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Perspective
By Rich Checkan
Much has happened over the past month. Change is all about.
Time will tell how all this change plays out.
In the short term, markets seem to like the chaos. The stock market continues to surge. The U.S. dollar remains at levels of recent strength.
And over the past few weeks, gold and silver have steadily climbed. Gold has methodically inched toward and through the U.S. dollar all-time highs reached just prior to President Trump’s election. In every other major currency, it seems like new all-time highs are as common as the sun rising each day.
We suggested this would be the case last month. Specifically, here is what we said…
“My theory is that investors are waiting to see. Until they do, gold and silver will take a pause. I see either a slow increase in gold and silver prices or range-trading for at least the first quarter of 2025… and most likely for the first half of 2025.
I believe it will take that long to measure the results of the incoming administration.
If the new administration is successful, gold and silver will still climb, but they will do so in a slow and methodical fashion.
If the new administration runs into entrenched swamp critters, the climb for gold and silver will be more rapid.
Either way, I see both metals moving higher by year end.”
Central banks will continue to buy to lower U.S. dollar reserves in favor of gold. Investors will buy as a safe haven, as a hedge against inflation, and as a buffer against the uncertainties of our world today.
Silver will continue to follow gold higher.
This is all playing out.
Are You In?
Are you participating in this bull market in gold and silver yet? If not, for what are you waiting?
Please share your thoughts at infoasi@assetstrategies.com.
The bull market is clearly established. There is plenty of time and price appreciation potential ahead.
And the indicators we expect to see when the bull market turns bear are nowhere to be found…
Duration… The bull market should last a minimum of a decade.
Price… Gold is expected to reach two to three times the previous bull market high.
Interest rates… Rates should be high single-digit or low double-digit levels.
The U.S. dollar… Clear strength and expected future appreciation is what the dollar should exude.
Sentiment… Everyone should be talking about how much money they are making in gold and silver.
Gold/Silver Ratio (GSR)… The number of ounces of silver it takes to buy an ounce of gold should be steadily moving toward 35 to 50.
Geopolitical stability… Is peace permeating our world?
Social stability… Is there domestic peace and harmony right now?
No… no… no… no… no… no… no… and no.
None of these indicators are firing. Therefore, there is no reason to believe the bull market in gold and silver is anywhere near its end.
At this time, in this market, it is the buyer who will be rewarded and the seller who will be filled with regret.
What To Do?
Take the time to watch this interview I recorded with Arthur Bavelas of Family Office Insights…
We covered a lot of ground here. If you have a question about owning precious metals or how to get started, we covered it.
Take a listen. Then, take action. It is how you Keep What’s Yours!
Visit our online store. Send us an email. Call us toll free at (800) 831-0007.
—Rich Checkan
Editor's Note: Jim Woods is the editor of Investing Edge, Bullseye Stock Trader, Fast Money Alert and his latest publication, Crypto & Commodities Trader. A self-described radical for capitalism, he celebrates the virtue of making money from his Southern California horse ranch.
Feature
The Trouble with Tariffs
By Jim Woods
I’m old enough to remember the original Star Trek TV series starring William Shatner as Captain Kirk of the starship Enterprise. One of my favorite episodes is “The Trouble with Tribbles.” In this comic episode, the Enterprise visits a space station that soon becomes overwhelmed by rapidly reproducing small furry creatures called “tribbles.” But of course, their rapid reproduction rate soon overwhelms, and that means trouble for the crew and its mission.
I thought about this rapid reproduction idea, because just like tribbles, the trouble with tariffs is they’re also a rapidly reproducing organism that will speedily overwhelm if not quickly contained.
On Jan. 31, President Trump announced the imposition of 25% tariffs on goods from both Mexico and Canada, and a 10% tariff on goods from China. The president’s reasoning for this, as he’s been claiming for years, is “tariffs are going to make us very rich and very strong.”
To this I say… bollocks!
Let’s get this concept straight right now… tariffs are taxes levied by the federal government on U.S. companies. Full stop.
When a tariff is placed on imported goods from Mexico, Canada, China (or anywhere else) into the U.S., that tariff is paid by U.S.-registered firms directly to the U.S. Customs agency. Perhaps a better term to use, which is much more clarifying and much-less subject to Orwellian language manipulation, is to call a tariff what it actually is — an import tax on U.S. companies.
Contrary to what the president claims, tariffs (i.e. taxes) do not make any nation rich and strong. They only serve to make companies and citizens poorer and less free. And because my mission in life is to help companies and investors get richer and enjoy more freedom, I am vehemently opposed to tariffs.
By Star Trek: The Original Series episode, “The Trouble with Tribbles,” fair use, https://en.wikipedia.org/w/index.php?curid=40155418
Now, here is the real trouble with tariffs.
Like tribbles, they keep having that multiplier effect. You see, U.S. companies don’t just treat import taxes as a static cost of doing business. Instead, like all forms of tax increases, these companies usually pass the costs on to their customers by raising their prices.
Higher prices mean higher inflation, and higher inflation means more constrained and more restricted economic activity. And then there is the damage to investors, as these higher import taxes pressure corporate profits, and that throttles earnings per share growth, which hamstrings share prices. So, tell me, just how does this make us “very rich and very strong”?
Now, lest you think I come to this from a purely academic perspective, I would like to relate to you a personal anecdote regarding this subject, one that captured a lot of kudos from fellow members of the investment community. Last year, I attended an investor event at President Trump’s Mar-a-Lago resort in Palm Beach, Florida.
At dinner that night, our group heard a speech from one of the architects of the first Trump administration’s tariffs, U.S. Trade Representative Robert Lighthizer. Lighthizer spoke for about 30 minutes, and most of his talk was aimed at dispelling what he called the “free-market myth” that tariffs hurt the economy. After citing some rather unconvincing examples, I became disenchanted, which impelled me to act during the Q&A period.
It was then that I was handed the microphone, and asked Mr. Lighthizer the following question, which, of course, I already knew the answer to: “Can you please clear something up for me: Who, exactly, pays these tariffs? Is it the Chinese government, or is it the American company who has to write a check to the U.S. Customs agency?”
Like any nimble politician, Lighthizer saw the dangerous waters he was about to wade into with my direct inquiry. So, rather than give me a direct answer, he pivoted and started talking about how tariffs don’t cause inflation and that this was one of the myths floating around the free-market worldview.
After dinner, and much to my delight, I was approached by multiple colleagues who congratulated me on my direct question. You see, these are sophisticated, and in many cases free-market, libertarian-leaning investors, writers and businessmen who also know that tariffs are a form of taxation, and that they are not good for America.
Finally, while I do certainly think that President Trump is earnest about wanting to “make us very rich and very strong,” the way to do that is not to increase taxes on U.S. citizens via tariffs, but to drastically reduce all taxes for everyone. Here I think the president should pivot his attention to doubling down on the tax reduction that was the signature achievement of his first term, The Tax Cuts and Jobs Act (TCJA).
This overhaul of the tax code that President Trump signed into law in 2018 was a very good piece of legislation that included some of the biggest changes to the tax code in some three decades. We need more policies like this, and NO NEW IMPORT TAXES!
The way I see it, American can get rich and become freer (tax cuts) or it can get poorer and become less free (tariffs). It’s a simple binary choice, and one that I sincerely hope the president makes in favor of freedom.
Editor's Note: Adrian Day is president of his eponymous money management firm, offering discretionary accounts in both global markets and resources. He also manages the Europac Gold Fund. To see if a managed account might be right for you, call ASI and we'll make the connection. Call 1-800-831-0007 for more information.
Hard Stuff
It is the Perfect Set-Up for Gold Stocks
By Adrian Day
This is a most opportune time to be buying gold stocks. Incredibly, valuations remain low even as gold itself hits record highs. This is so even as margins are expanding with the major miners generating increasing cash flow. Gold is extremely under-owned, while sentiment remains poor. However, signs of a change are coming. This is a perfect set-up for gold stocks, with tremendous opportunity ahead.
I hear over and over gold investors complaining about the gold stocks, and asking when they are going to move. This begs the question: in fact, the XAU index is up over 47% over the past year, significantly more than the S&P for the same period (24%). Yet you would never know it from the financial media. At some point, someone will notice.
The one-year return for the XAU is a tad higher than that of bullion. Of course, we expect gold stocks to well outperform bullion in a gold market, and the gap between gold itself and gold stocks has never been wider. Notwithstanding their very strong performance in the last 12 months, why have gold stocks so far not exhibited the leverage we expect?
As we know, the gold market has been driven by central banks buying to diversify their reserves in the face of dollar weaponization, and Chinese investors and consumers buying on concerns about their economy and the fragility of the banking system. The groups buy bullion not gold stocks.
For the past two plus years, the macro-economic environment–-with high interest rates, low and declining inflation, a strong economy, and reasonably strong dollar––has not been attractive for gold investments. And so “traditional” gold investors have not been buying.
Even after the Federal Reserve initiated a new rate-cutting cycle in September, the focus on gold was fleeting, with optimism about the economy under the new administration overshadowing concerns.
Not only have they not been buying, but Western investors, particularly in North America, have been selling. In the past couple of weeks, physical gold has been rushing into the U.S. in anticipation of tariffs, it is to meet demands from large banks to settle COMEX contracts. The buying has not reached the ordinary retail investor or small institution. Indeed, the GLD, the largest U.S. gold ETF had only three days of positive inflows during all of January, and only six since Thanksgiving.
Now things are beginning to turn and North American investors may start looking to gold as the underlying economic realty comes to the fore. Inflation remains stubborn and importantly above the Fed’s own target. The last six months of inflation data shows a clear trend up. And many important indicators point to a slowing economy and a jobs market less healthy than the headlines suggest.
For the Fed to cut rates before inflation has been conquered, as it has been done, is the most attractive scenario for gold to do well.
Gold stocks have performed well, but lagged gold
Not only has the economic environment not been conducive for investors in the West to look to gold, strong stock markets, led by tech stocks, meant that North American investors have not been looking at gold stocks. In January, neither the GDX nor the GDXJ has seen a single day of net inflows; indeed, the GDXJ has seen no inflows for three months, with $495 million in net outflows over that period.
Things are changing, not only in the economic environment. The S&P is now losing momentum as the erstwhile market leaders start to falter. Meanwhile, the gold miners have had the highest cash flow growth of any segment of the stock market over the past year. Soon investors will start to notice, especially if the “Magnificent Seven” stocks stumble.
There is potential for extreme moves due to low ownership
And despite record gold prices, when valuations usually get extended, gold stocks today are selling close to multi-decade lows. Agnico Eagle, the third-largest miner, for example, is trading at a multiple of less than 10 times its cash flow. This is in its lowest decile in its history. The entire XAU is close to a multi-decade price-to-cash flow low.
For most of the past year, gold stocks did indeed move up, but never exhibited the traditional leverage we see at the beginning of a bull market. The fact that we did not see gold stocks dramatically outperform over the past two years as gold appreciated over 70% is simply due to who was buying and why.
Now that the Fed has embarked on a rate-cutting cycle, and the S&P is faltering, we will see investors look to gold and gold stocks. With average gold exposure among U.S. investors under half a percent––compared with a 50-year average close to 2%-–the potential for significant buying exists. And given that the entire gold equity market worldwide has a market cap of only about $500 billion, compared with over $15 trillion for just the top five U.S. tech stocks, it would not take much of a shift to see the gold stocks move up dramatically. We should see the kind of leverage that gold stocks have historically demonstrated at the onset of every gold bull market.
This is a rare confluence of record gold prices and low gold stock valuations, and an excellent time to step up investing in this space.
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The largest gold miner in the world, Newmont Corp., has a market cap of only $48 billion. The market cap of the 100 largest gold companies is just over $400 billion. The value of one year’s gold production is $328 billion, while all the gold ever mined in the history of the world is about $14 trillion. Meanwhile, just five U.S. tech stocks have a market cap over $15 trillion.
Editor's Note: Bill Bonner is the Founder of Bonner Private Research and owner of the Agora Companies. Dan Denning began working with Bill Bonner at the Agora Companies in 1998. This article was originally published by Bonner Private Research on February 5, 2025. You can subscribe to Bonner Private Research here.
The Inside Story
God's Work
By Bill Bonner and Dan Denning
Bill Bonner, writing from Baltimore, Maryland
So far, we’re only a couple weeks into Donald Trump’s second try at governing the USA… it’s everything we expected – and more!.
Getting rid of DEI… abandoning the Energy Transition… closing departments and firing federal workers… pardoning Ross Ulbricht — yes, there are bright spots.
‘It’s time for it to die,’ said Elon Musk of the USAID. The agency ‘promotes democracy’ by undermining elections, engineering regime changes, spreading propaganda…and funneling billions of dollars to its chummy crony contractors. It should have been put to death a long time ago. And there are many other agencies that should be terminated along with it.
But there are some dark spots too -- trade wars… drug wars…Panama, Greenland, and now Gaza! banning, prohibiting, sanctioning, tariffing…ignoring the Constitution… flights of fancy, doomed to crash…and lose-lose deals that make no real sense.
Here’s the latest:
"Trump orders creation of a U.S. sovereign wealth fund
President Trump on Monday took the first steps toward his administration creating a government-owned investment fund, tasking the heads of the Treasury Department and Commerce Department with beginning the process to create an American sovereign wealth fund. "
Uh…
Don’t you need some ‘wealth’ to create a ‘wealth fund?’ Norway did it with the money it got from North Sea oil. China’s trillion-dollar wealth fund comes from its trade surpluses.
Where will the US wealth come from? The government runs deficits… America’s trade balance is negative. And it has nearly $37 trillion in anti-wealth… aka debt.
Whatever ball Mr. Trump has his eye on, it ain’t the one that matters. In all the sound and fury of Trump’s executive orders and confrontations, there is scarcely any mention of the real challenge: avoiding a fiscal crisis.
But the nice thing about Donald Trump… the fresh air of his administration… is that he is so transparently rapacious. Almost everything he says is a lie, or a mistake, or plain nonsense. But it is not gussied up with taffeta talk of the ‘rule of law’… the Constitution… or the ‘dignity of the Oval Office.’ All the claptrap and cupidity of an aging empire… like the painting of Dorian Gray… is finally on display. Pearls and Irritations opines:
"What Trump is announcing to Americans and the world contains more than elements of a new security, economic, political and human rights order. He is essentially proclaiming a new Pax Americana charter to replace the United Nations charter which he, and it should be noted, together with other US presidents have consistently violated since the charter was established in 1945 but which none until Trump has explicitly repudiated. "
Until now, America’s violence was cloaked in the hypocrisy of the 20th century. We were ‘making the world safe for democracy.’ We were promoting the globalized ‘liberal’ order… and protecting the world from fascism… and then, from communism… and later from terrorists. Donald Trump ‘tells it like it really is.’ We’re in it for what we can get out of it. And now, the whole world knows it. The Guardian:
"Trump demands rare earths from Kyiv in exchange for aid
US reportedly briefly paused weapon shipments into Ukraine…
“We’re telling Ukraine they have very valuable rare earths,” Trump said on Monday. “We’re looking to do a deal with Ukraine where they’re going to secure what we’re giving them with their rare earths and other things.” Trump, speaking to reporters at the White House, said Ukraine was willing, adding that he wants “equalisation” from Ukraine for Washington’s “close to $300bn” in support."
Trump is bad. Trump is good. He is ‘destroying our democracy.’ Or, he is a genius, given to us (by God!) to make us great again.
Our own guess — an admittedly grandiose sweep of historical dot connecting — is that Mr. Trump is simply Mr. Trump…neither bad nor good…but just another one of history’s useful dupes. His real mission, of which he is entirely unaware, is not to save the empire, but to sink it.
God does not permit trees to grow to the sky… nor does He allow empires — no matter what their pretensions — to rule forever. All things made by man have a beginning…and an end. The Roman Empire needed its Augustus…and its Caligula.
And now, Donald J. Trump… Time’s ‘man of the year’…seems to be doing God’s work, hastening the end of American hegemonic power by turning much of the world against the USA.
This view is so out-of-step with the bulk of popular opinion…it must be either very wrong…or very right. Whichever. We’ll accept the verdict of history, when it is finally rendered.
Unless it goes against us.
Regards,
Bill Bonner
Research Note, by Dan Denning
Spot gold prices hit a record in Tuesday trading in the US. This morning, gold futures are knocking on the door of $2,900/ounce. Are refugees from the tariff wars fleeing to gold as a safe haven? Or is the gold price itself tired from winning so much in the last twelve months?
I’m headed to New York later today to talk to some old friends with strong views on the matter. Paid readers will hear more on Friday. In the meantime, the World Gold Council has just published its Gold Demand Trends report for 2024. See the image below.
Central banks are still big buyers (over 1,000 tonnes for the third straight year, according to the official figures.) ETFs were no longer sellers although they’re not yet big buyers either. And high prices discouraged gold jewelry consumption. Are you buying or selling at these prices?
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