Category: investing

Goofy Jobs Numbers Suggest One MORE Reason Why Hedging Is So Important

President Trump apparently thinks the July nonfarm payroll report is proof that the federal government’s Bureau of Labor Statistics (BLS) is out to get him.

In the runup to the report’s release, analysts were expecting to find that the economy added slightly more than 100,000 jobs last month. That’s not what happened, according to the numbers. Instead, a substantially fewer 73,000 jobs were picked up. Even more notable were the massive downward revisions to the initial growth estimates from May and June. Instead of adding 144,000 jobs in May and 147,000 jobs in June, the BLS jobs report said that, in fact, a meager 19,000 and 14,000 jobs were gained in those months.

The president had plenty to say in the wake of the report’s publication, including on his very favorite social media outlet, Truth Social:

“In my opinion, today’s Jobs Numbers were RIGGED in order to make the Republicans, and ME, look bad — Just like when they had three great days around the 2024 Presidential Election, and then, those numbers were ‘taken away’ on November 15, 2024, right after the Election, when the Jobs Numbers were massively revised DOWNWARD, making a correction of over 818,000 Jobs — A TOTAL SCAM. Jerome ‘Too Late’ Powell is no better! But, the good news is, our Country is doing GREAT!”

Trump was so unhappy with the report, in fact, that he moved quickly to fire BLS Commissioner Erika McEntarfer – a Biden appointee – and replace her with E.J. Antoni, chief economist at The Heritage Foundation, a conservative think tank.

Observers on both sides of the political dividing line say there’s a dearth of evidence to support the president’s bold contention that jobs numbers have been “rigged” to make him look bad.

Additionally, Trump’s Truth Social post is incorrect about the timing of the 818,000-job downward revision. The revision – which applied to the 12-month period ended March 2024 – was announced by the BLS in a report published last August…months before the general election.

But even if it’s the case that employment data isn’t being willfully manipulated in an effort to embarrass the president politically, the regular and substantial revisions to initially published numbers make clear that employment data is growing increasingly unreliable.

CNBC’s Jeff Cox: BLS “Using Very Antiquated Measures to Gather” Data

Last week, CNBC’s ace economics reporter Jeff Cox briefly appeared on his network’s Worldwide Exchange show to talk about the deficiencies in data collection methods that many say are the real reason for the ever-wonkier BLS numbers.

Referring to the survey process used to gather the information and numbers that ultimately become official BLS data, Cox said:

“Getting the information has been more and more difficult for the BLS because people just aren’t responding to these things anymore. And the BLS is using very antiquated analog measures to gather this. There’s a lot of pressure on them to modernize how they’re how they’re collecting data. They’re still calling people up on the phone and using paper surveys.”

Wall Street Journal: BLS Jobs Survey Response Rate Has Dropped to 43% from 60% Since Pandemic

In a recent article on the July jobs report, the Wall Street Journal noted that survey response rates – which weren’t exactly stellar before the global health crisis – have fallen significantly since.

“The survey’s overall response rate has declined to 43% from 60% before the pandemic,” the Journal explained, “and small businesses are less likely than bigger ones to respond.”

By the way…the matter of reporting rates among small businesses being particularly bad is no minor issue; small businesses in the U.S. employ nearly half of the nation’s private-sector workers.

And what happens when data is missing?

Rather than discard an incomplete response, the BLS instead imputes the missing data, which means completing the response using values generated by models designed to generate substitute numbers.

Heavy Use of Imputation to Complete Missing Data Raises Serious Questions About Report Accuracy

And as survey response rates decline, the use of imputation is growing. As it does, concerns about the bottom-line accuracy of these high-profile reports are growing, as well.

“Statistics (BLS) is having a lot of trouble with its data collection,” Cox said, referring to the BLS. “It’s having to impute more and more data into these surveys.”

“It’s really raising a lot of issues in terms of, you know, whether you can trust this data,” he added.

In a recent interview with Fox News Digital prior to his being nominated as the new BLS commissioner, E.J. Antoni succinctly summarized the problem with untrustworthy economic data, rhetorically asking:

“How on earth are businesses supposed to plan – or how is the Fed supposed to conduct monetary policy – when they don’t know how many jobs are being added or lost in our economy?”

And how on earth are investors supposed to proceed?

There’s likely nothing nefarious going on with the jobs reports. But just because the reasons for data inaccuracies may be innocent, that doesn’t change the macro risks to investor portfolios which arise from those inaccuracies.

Unreliable Economic Data Is Yet Another Example of Pervasive Uncertainty

We live in an era of unprecedented uncertainty. Part of what makes it unprecedented is the multitude of ways in which it now exists and threatens the global economic order…including the stability of financial markets.

War, national fiscal profligacy, unstable trade relationships and de-dollarization are among the most obvious drivers of uncertainty – but they are by no means its only drivers.

Inaccurate, difficult-to-trust economic data is unquestionably a source of that uncertainty, too’ and one more compelling reason why it’s so critical in this day and age for investors to ensure their portfolios are smartly hedged and effectively diversified.

This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

What Does Gold’s Epic Rise in the Face of Higher Rates & Thriving Markets Tell Us?

As you likely know, gold reached a new intraday high last Friday, surpassing the previous high of $3,500 reached in April and topping out at $3,534 (continuous contract) per ounce.

The new high came on news that imports of gold bars would be subject to tariffs. Shortly thereafter, however, the White House characterized the report as “misinformation,” with President Trump confirming on Monday via Truth Social that “gold will not be tariffed.”

By Wednesday of this week, gold had retreated about $130 from its latest record high. But that means the metal nevertheless remains relatively close to its highest-ever price.

That resilience is worth a closer look. Since the beginning of 2022, the price of gold has climbed roughly 85%; since January of 2024, gold has achieved new all-time highs nearly 70 separate times…a remarkable record of achievement. But what makes it even more noteworthy is that gold’s powerful push higher in recent years has come amid circumstances universally considered to be adversarial to the metal’s success.

Among the most prominent of those circumstances is the sharp rise in interest rates during 2022 and 2023, as well as the persistence of those higher rates to this day.

Gold Couldn’t Be Contained by the Fastest Cycle of Rate Hikes in 40 Years  

Over a strikingly short span of time…from March 2022 through July 2023…the Federal Reserve raised the benchmark federal funds rate 11 times and by 525 basis points in its effort to rein in runaway price pressures. The explicit increase in nominal interest rates combined with the rates of inflation over this period resulted in an overall increase in real rates over this period, as well – an increase that has remained largely intact to this day.

Despite this increase, however, rate-sensitive gold has managed to rise significantly over the last three years, as I mentioned just a minute ago.

But this epic surge by gold has taken place in the company of not only the fastest nominal rate increase in four decades…but also the record-breaking momentum demonstrated recently by equities.

Record Stocks? Gold Has Outperformed All Major U.S. Indexes So Far in 2025

Typically, periods that see risk assets characterized by great strength are oftentimes hostile to gold. There’s no great mystery as to why; when investors are confident in the near-term growth potential of the economy and financial markets, risk-off assets such as gold tend to fall in disfavor.

Yet during this most recent wave of strength among equities, gold has managed to remain exceptionally resilient, largely holding on to all of the gains it’s made during this metals bull market even as it has been outperformed by the three major U.S. indexes over the past few months.

Indeed, despite a recent surge that has seen the S&P 500 and Nasdaq Composite achieve new all-time highs, gold’s 28% rise since the beginning of January still far outdistances the increases logged so far this year by the S&P and Nasdaq as well as the Dow Jones Industrial Average.

So, what gives? How has gold managed to keep its strength despite the onslaught of rate- and market-based Kryptonite?

Uncertainty: The Biggest and Baddest Influence Over Gold Right Now

Simple. In a nutshell, the impact of traditional gold headwinds like higher rates and surging markets is being more than offset by a traditional gold tailwind that’s blown with great strength over the last several years: substantial economic, fiscal and geopolitical uncertainty.

It’s an uncertainty fueled by a multitude of drivers, including:

  • an ever-worsening U.S. fiscal trajectory;
  • ongoing deglobalization trends expected to generate an array of consequences, including higher structural inflation on a global scale and a lasting uptick in international tensions;
  • America’s continued and aggressive use of dollar-based economic sanctions;
  • continued related efforts at de-dollarization by many of the world’s central banks;
  • and an anticipated increase in social and political unrest around the world.

The list could be a good deal longer – but you get the picture.

It’s not really the case, then, that there’s been a paradigm shift in the way gold reacts to higher rates and robust markets; those conditions always will tend to act as hinderances to gold. But remember that gold is subject to being moved in one direction or another by multiple influences. Each of the headwinds and tailwinds discussed here is every bit as relevant to gold today as it’s ever been. It’s just that comprehensive and multifaceted uncertainty has proved to be such an acutely strong driver of gold in recent years that the metal’s properties as a safe–haven asset have been more vigorously energized than its properties as a monetary asset (such as rate sensitivity).

The safe-haven properties of gold that have provided the metal with so much energy are expected to remain highly optimized as worrisome uncertainty continues to be a central feature of the global order. Should that projection, in fact, be realized, the investment terrain is likely to remain fertile for gold through at least the foreseeable future.  

This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

Wealthy Investors Join Worldwide Gold Rush

Despite concerns that tariff distress might have a lasting impact on the appeal of U.S. exceptionalism, the stock market has powered its way to new all-time highs in recent weeks while the CBOE Volatility Index hovers not far above its 52-week low.

And yet, even as risk assets are putting on a hell of a show, gold – perhaps the ultimate risk-off asset – remains as resilient as ever, reaching another new all-time high (intraday) of $3,534 on Friday.

That gold and equities are at or near their respective record levels at the same time says a great deal about the uniqueness of the current investment environment, one that appears to be characterized by nearly equal parts optimism and caution.

Among the most cautious investors, it seems, are the world’s central banks, which have acquired gold at or near record demand levels since 2022. Central banks have been buying so much gold, in fact, that it’s now the second-largest reserve asset.

Especially revealing are the most prominent reasons why central banks are buying all this gold. According to the World Gold Council’s 2025 Central Bank Gold Reserves Survey, the institutions said that “gold’s performance during times of crisis” is the most relevant factor in their decision to hold the metal. Similarly, during the assembly of its 2025 Global Sovereign Asset Management Study, investment management giant Invesco found that gold’s potential to serve as a “safe haven during financial instability” was the most important factor “to ongoing gold acquisition” by central banks.

And now it appears the world’s wealthiest individual investors are taking a page or two right out of central banks’ hedging playbook.

High-Net-Worth Investors Favor Less-Complex Gold as a Hedge; “Easier [for Them) to Get Their Head Around”

According to a recent report by HSBC, affluent investors raised their gold allocations by 120% over the past year. Edmund Shing, global chief investment officer at BNP Paribas Wealth Management, recently told CNBC that overseas family offices currently have allocations as high as 10% in physical gold or gold-backed investments.

For his part, Stephen Jury, a vice chairman of J.P. Morgan Private Bank, says he’s been seeing a significant increase in the number of U.S.–based high-net-worth clients who are eschewing more complex hedge strategies in favor of gold, telling CNBC investing in the metal is something that’s “easier [for them] to get their head around.”

High-net-worth investors both here and abroad not only are demonstrating their growing distrust of the prevailing global economic order by raising their allocations to gold; they’re demonstrating it, as well, by storing their metals in highly secure and geopolitically neutral strategic locations.

Remote Vaulting Popular Among Well-Heeled With a “Lower Trust in Government or Financial Systems”

“Our clients have lower trust in government or financial systems or are trying to build a backup or insurance plan by holding precious metals outside of the banking system in a neutral and safe country,” says Ludwig Karl, COO at Swiss Gold Safe, a company that provides specialty vaulting services in Switzerland and the Principality of Liechtenstein.

It’s worth noting that like their gold-buying counterparts at the world’s central banks, the high-net-worth investors now stockpiling gold aren’t purchasing it as a shorter-term “play” or in anticipation of prospective metals-favorable monetary policy moves in the months ahead. To be sure, investors at any level would welcome added positive momentum that might be catalyzed by a reduction in interest rates. But to astute gold investors today, beneficial price influences generated by developments in trade and/or monetary policy are the peas and carrots on the plate – not the steak.

The steak, in this case, is represented by the comprehensive, multidimensional economic, fiscal and geopolitical uncertainty expected to intensify through the foreseeable future amid an ongoing transition from global unipolarity to multipolarity as well as a consequential move toward greater deglobalization. Given this, gold’s most structural drivers – the soundest, most foundational reasons for owning the metal – will remain intact for at least years to come. The world’s central banks…and now its wealthiest individual investors…clearly have made note of this likelihood. Others might be well advised to do the same.  

This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

Economic Week in Review: Markets Sink on Shocking July Jobs Report, FOMC Sees First “Double Dissent in Decades, Inflation Accelerates, and More

Hello, my friends!

Well, it was yet another “week that was” in the U.S. economy, with all kinds of developments and data…including unwelcome jobs numbers and renewed tariff distress…energizing the news cycle and sending markets reeling.

By the time Friday’s trading session ended, each of the three major averages had lost significant ground on the week. The Dow Jones Industrial Average suffered the biggest drop, tumbling 2.9% to finish at 43,588.58…more than 1,200 points lower than where it was at Monday’s open. The broader S&P 500 and tech-heavy Nasdaq Composite fell nearly as hard, ending the week down 2.4% and 2.2%, respectively.

The indexes suffered much of their damage on Friday in the wake of a much-worse-than-expected July jobs report. The Labor Department not only revealed that job growth last month fell far short of consensus expectations…but also announced significant downward revisions to the jobs numbers from May and June. I’ll be discussing the employment data in greater detail shortly.

Putting additional downward pressure on markets this week was the White House’s updated reciprocal tariff regime, now set to go into effect August 7. The revised duties range from 10% to 41% and are poised to be levied against nearly 70 countries.

This, in fact, turned out to be one of the busiest weeks for the economy in quite a while. Let’s take a look beyond the headlines at just some of what made it so hectic.

Fed Policy Meeting Sees Its First Multiple Dissenting Votes in Decades

One of the week’s biggest economic headlines was generated by the Federal Reserve’s fifth policymaking meeting of the year…but it wasn’t the actual decision of the Federal Open Market Committee, which, to no one’s surprise, left interest rates unchanged at the target range of 4.25% to 4.5%.

Instead, it was the casting of “No” votes on that decision by Federal Reserve Governors Michelle Bowman and Christopher Waller, making it the first time in more than 30 years that multiple dissenting votes were cast against a rate decision. Both Bowman and Waller have said they think inflation is sufficiently under control but that the labor market is in peril, and the pair believes the time has come for the central bank to resume easing.

They were, of course, outnumbered 9-2 by the other members of the FOMC, who…as of this past Wednesday…were more concerned about the impacts that tariff-induced inflation could have on prices than they were about any looming weakness in the economy.

“Our obligation is to keep longer term inflation expectations well anchored and to prevent a one-time increase in the price level from becoming an ongoing inflation problem,” Fed Chair Jerome Powell said in the post-meeting press conference.

Powell’s noncommittal stance on the subject of rate cuts in the near term prompted traders to lower their expectations of a reduction in September from 64% to 46%. But two days later, those odds soared again with the release of the government’s nonfarm payrolls report for July, the contents of which seemed to validate the very concerns of dissenting Fed officials Bowman and Waller.

Job Growth Sinks in July…and, as It Turns Out, Positively Tanked in May and June

As I noted earlier, the government’s nonfarm payrolls report for July proved to be an especially large – and especially unpleasant – catalyst of market activity this week.

The primary headline, that the economy added a measly 73,000 jobs in July and the unemployment rate rose to 4.2%, was bad enough. But to make matters (much) worse, the Bureau of Labor Statistics (BLS) revised down the May and June job-growth numbers by a stunning 258,000, total.

According to BLS revisions, just 19,000 jobs – not the previously stated 144,000 – were picked up by the economy in May, while June saw a mere 14,000 jobs added…far below the 147,000 that the government originally said were gained.

Beyond the immediate impact to financial markets, which I discussed earlier, the report suddenly put a September rate cut back in the center of the table, just one day after PCE inflation readings seemed to push it further away.

“This is a gamechanger jobs report,” Heather Long, chief economist at Navy Federal Credit Union, told CNBC. “The labor market is deteriorating quickly.”

Game-changing, indeed. By the weekend, traders had raised the odds of a September rate cut up to 80%.

And that’s not all. Concluding that the wonky jobs data was a sign of either gross ineptitude or politically motivated malfeasance, President Trump took the extraordinary step on Friday to fire BLS Commissioner Erika McEntarfer, who had been appointed to the position in 2023 and confirmed by the Senate in January 2024.

Announcing the dramatic change on Truth Social, President Trump wrote:

“We need accurate Jobs Numbers. I have directed my Team to fire this Biden Political Appointee, IMMEDIATELY. She will be replaced with someone much more competent and qualified.”

Fed’s Favorite Inflation Metric Sped Up Across the Board in June

Sandwiched in between Wednesday’s Fed rate decision and Friday’s jobs report was the release of a key inflation gauge for June that at the TIME seemed to validate Fed Chair Powell’s “wait-and-see” approach to monetary policy.

On Thursday, the Commerce Department reported that the personal consumption expenditures (PCE) price index…known to be the Fed’s preferred inflation measure because it better reflects changes in consumer behavior…accelerated on both monthly and annual bases last month.

According to the data, headline PCE increased 0.3% for the month, up from May’s 0.1% pace. Year over year, PCE in June climbed 2.6%, speeding up from 2.3% in May.

As for core PCE, which strips out more volatile food and energy prices, that also accelerated in June. The monthly rate came in at 0.3%, a tenth of a percentage point faster than in May, while annual core PCE rose 2.8% in June…also a tenth of a point faster than the month before.

In their assessment of the data, economists seem to be largely on Powell’s side in the tug-of-war between the Fed and the White House over what should happen with interest rates as tariff impacts continue to work their way through the economy. Following the release of the PCE numbers for June, Michael Pearce, deputy chief U.S. economist at Oxford Economics, declared, “Tariffs are beginning to make their mark on the inflation data”; and senior economist Sal Guatieri of BMO Capital Markets informed clients, “We will need to see either calmer inflation figures or weaker growth or softer job conditions to spur a rate cut on Sept. 17.”

As we know from our previous discussion of the jobs report which came out on Friday, glaring signs of “softer job conditions” now are in evidence. Does that mean September rate cuts are suddenly a done deal? Not necessarily. But if the August nonfarm payrolls report…which comes out September 5…telegraphs still more epic weakness in the labor market, it’s hard to imagine the Fed again will refrain from cutting rates.

Consumer Confidence Ticked Up in July…but Americans Remain Anxious About Tariffs, Job Market

Finally this week, a widely followed gauge of consumer sentiment suggested that Americans recently have grown a little more upbeat in their consideration of the country’s economic outlook…but remain anxious about what lies ahead for the labor market as well as how tariff impacts ultimately might manifest.

On Tuesday, The Conference Board reported that its proprietary Consumer Confidence Index came in at a reading of 97.2 last month, two points higher than the 95.2 posted in June. Despite the improvement, however, the July number represents the fifth consecutive month the index landed below the neutral reading of 100. Measures below 100 imply greater pessimism, overall, among Americans.

The story was largely the same with the Expectations Index, a component measure of the headline metric that evaluates consumers’ six-month outlook for the economy.

In July, the Expectations Index climbed 4.5 points to come in at 74.4. Despite that solid improvement, however, last month’s reading left the subindex below the critical level of 80, which implies that a recession could lie ahead.

In a statement, Stephanie Guichard, senior economist at The Conference Board, addressed two of the more prominent reasons why the metrics remain at less-than-optimal levels.

“Consumers’ write-in responses showed that tariffs remained top of mind and were mostly associated with concerns that they would lead to higher prices,” Guichard said. “In addition, references to high prices and inflation rose in July.”

Guichard also noted, “Their [consumers’] appraisal of current job availability weakened for the seventh consecutive month, reaching its lowest level since March 2021. Notably, 18.9% of consumers indicated that jobs were hard to get in July, up from 14.5% in January.”

That’s it for now; have a marvelous weekend!

This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

State Street Analyst: Gold’s Legitimacy Is Underscored by Its Resilience

Much has been made of the numerous record highs reached by gold in recent years. It doesn’t take a genius to understand why. From January 2024 through present, gold has climbed roughly 63%, reaching record highs nearly 70 times along the way, to include at one point briefly touching $3,500 per ounce.

But according to one highly respected analyst, the metal’s more compelling behavior, in terms of price action, is just how stubborn it has been in holding on to its remarkable gains.

To be sure, Aakash Doshi, head of gold strategy at State Street Investment Management and a former head of commodities research at Citi, sees even more fresh all-time highs in gold’s near-term future. Doshi recently told Kitco News that he expects to see the metal sitting on the doorstep of $4,000 by the end of the year.

But as optimistic as Doshi is about the metal’s prospects for continued growth, he believes it’s gold’s impressive resilience…its capacity to remain well-supported and not suffer meaningful corrections right now…that investors should find most appealing – and revealing.

Doshi: Ask Not Why Gold Isn’t at $4,000; Ask Why It’s Not Dropped Below $3,000

Since reaching $3,500 in April, gold’s upward trajectory has stalled amid what’s become a period of price consolidation. But Doshi contends that the fact gold has done no worse than “stall” given the current market backdrop is especially revealing – and something of which investors should take notice.

“Instead of asking why gold isn’t at $4,000 already, given it’s already risen 26% (this year),” Doshi said, “we maybe should be asking why gold hasn’t actually fallen below $3,000, even though equities are at all-time highs and volatility is at its lowest level this year.”

Historically casual observers of the asset who’ve paid it much more attention recently may well have been motivated to do so by its headline-grabbing price jumps. Although understandable, Doshi contends that focusing exclusively on upside price potential may prompt some to look past the metal’s underlying strength…and the message it’s sending about both gold and the macroeconomy.

“[Gold investors] are waiting for the next catalyst, but there are some other structural factors in play that support buying on the dips,” Doshi said.

Among those factors, Doshi believes, are concerns about the nation’s ever worsening fiscal trajectory as well as the apparent intractability of higher inflation. Indeed, the most recent data that emerged from the PCE price index showed inflation accelerating across the board (monthly and annually, all-items and core) in June.

Gold’s Durability Can Be the Real Key to Its Upside Price Potential

Classic safe-haven assets such as gold often rely on acute uncertainty-based catalysts – such as a wave of trade policy upheaval, good news on interest rates or the outbreak of sudden nation-state military conflict – for continued dynamic growth, particularly after what already has been an extended period of dramatic price appreciation. And when those assets, bereft of any such catalysts, appear to start treading water, it’s tempting to consider that their time has passed for now.

But I would contend, as Aakash Doshi suggests, that a truer measure of gold’s longer-term viability is its capacity to retain the gains already made, particularly when conditions favorable to risk assets emerge. That kind of durability – in evidence right now – telegraphs strength at the most foundational level, fueled by the purchase activity of the largest institutional investors, both public and private, which have the most to lose when economic, fiscal and geopolitical risks become realized. And it ultimately serves, in my opinion, as the best indicator…more than any single especially spirited driver…of gold’s potential to continue reaching for records.

This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

“We Are at the Point of No Return”; Hedge Fund Legend Ray Dalio Says Gold – and Maybe Bitcoin – Is All That’s Going to Save You Now

America’s gross federal debt is now more than $37 trillion. The annual budget deficit is projected to average – average – well over $2 trillion through 2035. And in just nine years, the gross federal debt is forecast to be 50% higher than current levels while debt held by the public is forecast to reach above 120% of GDP.

And in the assessment of hedge fund legend Ray Dalio, these worrisome numbers are about all that he needs to hear to believe gold…and perhaps Bitcoin…now are exceedingly critical portfolio assets.

Dalio is the founder of Bridgewater Associates, the world’s largest hedge fund, and a longtime critic of Uncle Sam’s fiscal profligacy; a profligacy the money manager thinks is poised to doom investors who refrain from adding meaningful quantities of key alternative assets to their holdings.

This past weekend, Dalio was a guest on CNBC’s Master Investor Podcast, and used the opportunity of his appearance to issue yet another warning about the nation’s unsustainable fiscal trajectory.

“It’s spending 40% more than it takes in,” Dalio said of the government, “and it can’t really cut spending because so much of it [spending] is fixed.”

In other words, warned Dalio:

“We are at the point of no return.”

America’s Fiscal Ills Put the Nation at Risk of Suffering “an Economic Heart Attack”

Dalio likened America’s distressed fiscal structure to a failing human circulatory system…and suggested the economy is likely to suffer an eventuality every bit as dire:

“The credit system is like a circulatory system that brings nutrients—buying power—to different parts of the economy. If that buying power is used to generate income, then the income services the debt, and it’s a healthy system. But when debts, debt service payments, and interest rates rise, they begin to crowd out other spending—like plaque in the circulatory system—creating a problem akin to an economic heart attack.”

And according to Dalio, it is not just the U.S. that’s facing a fiscal flatline…but all Western economies.

“Just like in the ’70s or the ’30s, they will all tend to go down together. We’ll pay attention to their relative movements, but they will all decline in value—relative not to fiat currencies, but to hard currencies. And that hard currency is gold,” Dalio said.

Gold. The 5,000-year-old medium of exchange and store of value to which all other currencies are compared. And, in the assessment of Dalio, the one true life preserver for investors he believes are destined to one day find their portfolios drowning in a sea of government debt.

It’s no secret that central banks have for years been putting a great deal of faith in gold’s potential to hedge, diversify and otherwise protect reserves. Central banks have been net purchasers of gold since the financial crisis (2010) and have been stockpiling the metal at or near record pace since 2022.

Debasement-Fighting Assets Should Make Up 15% of Portfolios, Says Dalio

Noting that gold overtook the euro earlier in 2025 to become the second-largest reserve currency, Dalio suggested that investors might do well to take a page straight from the more recent editions of the central bank handbook and allocate 15% of their portfolios to the yellow metal.

Notably, the storied money manager also raised the possibility of Bitcoin serving as a useful defense against fiscal instability. But Dalio clarified that while he owns both assets, it’s gold that he believes may serve as the more reliable hedge.

“I strongly prefer gold to Bitcoin,” Dalio clarified, “but that’s up to you.”

The overriding issue, he insisted, is making sure that one has a hedge against “the devaluation of money.”

The overwhelmingly likely prospect is that developed-market fiat currencies the world over now are in a circumstance of permanent devaluation – at least until the global economy is overcome by an explicit debt crisis. Which means any effective hedges against that condition…possibly crypto, but certainly gold…are well-positioned to thrive on a structural basis through at least the foreseeable future.

This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

Economic Week in Review: Financial Markets Shine, Housing Continues to Sputter, ECB Pauses, and More

Hello, my friends!

U.S. financial markets enjoyed another banner week, powered by robust earnings and growing optimism on the trade front.

By the toll of Friday’s closing bell on Wall Street, the Dow Jones Industrial had risen 1.3% on the week, while the tech-oriented Nasdaq Composite and S&P 500 had climbed 1% and 1.5%, respectively. The biggest catalyst of the upward momentum was another wave of strong earnings reports, including those of Alphabet (GOOGL) and Verizon (VZ). According to FactSet data, well over 80% of the 169 S&P 500 companies which have reported earnings so far this season have beaten the consensus estimates.

Another positive influence on markets last week is growing optimism over the outlook for trade relations. The White House announced a “massive” trade agreement with Japan, the structure of a new trade deal with Indonesia, and the expectation that a spate of new trade accords – including one with the European Union – will be in place before the August 1 tariff deadline.

And as for the economic week’s other notable news and numbers…

Growth in S&P Global’s Flash Composite PMI Belies Weakness in Manufacturing Sector

Among the week’s most prominent data reports was the release on Thursday of the July Flash U.S. Purchasing Managers’ Indexes from S&P Global. “Flash” PMIs are advance estimates of the final numbers that come out at the end of each month and are calculated using roughly 85% to 90% of the survey responses.

As for this month’s numbers, the Flash U.S. Composite PMI, which is a weighted average of the Manufacturing and Services PMIs, ticked up 1.7 points to land at 54.6, the highest reading for the overall index since December.

But this month’s devil was in the details, as the saying goes. While Flash Services PMI energized much of the growth in the overall metric, jumping 2.3 points this month to come in at a seven-month high of 55.2…Manufacturing PMI fell nearly 3.5 points to 49.5. Not only is that a seven-month low, but it marks the first time this year that Manufacturing PMI fell below the key threshold of 50 to land in contraction territory.

In a statement, Chris Williamson, chief business economist at S&P Global Market Intelligence, telegraphed his doubts about continued increases in Composite PMI, saying:

“Whether this growth can be sustained is by no means assured. Growth was worryingly uneven and overly reliant on the services economy as manufacturing business conditions deteriorated for the first time this year, the latter linked to a fading boost from tariff front-running.”

“Business confidence about the year ahead has also deteriorated in both manufacturing and services to one of the lowest levels seen over the past two-and-a-half years,” Williamson added. “Companies cite ongoing concerns over the impact of government policies, notably in terms of both tariffs and cuts to federal spending.”

Big Drop in Civilian Aircraft Orders Drags Down June’s Headline Durable Goods Metric

In other news this week, the Census Bureau reported on Friday that orders for durable goods tumbled 9.3% in June, a sharp turnaround from the 16.5% gain posted in May.

The big drop last month didn’t set off any alarm bells on Wall Street, however. One reason is that as sizable as the decline was, it still was less than the 11.1% drop that economists were expecting.

But the bigger reason no one seemed to sweat the decline is because most of it was attributed to significant weakness last month in the transportation sector, which is notoriously volatile and not viewed as representative of business behavior in the underlying economy.

By the numbers, new orders for transportation equipment, overall, fell 22.4% in June following a 48.5% rise in May. Much of that decline was triggered by a whopping 51.8% drop in orders for civilian aircraft and parts.

So, just how much can transportation activity impact the headline durable goods number? Excluding transportation, which is another way analysts look at the data when they want to get a better sense of fundamental business investment, durable goods orders increased 0.2% last month.

In fact, Ali Jaffrey, economist at CIBC Economics, saw much to like in the June report, saying it’s “a testament to the resilience of the U.S. economy in the face of significant tariffs and uncertainty.”

But other observers still expect tariffs to negatively impact these numbers later this year, with Wells Fargo economist Sam Bullard making this projection:

“We look for business equipment investment to decline in the second half of the year as survey details still point to worries about tariff impact, high input costs and potential supply chain disruption.”

Sales of New and Existing Homes Disappoint in June as Mortgage Rates Remain a Distinct Challenge

This week also saw the release of two widely followed housing metrics, both of which disappointed the expectations of economists and together reinforced the narrative that little in the way of good news is likely forthcoming in the real estate market until there’s a meaningful drop in interest rates.

On Wednesday, the National Association of Realtors (NAR) announced that sales of existing homes fell 2.7% month over month in June to land at a seasonally adjusted annualized total of 3.93 million units. Analysts had expected to see a more modest decline of 0.7% last month.

Currently, sales of previously owned homes remain stuck at their lowest levels in roughly 30 years.

Then, on Friday, the Census Bureau doubled down on the bad news in the housing sector, reporting that sales of new single-family homes increased last month by an amount well short of what economists had projected.  

According to the data, new-home sales rose just 0.6% in June to come in at a seasonally adjusted annualized rate of 627,000 units…just 4,000 more than the number for May. Heading into the week, analysts were looking for a jump to 650,000 units, which would have translated to an increase of more than 4% from May’s 623,000.

Economists pointed to mortgage rates that remain stuck at just under 7% as the principal culprit in the disappointing sales activity throughout the U.S. housing market.

“High mortgage rates are causing home sales to remain stuck at cyclical lows,” said Lawrence Yun, chief economist for the NAR, this week. “If the average mortgage rates were to decline to 6%, our scenario analysis suggests an additional 160,000 renters becoming first-time homeowners and elevated sales activity from existing homeowners.”

How soon we see rates down to 6% is anybody’s guess, however. Mortgage rates are largely a function of Treasury yields, and those are likely to remain elevated as uncertainty about tariff impacts continues to hang over the economy.  

ECB Leaves Rates Unchanged as Inflation Cooperates and Trade Uncertainty Persists

Finally this week, the European Central Bank took a pass on making any changes to interest rates, the first time that central bankers in the Eurozone have stood fast on monetary policy this year.

Thursday’s decision to leave rates at 2% was made largely because of growing uncertainty at the ECB over what lies ahead for the economy as trade negotiations continue between the U.S. and the European Union.

The ECB reduced rates at each of its four previous meetings this year, bringing the deposit facility rate from 3% in January to 2% in June. With annual inflation in the Eurozone coming in right at 2% last month, observers already expected the ECB to leave rates unchanged. But with the possibility that the trade relationship between the U.S. and the EU could grow more contentious in the near term…and include a 15% baseline tariff rate on imports from across the pond as well as retaliatory tariffs imposed by the EU…officials were all too happy to take a “wait-and-see” approach to rate policy this time around.

“The environment remains exceptionally uncertain, especially because of trade disputes,” the ECB said in a statement.

Indeed, numerous economists now expect the ECB to take no further action on interest rates for the foreseeable future, not only out of deference to persistent tariff uncertainty but also because inflation has declined back to target.  

“We are revising our forecasts and no longer expect a final cut of the ECB deposit rate to 1.75% at the September meeting,” Commerzbank economist Jörg Krämer said. “Now expect an unchanged deposit rate of 2.0% for the rest of this year and for 2026.”

That’s it for now; have a great weekend!

This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

Invesco Survey Provides More Evidence That Vigorous Central Bank Gold Demand May Be Here to Stay

Amid growing speculation that the most feared outcomes of White House tariff policy may not come to pass, after all, some analysts are suggesting gold may be nearing the end of its epic bull run.

Indeed, a number of observers have gone on the record with projections that the price of gold could decline as much as 30% from current levels.

It very well could be the case that gold’s more recent and acutely dynamic catalysts are in the throes of weakening. But even if that is so – and it’s too soon to know, for sure – it remains difficult to argue against a continued structural bull case for gold…one that’s been exceptionally well-supported in recent years by central bank demand.

And as the freshly published 2025 Invesco Global Sovereign Asset Management Study makes clear, it’s a demand that’s poised to continue as central banks continue to adjust for the unprecedented levels of multidimensional uncertainty that now characterize the economic and geopolitical landscape.

Report: “Temporary Post-Pandemic Disruptions” Now Permanent

Detailing the macro components of the worldwide economic paradigm shift that’s prompting central banks to rethink how they manage their reserves, the report says, in part:

“What many had hoped were temporary post-pandemic disruptions have crystalized into enduring structural features. Geopolitical tensions, persistent inflation pressures, and fragmented global trade patterns are now recognized as permanent elements shaping long-term investment strategy rather than cyclical headwinds.”

And one way in which the overseers of the world’s economies are responding to this array of structural challenges is by making greater use of gold, an asset that’s enjoyed universal regard as an apolitical, counterparty-free medium of exchange and store of value for millennia.

“Gold is a diversifier,” one Latin America central banker crowed to Invesco, “but it’s also a form of protection and a backstop if all else fails.”

Nearly Half of Central Banks Expect Their Own Gold Reserves to Rise Over the Next Three Years

This affection for gold among the world’s most prominent and influential banking institutions is pervasive. According to the survey data, 86% of central banks reported holding gold currently, while 47% said they plan to increase their allocations over the next three years.

Ownership of physical bullion is expected to remain a centerpiece of central bank reserves risk-reduction strategy through the foreseeable future. That said, roughly 20% of institutions surveyed by Invesco also said they plan to utilize multiple financial instruments…including swaps, derivatives and/or gold ETFs…to more tactically manage their exposure to the metal in the coming years.

“We aren’t selling physical gold,” one European central banker explained, “but we use swaps and futures to fine-tune exposure and generate modest returns.”

It’s a more “fleet-of-foot” approach to incorporating a naturally staid asset such as gold in reserves, but one that could gain increasing favor should the operating environment continue to grow in complexity.

Clear Majority of Respondents to World Gold Council Central Bank Survey See Gold Reserves Rising and Dollar Reserves Falling From Here  

Publication of this year’s Invesco study comes on the heels of the World Gold Council’s 2025 Central Bank Gold Reserves Survey, the results of which draw similarly robust conclusions about anticipated gold demand and general amenability to the metal as a portfolio aid:

  • 95% of central banks see overall gold reserves among the institutions rising over the next 12 months.
  • 43% of central banks believe their own gold reserves will rise over the next 12 months…with none expecting a decline in their gold inventories.
  • 76% of central banks expect overall gold reserves to rise over the next five years.
  • 73% of central banks project a continued decline in dollar reserves over the next five years.

Notable, too, is that the World Gold Council’s survey found a nearly 20% increase in the number of central banks that said they’re actively managing their gold reserves in 2025 versus the number that said they were doing so last year, largely mirroring the growth rate anticipated by respondents to the Invesco survey.

Many of those who make a long-term structural case for gold point to a projected continuation of substantial central bank demand as a cornerstone reason for their optimism. That certainly makes sense, particularly considering the significant price support that central bank purchases at or near annual record levels have lent to the metal since 2022.

Gold’s True Structural Case Is Found Not Merely in Central Bank Demand…but in the Profound Reasons for It

But I happen to think the most deeply rooted structural case for gold is found not merely in central bank demand, per se – as profound a driver as that is – but in the reasons for that demand. The two most prominent reasons for their gold-buying cited by central bank respondents to the Invesco survey are the metal’s potential to serve as a “safe haven during financial instability” as well as “concerns over geopolitical instability.” For their part, respondents to the World Gold Council’s survey said “gold’s performance during times of crisis” and its utility as an “effective portfolio diversifier” are the two biggest factors in their decision to hold the metal in reserves.

Yes, central banks are buying a lot of gold. But the unmistakable, overarching reason they’re doing so is what investors should take most to heart: the institutions’ collective expectation that comprehensive uncertainty of multiple dimensions will continue to characterize the global economic, fiscal and geopolitical landscapes for the foreseeable future.

It is uncertainty that’s poised, in my opinion, to not only push gold further into record territory in the years to come…long after current tariff drama has dissipated…but to also greatly reduce the metal’s downside risk and otherwise keep it well-supported during periods of profit-taking and technical weakness.

This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

Economic Week in Review: Key Inflation Numbers Send Mixed Messages, Retail Sales Pleasantly Surprise, and Consumer Sentiment Improves

Hello, my friends!

It was yet another eventful week in financial markets catalyzed by – who else? – President Trump. More talk of replacing Federal Reserve Chair Jay Powell as well as reports that Trump won’t settle for any less than a 15% tariff on EU imports kept the major indexes in check despite some relatively upbeat numbers from elsewhere in the economy.

For the week, the Dow Jones Industrial Average finished a little lower than where it started, while the S&P 500 and Nasdaq Composite still managed to post gains of 0.6% and 1.5%, respectively.

And as far as some of the economic week’s other high-profile numbers are concerned:

Consumer Price Pressures Intensified Last Month…

Among the biggest releases were two popular inflation measures: the consumer price index (CPI) and the producer price index, which gauges price pressures at the wholesale level.

First up were the consumer numbers. On Tuesday, the Labor Department revealed that headline, or all-items, CPI accelerated 0.3% on a monthly basis in June…two-tenths of a point faster than May. CPI accelerated on an annual basis in June, as well, rising 2.7%, which is three-tenths of a point faster than the pace set in May.

As for core CPI, which strips out volatile food and energy prices, both the monthly and yearly numbers also showed inflation picking up speed in June.

For the month, core CPI rose 0.2%, which is a tenth of a point faster than May, while year over year, core increased 2.9%, up from May’s 2.8% rate.

Signs of renewed inflation resilience in CPI numbers that had been trending downward through the first several months of the year have added to concerns that White House tariffs may, in fact, exacerbate longstanding price pressures. Of particular note was the monthly 0.4% rise in apparel prices as well as the 1% jump in prices of household furnishings, goods categories that are both particularly sensitive to tariffs.

Still, the jury remains largely undecided as to how much of an inflation problem tariffs ultimately will prove to be. Referring to the June CPI numbers, Kay Haigh, global co-head of fixed income and liquidity solutions in Goldman Sachs Asset Management, noted that “on the whole, underlying inflation remained muted,” but warned:

“Price pressures, however, are expected to strengthen over the summer and the July and August CPI reports will be important hurdles to clear.”

…While Wholesale Inflation Showed Significant Moderation in June

Adding to the lack of real clarity over just how much tariffs are bedeviling prices were June’s numbers for the producer price index.

The day after its release of last month’s CPI report hinting at tariff-induced troubles, the Labor Department announced that prices paid by America’s wholesalers didn’t change at all from May on a monthly basis.

According to the data, both headline and core PPI were flat for the month. That was a surprise to economists, who had expected to learn that each measure rose 0.2% in June.

The more subdued monthly numbers reflected particularly favorably on the annual rates, with headline PPI declining to 2.3% from 2.7% in May and core PPI slowing to 2.6% in June after landing at 3.2% the month prior.

“Tariff passthrough is visible in today’s PPI data, but producer price inflation overall remains damper than many expected just a few months ago when the tariffs started rolling out,” noted Oren Klachkin, an economist with Nationwide Financial Markets.

Still, the bigger-picture view of price pressures reveals that headline as well as core inflation remain solidly above the Fed’s 2% target at both the consumer and producer levels, all but ensuring Americans won’t see another rate cut until at least September. As of right now, traders peg the chances of a quarter-point reduction in September at around 53%.

Robust Retail Sales Numbers in June Underscore Continued Consumer Resilience

In other news this week, the Commerce Department reported on Thursday that retail sales rebounded strongly in June after suffering a sizable decline the month before, implying that consumers aren’t quite ready to throw in the towel on spending despite anxiety about potential tariff impacts.

According to the numbers, headline retail sales – which include all categories of goods – rose 0.6% last month. That’s significantly higher than the 0.1% increase projected by economists and a sharp turnaround from May’s sizable drop by 0.9%.

Adjusted for June’s 0.3% rise in consumer prices, which some analysts attribute to tariff-based price pressures, headline retail sales were up a slightly less impressive 0.3%. But other numbers from the report seemed to telegraph that Americans remain enthusiastic about making the nation’s cash registers ring.

On that note, retail sales of the “control group” – a “core” version of the metric which excludes activity at gas stations, auto dealerships and building-material retailers – climbed a robust 0.5% in June. And sales at bars and restaurants, which are seen as a particularly revealing indicator of consumers’ inclination to engage in discretionary spending, jumped 0.6%.

Commenting on the stronger-than-expected sales figures, Heather Long, chief economist at Navy Federal Credit Union, wrote:

“Don’t count the American consumer out yet. There’s still a lot of trepidation about tariffs and likely price hikes, but consumers are willing to buy if they feel they can get a good deal.”

Sentiment Rises Among Consumers Rises as Their Inflation Anxiety Lessens

Finally this week, evidence continues to emerge suggesting consumer anxiety over tariffs actually may be subsiding.

On Friday, the University of Michigan issued the preliminary numbers from its Survey of Consumers for July, which showed an increase in the report’s Consumer Sentiment Index as well as declines in both the one- and five-year outlooks for inflation.

According to the data, the headline metric rose a little more than a point this month to settle at a reading of 61.8…three-tenths of a point above the consensus estimate and the index’s highest level since February.

It likely wasn’t a coincidence that the survey’s most widely followed collateral measures…the outlooks for inflation one and five years down the road…fell at the same time overall sentiment improved.

The one-year inflation forecast landed at 4.4% this month, which is a sizable drop from the 5% expectation recorded in June. As for the five-year inflation outlook, that sank to 3.6%…a drop by 0.4 percentage point from the previous month.

Like the index itself, this month’s numbers for extended inflation are the most favorable readings of those metrics since February.

Jeffrey Roach, chief economist at LPL Financial, is one of many analysts who are at least cautiously optimistic about the implications of the July sentiment numbers.

“Despite risks of rising consumer inflation in the next few months, consumers have well-anchored expectations that tariff inflation will be temporary, and that conditions should improve by the time we enter 2026,” Roach said, adding:

“Inflation expectation is an important factor for the Fed and according to this report, the trajectory looks encouraging.”

That’s it for now; enjoy the rest of your weekend!

This post is created and published for general information purposes only. The Gold Strategist blog and Bob Yetman disclaim responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

Silver’s “Dual Nature” in Full Effect; Monetary & Industrial Demand Combine to Push Metal to 14-Year High

After lurking in gold’s shadow throughout much of the current precious metals bull market, silver is finally having its moment in the spotlight. It seems that silver’s unique “dual nature” as both a classic safe-haven monetary metal and critical industrial metal is largely optimized right now…prompting not only silver’s outperformance of gold so far in 2025 but also raising speculation that it could represent the superior metals allocation through at least the near term.  

It’s not unusual, of course, for gold to outshine silver whenever the precious metals bull decides to make another charge. Gold’s longstanding reputational dominance as the premier hedge metal means many will tend to think of it first as a refuge during the periods of heightened economic and geopolitical uncertainty that frequently set the metals bull off and running.

There’s something else: silver’s demand as an industrial metal, which accounts for roughly 55% of its overall demand. While having two different fundamental demand sources might seem particularly advantageous for an asset, it can be a complication in the case of silver. That’s because the worrisome conditions which can spark interest in silver as a safe haven will tend to hurt the economic growth likely to drive its industrial demand.

It is, in fact this potential for silver’s significant demand by numerous industries to act as a headwind to its safe-haven demand that’s viewed as another key reason for its underperformance, relative to gold, in recent years.

All of that said, there are times when silver’s dual demand sources manage to thrive at the same time. And when that happens, the result can be a double-barreled silver surge, one so great it powers the white metal past its more acclaimed counterpart.

“Perfect Storm” of Silver Activity Has Metal Sitting on the Doorstep of $40

That “perfect storm” of silver activity appears to be what we’re witnessing right now. On the strength of its two most fundamental demand sources, silver recently surpassed $39 per ounce for the first time in nearly 14 years. And while the price has since beat a modest retreat to around $38.50 per ounce, the metal’s fresh wave of energy has put it up about 32% year-to-date, slightly ahead of vaunted gold, which has risen 28% over the same period.

Explaining silver’s continued aappeal as a safe-haven asset in the current climate, Solomon Global analyst Nick Cawley said, “Currency debasement typically drives investors toward hard assets, and silver and gold have benefited from this trend. The dollar’s weakness stems partly from ongoing concerns that U.S. inflation may remain sticky due to proposed tariffs and other policy measures.”

“These inflationary fears have triggered a renewed surge in demand for safe-haven currencies and precious metals,” Cawley added. “Investors are increasingly seeking protection against potential currency devaluation and purchasing power erosion, making silver an attractive hedge against economic uncertainty.”

Inflows Into Silver ETPs This Year Have Already Surpassed 2024 Totals

Inflows into silver exchange-traded products (ETPs) certainly tell that story, at least in part.

Noting that “heightened geopolitical and economic uncertainties, along with positive price expectations, spurred silver investment in the first half of 2025,” The Silver Institute recently reported that silver ETPs saw net inflows of 95 million ounces in the first half of this year…more than the total inflows received by the securities for all of 2024.

According to other observers, silver’s industrial demand also is going a long way to supporting prices this year…demand cued in large part by a big uptick in semiconductor sales.

Semiconductor Surge Is Another Powerful Real-Time Silver Driver

“Semis sales reached a record high in 2024 and are expected to show double-digit growth this year, according to the Semiconductor Industry Association (SIA),” analysts at German global technology company Heraeus recently explained. “Year-to-date, semis sales are well ahead of last year, with May 2025 sales of $59 billion nearly 20% higher year-on-year. This follows an increase in global revenue of 19.1% year-on-year in 2024.”

Connecting the dots to silver demand directly, the Heraeus analysts added:

“The rapidly expanding semis market, driven by AI and cloud infrastructure advances, indicates the electronics market is currently strong, which should see silver demand in electronics rise this year. This may be enough to offset the expected decline in silver demand in solar PV (photovoltaic) applications this year and should have a positive price impact.”

Structural Case for Silver Continues to Improve

Together, the stronger embrace of silver by investors who recognize the utility of a cheaper safe-haven alternative…as well as the sustained benefit to silver industrial demand energized by the manic growth of knowledge technologies…enhance the viability of a longstanding but unfulfilled structural case for the white metal.

It’s a structural case long rooted in a variety of highly regarded drivers, including:

  • the accelerating global move to silver-critical renewable energy;
  • a silver supply deficit now in its fifth year;
  • and persistent economic, fiscal and geopolitical uncertainty, which is conducive to heightened investor interest in real assets possessed of naturally occurring safe-haven properties.

Should the accumulation of additional key silver drivers – such as the current and expected future growth of the semiconductor market – continue in the face of deglobalization, the resulting assembly likely will serve to further strengthen the metal’s existing robust structural outlook. Importantly, it could pave the way for silver to keep benefiting simultaneously from both safe-haven-specific and industrial-specific supports. And if that happens, it would be reasonable to expect silver to climb back into price territories unseen for decades.

This post is created and published for general information purposes only. The Gold Strategist blog and Bob Yetman disclaim responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

Blog at WordPress.com.

Up ↑