was reduced oil prices. June CPI fell 0.4%, its steepest one-month drop since April 2020. The annual rate eased to 3.5% from 4.2, and producer prices fell the next day.
That relief may already be reversing. Oil rose back to near $85 a barrel, up more than 20% over the past month, after weeks of U.S. and Iranian strikes and repeated disruption to traffic through the Strait of Hormuz. Following the two sides loosely having paused strikes only to once again veer toward conflict, crude continues to be in flux. As the standoff over the strait remains unresolved, so does the cost at the pump.
But that also means there is still time for oil to dip back into the $80s, which could help pull the next inflation print lower. At his July 14 testimony to Congress, Warsh called rising prices an “undue burden” on households and businesses and vowed to keep fighting inflation.
Meanwhile, the market is still betting significantly on a hike before year end. Yet if the next set of inflation figures drop, those bets could too.
Congress Is Locked In Spending Mode
The more consequential decision this month came emerged across town in Washington D.C. with Congress. That part of the story feeds both into the growth narrative and to U.S. national debt.
On July 21, the U.S. House of Representatives passed a stopgap bill to fund the government through December 4, which would carry that funding past both the September 30 deadline and the November 3 midterms, in a 220 to 205 vote.
With six Democrats crossing over the political line, spending in the legislation is being held at current levels while the Senate writes its own version. Passing a funding bill this early, months ahead of the deadline, shows that House leaders wanted the spending fight off the table before allowing voters a chance to weigh in.
It is the third year running that such outlays have climbed regardless of who controls the House, the Senate, or sits in the White House, and this bill holds them at that elevated level. Interest payments on that debt have also continued to escalate.
Interest payments on the national debt, now $39.2 trillion, run about $1.0 trillion a year, close to $3 billion a day and more than the entire defense budget. They are on track to double to $2.1 trillion by 2036.
It is the fastest-growing line in the federal budget, climbing faster than the U.S. military spending, or Medicare, and the roughly $2 trillion annual deficit that feeds it keeps the pile growing no matter what the Fed does with rates. Every dollar of it has to be borrowed and refinanced through a bond market already reticent to absorb a growing volume of Treasury issuance.
At $39.2 trillion, the debt limits how far the Fed can go. Higher rates feed into the government’s interest bill as existing debt rolls over, just as higher oil prices threaten to push inflation back up.
If oil keeps inflation elevated, the Fed may have to hold rates higher or raise them again, making the government’s borrowing problem even more expensive. The debt load and the pace of borrowing matter more to the dollar each year, with no Fed chair in control of either one.
Why the U.S. Debt Matters More Than the Rate Decision
Regardless of what happens with monthly inflation figures, the size of the U.S. debt is going in only one direction, up. The reality is that neither party is cutting it, and the government still has to borrow roughly $2 trillion a year to cover the gap. Yet as we noted above, the buyers who used to support that borrowing are stepping back.
Foreign holders are down to about 32% of the Treasury market from more than 40% a decade ago, and over the same years central banks have bought more than 1,000 tonnes of gold annually from 2022 through 2024 and have not slowed since.
In practice, that means the institutions lending Washington less and less are the ones that are also buying gold more. Currently, gold trades near $4,130 an ounce, with the $6,000 target we set in January on track as record debt and interest bill that keep compounding.
Silver’s Two Different Prices
The same debt pressure pushing central banks into gold lifts the price of silver too, but silver carries a second distortion gold does not, a gap between its paper price and the physical metal. That’s because the silver price you see quoted when searching Google for the price of silver is a paper price. It is set in the futures market, where large funds trade contracts on the basis of leverage, or borrowed money, and rarely take delivery of a single bar.
You see, physical silver is priced differently depending on where and how it changes hands. Factories that make solar panels, electric vehicles, and AI chips need physical silver, and on the Shanghai Gold Exchange buyers pay cash upfront to get it, all at a premium to the paper price.
When paper silver crashed in February, the physical price did not follow it down. Clearinghouses raised margin requirements 36%, and that meant funds were forced to sell.
Paper prices fell near $78 an ounce while physical held above $104, a premium of about 34% in a single day. Silver trades near $60 now, roughly half of its $121.62 January record, but the physical silver premium over paper prices has held. The world is heading into a sixth straight annual deficit, while silver available for physical delivery keeps shrinking.
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