Gold In The Ground About To Go From Trading At A Steep Discount To Better Prices
When gold started a strong rally recently, many commentators felt it was due to Trump’s tariff tantrum. After the weekend announcement that Trump was putting tariffs on the three largest trading partners (Canada, Mexico and China) of America, the Wall Street folks weren’t too happy and sold stocks on the news. Which quickly resulted in a backtracking as Trump put a hold on the tariffs on Canada and Mexico. Meanwhile, gold keeps going up.
Tariffs are the noise when it comes to what is happening with gold. The signal is that a large group of paper traders are asking for delivery of the gold behind those paper positions. They are causing a draining of the physical gold from London to New York.
These are not the footsteps of small players, they are the actions of big players that want physical gold. Which is effectively straining the above ground supply of gold. As they tighten the above ground gold, the next play is on the companies that hold gold in the ground.
If investors look at the gold miners, new gold mine developers and gold explorers with important discoveries, they will find that gold in the ground is being priced at the lowest valuations ever.
With the demand for physical gold from London to New York, it is becoming clearer to more investors that the supply of physical gold is very tight and getting more so. Which is giving gold a fantastic start to the year that will take it to a new series of record highs in 2025.
The powerful start to the year in gold is catching plenty of generalist investors by surprise. It is being driven by central bankers in the BRICS nations buying gold, and high net worth investors taking delivery of gold through their paper positions. Collectively, this is tightening the above ground supply of physical gold. Paving the way for 2025 to be even a better year than 2024 that saw gold go from the bottom left of the chart to the top right and set a series of record highs.
This is perfectly setting things up for below the ground gold to get priced in a much more bullish way. I’m focused on best in breed gold miners, high cost producers with balance sheets highly levered to higher gold prices, new gold mine developers with high-quality projects and gold explorers with important discoveries.
All the best,
Allan Barry Laboucan
