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    Gold’s Rally Was No Surprise — And It’s Not Done

    Investing 6 Mins Read

    I’ve been writing about this setup for years, and the script hasn’t changed—only the stakes have grown bolder. The Fed is boxed in by stubborn inflation, a slowing rhythm in growth, and political crosscurrents that tilt relentlessly toward easing, even as the scoreboard still flashes above-target CPI. Markets see it too: rate-cut odds have surged as each soft labor print lands, and every tough-sounding Powell line gets repriced the moment the data wobble. When policy blinks before inflation truly breaks, gold doesn’t just hold its ground—it runs.

    In my recent piece “QB Powell In The Pocket – Too Late Or Just Lost?” I focused on the drama that will come with the end of Jerome Powell’s time as Fed Chair. He’s being pressured from all angles—fiscal dominance, tariffs, politics—while still staring at inflation above target. If weak labor data persist, he’ll cut. Markets have effectively pre-announced it, with odds for a September move surging from sub-40% after his last presser to north of 90% after softer prints.

    As I’ve argued repeatedly (see “Gold Can’t Be Downgraded And It’s No One’s Liability” – Forbes, August 20, 2023; and “When The Gold Dust Settled” – Forbes, January 12, 2023), these are precisely the conditions that light a fire under gold. The macro hasn’t changed: chronic fiscal deficits, an eventual glide lower in real rates if nominal cuts meet sticky inflation, and incentives to keep liquidity flowing.

    What’s different now is how broad and durable the sponsorship has become. The quiet force behind gold’s multi‑year basing and breakout has been central banks—not as a trade, but as a structural reserve shift away from concentrated dollar risk. The World Gold Council’s latest survey set records: 95% of central banks expect global official gold reserves to rise over the next 12 months, and 43% say their own institution will add. For three straight years, official sector purchases have exceeded 1,000 tons annually, resetting the demand floor and shortening the freely available float. When supply gets sequestered by decade‑horizon buyers, price elasticity changes.

    U.S. investors are waking up, but still not over their skis. ETF holdings have pushed up more than 3.5% in the past three months while spot churned in a $3,200–$3,500 band—a telltale of accumulation, not capitulation. This is the regime where gold’s opportunity cost compresses and its optionality expands: if the Fed cuts into sticky inflation and slows quantitative tightening, real yields bias lower. Layer in the long arc of dollar diversification and the math favors the metal.

    While gold has glittered, the real drama this year has been in the miners—the higher‑beta cousin that finally decided to show up. After a four‑year bear market where equities badly lagged bullion, the VanEck Gold Miners ETF is up more than 70% year to date, a catch‑up that still looks more cyclical than euphoric. Q2 earnings broadly surprised, and not just because of higher gold. We’re seeing tighter cost discipline, stronger balance sheets, and boards rediscovering that returning cash beats empire‑building when the commodity is already doing the heavy lifting. If the cycle has another inning—and I believe it does—operating leverage is just beginning to drop to the bottom line.

    Valuation underscores the setup. Newmont, the largest weight in the miners’ benchmark, trades around 13x consensus 2025 earnings; about half of the market’s multiple. It’s a reminder that cyclical value isn’t dead—it’s been ignored. When the cash flows inflect, the market remembers quickly.

    There have been head fakes—there always are. A tough Powell paragraph can knock gold $50 in a session; a labor wobble can give it back and more the next day. Rumors and policy noise—tariffs, sanctions, import quirks—can distort spreads between futures and spot before cooler heads correct the tape. None of that changes the bedrock: central banks are still buying, the policy reaction function still leans accommodative against persistent inflation risk, and deficits still define the fiscal landscape. In that world, the long‑run real rate anchor is lower than the bravado of any single presser would suggest, and gold tends to do what it has always done—quietly compound purchasing power while the policy cycle oscillates between courage and convenience.

    I’ve said before—and I’ll repeat it because it keeps paying—size gold like it matters, not like a novelty. At Proficio Capital Partners, our average family is encouraged to hold 25% in precious metals and related investments, while our most aggressive models run over 30%. That stance hasn’t wavered, even though the recent volatility. Accumulate on weakness, respect volatility, and remember that miners are a derivative—more torque, more noise, more reward if the thesis plays through. If spot consolidates at elevated levels while flows keep building, that’s not froth; it’s the market catching up to policy already in motion. This still feels early for the equity leg of the trade, and “early” often looks like “too late” to those watching the last 10% move.

    Years after our first discussion of this thesis, gold remains our best idea for both diversification and profit potential. Since that first article in 2017, gold is up approximately 165% while long-term U.S. government bonds are down roughly 13% including all interest payments. Gold was absolutely the better complement to stocks than bonds were during this period. We’ve also boldly predicted that gold will hit $6,000 in the next seven years if the U.S. keeps doubling down on a strategy of currency debasement. This is what a secular trend looks like—not a quick pop, not a momentum trade, but a fundamental repricing that unfolds in stages across multiple years. The early believers get rewarded first, but there’s still time for those who recognize that policy error creates opportunity, and that opportunity doesn’t always announce itself with fanfare.

    Bob Haber’s Gold Articles on Forbes (Last 7 Years):

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