3 Massive Shake-Ups Rocking the Gold Market This Week

Guest Post by Peter Reagan

Your News to Know rounds up the most important stories about precious metals and the overall economy. This week, we’ll cover:

• Eject gold from the monetary system? Not likely…
• …as tariff tremors shake “global market based on gold bars”
• The infamous gold bear changes course, now calls for big spike by year-end
• Ray Dalio on the inevitable return of the gold standard

Gold bar tariff confusion causes mayhem – what can we learn?

The biggest gold news of the week has undoubtedly been reports of tariffs on Swiss gold imports.

There are many things to analyze in this story, namely that it doesn’t seem to be true.

The news cycle must have eroded to previously unimaginable lows. Thus we’re being hit left and right with “stories” that are quietly disappeared a day or two later…

But before we jump into what is simply confusion at best and fake news at worst, let’s not overlook what is to me the main point.

Via Bloomberg: A Global Market Based on Gold Bars Shudders on Tariff Threat. Here’s a key quote:

Gold bullion is typically treated more as a financial instrument than a physical product, and slapping tariffs on it would have such profound consequences that many traders argued Friday the ruling had to be a mistake.

Gold bullion is typically treated more as a financial instrument than a physical product, and slapping tariffs on it would have such profound consequences that many traders argued Friday the ruling had to be a mistake.

Now, I want you to pause and think about that for a minute.

If you’ve been watching the gold market for as long as I have, you know that central bank gold buying, even in trivial amounts, is a relatively new phenomenon. It started in 2010 when central banks became net buyers, but until a few years ago, was still viewed as a fringe decision.

In the 40 years leading up to that pivot, world central banks sold their gold reserves. Heck, the World Gold Council annual reports from the 90s and early 2000s listed central banks on the supply side of their gold supply-and-demand charts.

Gold bullion was simply not considered a factor in the global financial system. That was the official, mainstream take – in the U.S. and around the world. No central banker or finance CEO would even acknowledge gold. With very few exceptions (Alan Greenspan and Marc Faber spring to mind) gold was dismissed as irrelevant.

The Bank of England sold its gold reserves for scraps two decades ago, along with Belgium, Canada and the Netherlands. They did so proudly – at prices ranging from $250-$500 per ounce. They thought they were getting a good deal!

Fast forward to today: That $500 from 2006 is now worth $305 – and, based on the Bloomberg headline, we’ve arrived where we started. Where gold is understood to be money – and is treated as such.

We’ve moved into a world where gold is no longer being treated as a simple hedge (although it’s obviously still a hedge, too). Why the change? Well, 40-year high inflation might have kicked things off. Dollar weaponization combined with an explosion of U.S. government debt both played a role.

Today, it sure seems like people are regretting any faith they placed in unbacked currencies to begin with.

What about the tariffs? The drama can be traced to a Swiss gold refiner asking U.S. Customs and Border Protection to confirm that gold would be exempt from tariffs.

The agency’s response that 1 kilo and 100 oz gold bullion bars will indeed be taxed on import, and the markets went into full crisis mode.

The story was first reported by the Financial Times, essentially as “Trump imposes sweeping tariffs on gold.” Why all the ruckus? Swiss 1 kilo and 100 oz gold bars are the basis of COMEX gold trading. They aren’t exactly common for everyday investors looking to buy gold.

The havoc sparked an announcement of an announcement from the White House, which said they will soon clarify “misinformation about the tariffing of gold bars and other specialty products.”

Then, on Monday, the President clarified on Truth Social:

The end of the story, right?

So what did we learn?

First, even the more respected financial outlets delight in running a story about what boils down to a simple mistake by a CBP staffer as if it’s huge, world-shattering news.

I mean, come on! Everyone in the gold market immediately read through the original Liberation Day announcements. Bullion was specifically exempted! Yes, people make mistakes. I’ve made more than a few. But amplifying those mistakes, presenting them as official U.S. trade policy? That’s just disingenuous.

More importantly, though: After watching this story (and the corresponding surge in gold price), anyone considering diversifying their savings with physical gold bullion can rest assured they aren’t buying into nostalgia. Gold is a not sentimental asset.

The market is driven by sentiment, as we just saw. Gold endures, playing the same safe-haven store of value role as it has for the last 5,000 years.

Six weeks after forecasting a gold plunge, Citi pivots: $3,500 by Halloween

We have been noting that bearish gold forecasts have been difficult to find, with the consensus being $4,000 in the near future (or $3,500-$3,800 on the low end).

In my opinion, Citi has been the most pessimistic bear during the latest bull run in gold. They were among the very few big names to forecast gold price to fall below $3,000.

Now, they’ve done a complete U-turn and are forecasting $3,500 gold in the near term, likely by Halloween.

Citi isn’t necessarily a perma-bear on gold, but they have been the most aggressively bearish forecasters just six weeks ago, predicting gold would plunge below $3,000 by the end of the year. This has now turned into $3,500 by the end of the year, along with also raising gold’s trading range.

What gives? Citi is not without an explanation:

“U.S. growth and tariff-related inflation concerns are set to remain elevated during [the second half of] 25, which alongside a weaker dollar, are set to drive gold moderately higher, to new all-time highs.”

Citi is also acknowledging the loss of the Federal Reserve’s credibility, recent weak U.S. labor data and the ongoing economic impact of the Russia-Ukraine war.

Not bad for someone who was predicting $2,800 gold just a few weeks ago! I think even their new revised figure downplays the overwhelmingly positive forecasts of gold’s performance for the rest of this year and the next.

Ray Dalio says return to gold standard might be unavoidable

Ray Dalio has been expressing discontentment with the U.S. economy and dollar prospects in his own way, most recently taking to the social media platform formerly known as Twitter, to explain why a return to the gold standard might be unavoidable.

Check it out:

When it comes to talk of the gold standard, there are only two approaches – a simple Yes or No. And the more well-known names that are in support of it, the closer the idea gets to reality.

Having Judy Shelton on the Yes-side helps. Having President Trump is even better.

Now, the Bridgewater Associates founder is also speaking openly about it. What this does, among many other things, is move the concept of the gold standard idea away from the fringes and into mainstream discussion. That’s real progress!

Is a return to the gold standard even feasible?

Probably not – not without either a massive dollar devaluation (which, I must remind you, would deliver a massive spike in the price of gold).

Would the Federal Reserve do this willingly?

No. But the choice will be taken from their hands – either by currency erosion, loss of global trust (or even an outright debt default. To paraphrase Winston Churchill:

“You can depend upon the Federal Reserve to do the right thing. But only after they have exhausted every other possibility.”

Dalio explains how history shows the same cycles repeating over and over again. (In case you aren’t familiar with Dalio’s economic views, he’s really into the cyclical nature of history.)

Here, he outlines the currency devaluation cycle four-step:

1. Excess borrowing
2. Money-printing that inflates the currency, and paying off old debts with newer, weaker currency
3. The public rejecting the debased and devalued currency
4. A return to a gold standard to restore credibility in money

Dalio doesn’t forecast this. He believes it’s the inevitable result of unbacked currency. History shows he’s right, by the way.

We are very clearly somewhere between steps #2 and #3 above. You could argue we’re already halfway through #3, if you consider central bank gold buying and the explosion of interest in gold purchasing worldwide, from Australia to Zimbabwe.

Now, the U.S. dollar hasn’t been formally rejected yet. That is only a matter of time.

Remember that the citizens of every nation with a flimsy currency run to the U.S. dollar as a better alternative. “The least dirty shirt,” as Phillip Patrick likes to say. That’s a rejection of their own currencies in favor of the dollar…

But the U.S. dollar has taken an absolute beating against other currencies so far this year. The White House wants it even weaker. Yes, that would be great for exporters! A weaker dollar would also help manage the $37 trillion national debt – good for the nation, bad for lenders. A weaker dollar is great for tourism from Europe and Asia (euros and yen go so much farther these days…)

In fact, a weaker dollar is only bad for a few people: Importers (who should be onshoring their supply chains anyway!), tourists (who should just stay within the U.S. instead) and the American saver.

Dollar devaluation doesn’t just make the national debt cheaper to pay off – it cheapens our savings as well.

So what do we turn to? Gold, of course. For our customers, a Gold IRA isn’t about the return ON your savings so much as the return OF your savings – in purchasing power terms.

I believe that the American public, to varying but considerable degrees, is slowly waking up to the fact that inflation is a tax on their savings. The rejection of the dollar (as a store of value at least) is happening.

The sheer scale of the national debt, $37 trillion (so far!) is so absurd that some kind of currency collapse is inevitable. The powers that be, well they’ll do the right thing after exhausting every other possibility.

A return to the gold standard will have to mean a massive monetary reset.

And it’s one you want to make sure you’re on the right side of…

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