Amid concerns about gold shortages and delivery delays, the gold price has soared to new record highs. Gold is up from $1,620 in late 2022 to a record high above $2,920 per ounce this week. This $1,300 move in roughly two years represents an 80% increase in the gold price. And in just the past 15 months, the price is up nearly 60%. There is definitely something brewing under the surface of the gold market that is generating significant profits for investors and I believe this is just the beginning of a much larger repricing in the precious metals market.

The chart shows the powerful uptrend over the past two years. The price is now at the top of the trend channel and the RSI is flashing overbought. Under normal circumstances, I would expect a pullback at this juncture, but as we will discuss below, current circumstances are far from normal.

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Gold Supply Shortage

There are signs of supply issues in the gold market, with reports that both London and Asian vaults have been cleaned out. Comex participants are demanding physical, potentially on fears of coming tariffs on bullion imports, which is leading to a run on the Bank of England’s vault. The Trump administration already announced tariffs on imports of steel and aluminum, so investors are speculating that gold and silver could come next.

There are long queues to withdraw from the Bank of England, with delivery delays rising from the normal time of a few days to as much as two months. London gold is trading at a discount due to the delays. Physical gold is moving from London and Asia into the United States at rapid rates. In fact, 390 metric tons of gold has been moved to COMEX, pushing their inventories up 75%. This is notable because it is the opposite of the direction gold had been flowing for several years prior. While this could just be markets looking to get the best price and avoid import tariffs, some speculate there is a more calculated strategy to onshore as much gold as possible as quickly as possible.

India’s gold supply is also being squeezed by rising US demand, leading to record-high leasing rates.

The COMEX, the world’s largest futures and options trading for metals. has seen an unprecedented 65,000 contracts delivered so far in 2025. Metals futures are mostly used for hedging and are not typically delivered. Some believe there is a run happening on physical precious metals that will result in a short squeeze and exploding prices. Of course, we hear about shortages and squeezes from gold investors nearly every year, but could this time be different?

Central bank buying of gold remains robust and China just announced that insurance funds will now be able to purchase gold. Global central bank gold buying has been absolutely massive in recent years. In fact, 2002 through 2024 witnessed central bank gold purchases that were nearly twice as much as the historical average.

Since the Great Financial Crisis, world reserve gold holdings have risen to the highest since the 1970s at 41 billion ounces.

Gold‘s global market cap to world GDP ratio reached a record 16.7% in 2024. This ratio has doubled in 10 years and quadrupled since 2001!

Macro Environment is Bullish for Gold

Interest rates have likely topped and are now trending lower. Central banks around the globe have started to reduce rates and more cuts are expected in 2025. In the United States, the Reverse Repo Facility has been significantly drained, which many speculate is a trigger for the Fed to end quantitative tightening (QT) and transition to quantitative easing (QE). This means that the money printers are about to go brrrrr again and liquidity levels are likely going to rise higher throughout the remainder of 2025.

CPI is starting to run hot again, which begs the question of whether we are going to repeat the type of runaway inflation seen in the 1970’s when the gold price went parabolic. This chart suggests the same pattern is repeating.

It is also worth noting that the dollar index has been trending lower over the past few weeks, helping to push prices for gold higher. In prior cycles, gold tends to front-run liquidity by about 12 months. I believe we are likely to see a shift from QT to QE this year and gold is the canary in the gold mine.
 

Silver Also Showing Signs of Supply Shortages

The silver borrow fee spiked higher in recent days from around 1.5% to over 10%. The cost to borrow shares of SLV has also spiked dramatically higher this week. Likewise, margin rates for gold and silver have risen sharply. Some speculate that a short squeeze could be imminent and that things are breaking behind the scenes. This is a contrarian signal. If everyone is short and there is little stock left to borrow, the risk becomes to the upside.

33 million ounces of real silver were withdrawn from SLV vaults in 2 weeks and 99% of borrowable (redeemable for physical) SLV shares are gone. In addition, SLV borrow rates have shot from 2% to 12%. According to the latest COT report the silver market is short 803 million paper ounces or around a full year of global silver production. If these shorts ever need to cover, there is not nearly enough silver around to do so. They will cash settle instead, but we are seeing increasing physical delivery demands.

The U.S. is a massive importer of silver to the tune of 80% of domestic demand. So as with gold, smart money could be moving large quantities of silver into the United States to build stockpiles, avoid tariffs and capitalize on any price premiums that may materialize.

The silver price has been rising sharply along with the gold price, although underperforming by a small degree. The RSI for silver is not overbought like gold. Silver’s price is not extended too far above the key moving averages. The interesting thing about the silver price is that while gold has been making new highs, silver still needs to rise 56% to reach prior record highs.

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Central banks may also start adding silver to their reserves. Russia released a draft budget report for 2025 that included silver reserves. With Russia having significant influence over the BRICS, we may see several other nations follow suit. A rebuilt silver strategic stockpile in the U.S. under Trump also seems plausible, either for the sovereign wealth fund or for military purposes.
 

Repricing Gold from $42 to $3,000 per Ounce

There is speculation that gold could soon be repriced from the statutory price of $42.22 per troy ounce to the current market value of nearly $3,000 per ounce. Most analysts believe such a revaluation would be bullish for the gold price.

“Within the next 12 months, we are going to monetize the asset side of the U.S. balance sheet.’ – Scott Bessent (Newly-appointed Secretary of the Treasury)

Scott Bessent had made favorable comments toward gold and seems to want it to have a bigger role in U.S. monetary policy.
 

Return of the Gold Standard?

US President Donald Trump has spoken highly of the gold standard, leading many to believe that he may attempt to put the U.S. dollar back on it. Steve Bannon, Trump’s former chief strategist, said he believes the president could ditch the US Federal Reserve and bring back the gold standard in his second term in office. More recently, the Heritage Foundation included a whole chapter on the Fed written by a former member of Trump’s 2016 transition team and suggested a return to the gold standard.

It is unclear though how this would be accomplished, as the United States only has around $700 billion worth of gold at current prices and the money supply is north of $20 trillion. Gold’s price would need to be revalued to around $90,000 per ounce or 30x the current value. Or the United States would need to acquire significantly more gold than it currently holds. Could this explain the massive movement of gold from London and Asia into the United States in recent months? Could Trump’s recent comments about maybe not having as much debt as thought also be setting up a return to a gold standard?
 

Mining Stock Leverage

It is worth noting that while mining costs are continually rising, the gold price is now rising much faster than costs. This will translate into bigger profit margins and higher share prices for quality miners with competent management.

Note the chart showing the gap between the gold price and production costs widening dramatically in recent years. We have already started to see this translate into stronger financials for mining stocks and I expect this trend to continue in the years ahead.

Barrick Gold (GOLD) just reported a 69% increase in net earnings to $2.14 billion and a 51% rise in adjusted net earnings to $2.21 billion, both significant beats. Free cash flow more than doubled. Next up is Agnico Eagle (AEM), which reports on Thursday after the close and is expected to have free cash flow of around $800M for Q4. The consensus EPS Estimate is $1.17 (+105.3% Y/Y) and the consensus Revenue Estimate is $2.27B (+29.0% Y/Y).

Another way to view this fundamental improvement for gold miners is by looking at cash flow per share. This metric is rising rapidly and is now reaching the highest level in 13 years.   This trend in the mining sector bears a resemblance to what happened in the energy industry—where skepticism persisted for years, with many investors losing faith in its profitability. Of course, that was precisely the wrong time to hold such a view, as energy companies went on to become highly profitable and efficient. A similar transformation now appears to be unfolding in the mining sector.

Gold mining stocks have been in a downtrend relative to gold for a few decades, but this is starting to change. While gold is up 8.5% in the past month, the VanEck Gold Miners ETF (GDX) is up 19.3% for leverage of 2.3x. I think we are going to see a continuation of this trend throughout 2025, with mining stocks significantly outperforming the metals. In my view, this is an excellent time to start increasing exposure to mining stocks ahead of earnings that will continue to surprise to the upside.
 

Summary

Something significant is happening in the gold and silver markets at the current time. Inventory is getting cleaned out in London, Asia and India, with long delays and discounted pricing as a result. Industry insiders are reporting a gold shortage with increased difficult to source the metal. Physical gold is moving to the United States at an unprecedented rate. Central banks around the globe are showing a fierce appetite for physical gold and there has been a growing trend in recent years of gold repatriation. Sovereign nations are wanting to hold their gold domestically and more recently there appears to be a rush to acquire as much physical gold and silver as possible.

There is not a clear view of what exactly is driving these moves, but recent moves by the Trump administration are likely a key driver. There is speculation that the gold on the balance sheet of the United States could be revalued or even that the new administration may consider returning a gold standard where the dollar is at least partially backed by gold. An audit of the gold reserves or even the Federal Reserve have also been discussed. The massive paper shorts against gold and silver could finally be squeezed by these actions, creating a massive upward movement in prices for gold and silver.

Lastly, gold and silver mining stocks are significantly undervalued by historic standards. But in recent months we are starting to see significant outperformance by mining stocks, which could be the start of a much larger leveraged move. With gold and silver prices rising much faster than costs, mining companies are seeing expanding margins, rising profits and exploding levels of free cash flow. I expect this trend to continue and accelerate in the months ahead, although the technical chart is suggesting that gold is overbought in the near-term.

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