Image Source: Pixabay
 

“The whole way I’m driving out, I’m thinking I’m going to pull out this freaking $100,000 nugget.”

The remark was recently made by 50-year-old Mike Hewlett, a welder from California. With gold now over $4,300 per ounce, he’s traded his hobbies of snowboarding, skiing, and dirt biking, for prospecting. He’s hoping to make big bucks.

In fact, Hewlett recently extracted a chunk of gold about half the size of his pinkie fingernail out of the dirt in the forested Mount Shasta area. “I was jumping all around like you see in cartoons and stuff,” he said. When he later weighed his find, he discovered it was worth $175.

Sometimes in life there are endeavors where even the slimmest chance of a big score is reason enough to do it. The adventure – and the hope – are what make it worthwhile, regardless of if the ultimate payoff comes or not. Prospecting the well picked over mountains of California in the year 2025 is one of those endeavors.

Nonetheless, Hewlett is not alone. Others have recently been bitten by the gold fever bug too. Cody Blanchard, for example, a sanitation worker from Sacramento, recently found pieces of quartz veined with gold that he located with a metal detector.

According to Blanchard, “The thrill of that first gold find in the wild can’t be beat, and keeps people coming back. It’s like a heroin addiction.”

But gold isn’t the only thing he’s found. Once, when prospecting with friends, Blanchard found old buttons from Levi’s jeans from the mid-1800s. They even had some old denim attached.

Picks and Shovels
 

Like past gold rushes, the real path to making money comes from selling picks and shovels. The new, 21st century gold rush also comes with 21st century online interest and influencer moneymaking opportunities.

Chris Spangler, a 39-year-old healthcare administrator for the U.S. Navy, chronicles his family’s gold hunting journey on social media. He’s up to 430,000 followers. What’s more, the social-media presence has earned his family around $30,000, well above any gold they’ve found.

Still, as gold’s price keeps rising, the accumulation of small finds and flakes become more valuable – at least in dollar terms.

This is the grand illusion of dollar debasement. It makes the price of gold appear more valuable. In reality, its value has stayed the same while the dollar’s value has declined.

This distinction is often overlooked by people who should know better. Warren Buffett calls gold a “pet rock.” He says it’s a non-productive asset that does not generate income or grow over time, unlike stocks or farmland. He prefers assets that create wealth and compound over time through earnings, dividends or rental income.

JPMorgan Chase CEO Jamie Dimon recently said gold “could easily go to $5,000 or $10,000.” He also added that, “This is one of the few times in my life it’s semi-rational to have some in your portfolio.”

If it’s semi-rational to have some gold now, when it’s over $4,300 per ounce, why wasn’t it fully rational to buy gold three years ago when it was under $1,700 per ounce? Or what about July 1999, when an ounce of gold cost just $253, was it rational to buy gold then?

Buffett and Dimon, for good reasons, prefer government money to gold. They’ve both profited more than just about anyone from their fiat money dealings.

Gold, however, reveals the flaws of a statist system that allows the wealthy to profit off the labors of everyone else, while the government trashes the currency.

Debasement or Speculation?
 

When the clock struck midnight on January 1, 2025, an ounce of gold was priced at $2,624. Today, it’s over $4,300. That’s a price increase, in dollar terms, of 64 percent. But is an ounce of gold really 64 percent more valuable.

Despite what Buffett or Dimon think, gold’s value is found in its 5,000-year track record as a reliable store of value. Over centuries and millenniums, its value stays the same. Its recent price increase represents the dollar’s loss of value.

Of course, this is mostly true most of the time. But like AI stocks or tulip bulbs, gold can periodically become an object of speculation. As its price increases, in response to mass dollar debasement, it attracts interest from speculators.

These opportunists, with an eye on quick riches and a bite from the gold fever bug, can overdo it. They can bid up and chase gold’s price higher and higher, with the expectation they can sell later for an even higher price.

The question, right now, is: How much of gold’s 64 percent increase so far this year is due to dollar devaluation and how much is due to gold speculation?

The answer is not an easy one…

Over the last several years, central banks have been some of the biggest buyers of gold. Specifically, the seizure of Russian reserve assets and the burgeoning trade war have prompted central banks to reduce their dollar reserves in exchange for gold. The World Gold Council’s 2025 Central Bank Gold Reserves Survey found:

“Central banks have accumulated over 1,000t of gold in each of the last three years, up significantly from the 400-500t average over the preceding decade. This marked acceleration in the pace of accumulation has occurred against a backdrop of geopolitical and economic uncertainty, which has clouded the outlook for reserve managers and investors alike.”

Increased buying by central banks puts an elevated floor beneath gold’s price. This would seem to be true so long as central banks are accumulating gold and not selling. With the abundance of geopolitical uncertainty, and the veracity of all currencies including the dollar being in question, it doesn’t appear central banks will start selling their gold anytime soon.

The Great Gold Fever of the 2020s
 

When looking at the price of gold relative to the Dow Jones Industrial Index (DJIA), via the Dow to gold ratio, we find that gold was most expensive in February of 1933 and January of 1980 when it took just 1.94 and 1.29 ounces of gold to buy the DJIA, respectively. Gold was cheapest in June 1999, when it took 41.98 ounces of gold to buy the DJIA.

Currently, it takes about 10.5 ounces of gold to buy the DJIA. By this metric, gold is no longer cheap, but it is also not at the extreme price one would expect during a gold fever bubble. That would require gold’s price to spike to over $10,000 per ounce, the DJIA to decline by over 60 percent, or some combination of rising gold prices and falling stock prices.

The fact is, some of gold’s price increase this year can be attributed to speculation, some can be attributed to central bank buying, and some can be attributed to dollar debasement.

That said, in the short term, gold is technically overbought. One should anticipate an abrupt, yet healthy, selloff on the order of $500 to $700 per ounce in the coming weeks.

We expect this to be similar to the selloff that occurred earlier this year between April and May, where gold fell from roughly $3,425 to $3,187 per ounce. There will then likely be a pause for several months before gold resumes its uptrend.

This will serve to filter out the weak hands and Johnny-come-latelies who bought gold for the first time in 2025 and look at it as a short-term speculation.

For gold to get to the extreme bubble stage there must be complete gold fever. We’re talking about the level of intense excitement, obsession, and greed, that hasn’t been witnessed in the gold market since the late 1970s.

Gold, no doubt, is receiving greater interest than it was a year or two ago. But the final chapters of the great gold fever of the 2020s have yet to be written.

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