February 2025 – Week 1 Edition
Gold Sets Another High – And Silver Rises Even Faster
During the opening month of 2025, gold gained 7% and silver rose 11% vs. 2.7% for the S&P 500 and a big downdraft in tech stocks during the final week of the month. Then, on Monday, February 3rd, gold hit another record high of $2,820 on the spot market and $2,870 on the futures market – nearing our predicted goal of $3,000 an ounce. The increase was driven by a wave of safe-haven buying based on the huge 25% tariffs levied on neighboring trade partners Canada and Mexico and 10% tariffs on China, all of which could lead to rising inflation and a recession.
As powerful as gold’s move was, it was nearly matched by the industrial metal leader, copper, and exceeded by double-digit gains in Silver (+11%), Platinum (+15.6%) and Palladium (+18.2%).
The U.S. Dollar Index (DXY) was flat (-0.11%) for the month of January but it seems to be setting a technical “double top” pattern after rising 10% since September 30, 2024. Its first peak came on January 13, 2025, at 110, then it approached 110 again (peaking at 109.88) on Monday, February 3rd. The current trade and tariff negotiations, as well as pending radical budget deficit cuts, could impact the dollar’s value – one way or the other – during the first half of the year.
A year-end survey of U.S. dollar predictions, published in the Wall Street Journal (“Why the Dollar’s Epic Rally Has Some Room to Continue,” on January 2, 2025) focused on the chances for short-term dollar gains in the first quarter or just through February but was skeptical of any full-year gains. Dominic Schnider, head of global foreign exchange at Switzerland’s UBS wealth management division had doubts the dollar really can last, citing rising tariffs and deficits at 6% of GDP vs. 3% in 2016. Schnider expects the dollar to peak this quarter and end the year down 5% to the euro and 8% to the yen. The article also stated, “Bank of America estimates the dollar is more than 20% overvalued,” based on factors like trade and interest-rate differentials.
Any major decline in the Dollar, after rising in 2024, will magnify any gains in gold and silver. I strongly encourage readers to take advantage of this and contact one of our professional representatives to add gold, silver and rare coins to your portfolio or IRA.
Gold and Silver Supply Shortages in London Have Also Pushed
Precious Metals Prices Up
The Financial Times (in an article, “Gold Stockpiling in New York Leads to a London Shortage,” January 30, 2025) reported a surge in gold shipments to the U.S. since early December caused a London bullion shortage and long waits for any new deliveries. The wait to withdraw any gold held by the Bank of England now takes four to eight weeks, up from normally just a few days.
Apparently, fears of Trump putting tariffs on gold caused a rush in gold bullion shipments. Flows of gold from London to New York started rising rapidly in early December, anticipating Trump’s moves. This pushed the difference between the spot London bullion price and the closest month for gold U.S. futures contracts up to $40 before the January 20 inauguration. However, when Trump delayed tariffs his first week, that premium shrank to $7 last week.
The current problem is in the delivery of promised gold for futures contracts or for backing Exchange Traded Funds (ETFs). Gold and Silver ETF demand in New York is up slightly (+0.6%) in 2025 but over 80% of their required bullion holdings are stored in London. Now they can’t access those physical holdings within less than one to two months.
The largest gold ETF, the SPDR Gold fund, holds 97.4% of its required gold backing in London. This over-reliance on London gold caused the large and rising gap between spot and futures contract prices, which is even wider in the narrower silver market. The difference between silver bullion prices in London and futures prices reached $1, a steep premium for delayed delivery.
The obvious solution is to BUY and HOLD the actual bullion metals, rather than paper shares in ETFs or futures contracts. That way, you own the real thing and you save money from the start.
Gold has gained almost $90 in the past three trading days, since opening Thursday, January 30th at $2,770 on the April futures contract, rising $54 that day. It then traded down a bit Friday and was up another $45 on Monday, February 3rd on news of Trump’s threatened tariffs and the slowdown in gold deliveries out of London. Silver had a longer glide path, rising from $30.25 last Monday, January 27, to $32.50 Monday, February 3rd. Those prices are well above spot levels due to the delays in bullion delivery out of London.
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