Media gold macro, page-2

A lot of action overnight very positive to POG and POS.

US dollar has plunged and as I write this it is close to 100 (at 100.21) down from 103 (this is actually very significant and indicates investors have lost faith in the US) - that is a major drop in a day and a bit.. Very positive for commodities especially gold.

Also the bond vigilantes are still causing US bond yields to rise significantly up close to 4.5% - they are now higher than when Trump backtracked on high tariffs or a pause.

CNBC reports:

- the 10% spike in US stock markets was caused by a short squeeze by hedge funds - the title of the article was 'the mother of all short squeezes'
- the rise is bond yields was the cause of Trump pausing some tariffs
- overseas investors are selling US stocks, bonds, etc and US futures are down another 1.5% as I write this
- some experts suggest the Fed was close to intervening in the bond market when rates were at current levels before Trumps pausing of some tariffs - a few interviews elsewhere on this topic.

In addition prime corporate and subprime corporate bonds spreads have surged much higher but still way below historically highs.

US bonds and US dollar are clearly not seen as a safe haven in the current turmoil and nor are overseas bonds - but gold is acting like a safe haven.

I believe the big rise in POG in 1Q2025 of nearly 20% was driven primarily by large gold ETF inflows. With gold again rising significantly and now over $US3,210 my view is that Gold ETFs are now buying lots of gold more than in the first quarter 2025 - we will have to wait until next Wednesday to see what the inflows were this week (see World Gold Council website) - Some ETF charts below.

Goldmans Sachs came out with these 2 scenarios below (image below):

- Scenario base case $3,300 (nearly there) - 70t/month CB buying but they brought an average of 90t in the last 3 years and gradual gold ETF inflows
- Scenario $4,200- $4,500 - CB buying 110t/month and ETF inflows COVID highs (ie average per quarter of 340t and March 2025 1st quarter was 226t up from average 35t in last 3 quarters of 2024 when the POG soared higher).

Currently we may be seeing COVID ETF type levels of gold buying (my view not proven yet) but I suspect not 110/month CB buying but I could be wrong.

My own view is that unless Trump really backs of from most of his tariffs something is going to break causing a big drop in share markets, rising bond yield, big fall in US dollar, crypto crash, etc and the Fed will have no option to intervene which will be good for POG - seen some experts suggest the credit market may break. Unless Trump does roll back tariffs we may see POG get to $US3,500 very quickly.

Gold mining shares have not really increased much if at all despite the big rise in POG over the last week or so (ie they are still very undervalued). But if things get worse we may find that gold stocks will become a huge beneficiary of the increase in POG especially if it does get to $US3,500 quickly and rises even more.

These are my thoughts but do your own research