Is Gold $4000 Next?

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On December 29, 2024, after careful consideration and perhaps several glasses of Bowmore 15 year old scotch, these pages made the following prediction regarding gold and silver prices this year:

Little did I know when that was written that the new administration and Congress would engage in such irresponsible policy decisions and actions that this would have been considered a layup in December of 2024.

Since that time, the big question is not is this for real, but how much higher?

Tonight, I’ll attempt to take a stab at this but with great reservations as the potential for massive disinflation if not outright deflation is potentially in the offing as America continues to destabilize the global economic scene.

First, let’s review some history where plummeting US bond yields happened the last time gold skyrocketed to almost $1000 per ounce:

Coincidence?

Perhaps.

However after the FOMC cut rates in September of 2007, the gold market hesitated then took off like a Space X rocket to new all time highs.

So what happened in the past week?

Uh, yeah, this might be noteworthy.

Gold just kissed an all time high above $3,700 per ounce on a cash, not futures basis. Yet the Federal Reserve Open Market Committee just cut rates again with GDP allegedly above 2.8%, unemployment allegedly below 4.5%, and the inflation rate allegedly almost to the 2% target the Fed mandates for itself.

That’s a whole lot of alleging going on.

Perhaps this time, just like last time when the Fed screwed up and failed to recognize that the risks to the greater economy due to political and policy incompetence which almost destroyed the financial system, it might be just a tad bit more important to pay attention to the price of gold as maybe, just maybe, it is sending a message.

This time the gold price will probably have to rise above $4000 per ounce to get the attention of policymakers to make them realize that the insanity they have been promoting along with the economic fraud may well require a major reset before the markets impose it on the US economy.