Gold does not believe the Fed has things under control and neither do I. 
Gold Hits Record High on Safe-Haven Demand Amid Tariff Threats
Reuters reports Gold hits record high on safe-haven demand amid tariff threats
Gold prices rose to hit a lifetime high on Thursday, sparked by safe-haven demand due to U.S. tariff threats, while the focus was also on a crucial inflation report for clues on the Federal Reserve’s policy path.
“We are seeing keener uncertainty and anxiety about the Trump administration’s new policies on trade and foreign policy … fresh technical buying coming in as prices are trending higher now in both gold and silver,” said Jim Wyckoff, a senior market analyst at Kitco Metals.
Earlier this week, the White House said U.S. President Donald Trump planned to hit Mexico and Canada with steep tariffs on Saturday and was also considering some on China.
The U.S. gold market has been trading at a premium since the recent presidential election, the London Bullion Market Association said on Thursday, adding that the association has been closely liaising with the CME Group and U.S. authorities to monitor this trend.
Gold vs the Dollar
At the beginning of 2021, the US dollar index was 89. The US dollar index is now 108.
The price of gold advanced from $1962 to nearly $2900. It’s now about $2850.
Yet, people still believe moves in the dollar determine moves in the price of gold.
I suggest the price of gold moves in accordance with long-term inflation and faith in the Fed.
From 1980 to 2000 there was inflation every step of the way, but gold fell from $850 to $250. There was inflation from 2011 to 2015 when gold fell from $1923 to $1045.
People thought Greenspan was “The Great Maestro” and Mario Draghi saved the Euro.
Gold tends to do very poorly in such times and in periods of disinflation.
A friend of mine emailed some thoughts on what’s changed.
What’s Changed and What Hasn’t?
In 1971, when Nixon closed the gold window, a 400 oz. bar of gold had a value of approximately $17,260.
Today, in 2025, that same 400 oz. bar has a value of approximately $1,140,000.
Did the gold bar add new and improved features?
Nope.Did the gold bar become substantially more efficient somehow?
Nope.Nothing changed whatsoever about the gold bar. It is exactly the same as it was in 1971.
What’s changed is persistent Fed and government-sponsored inflation.
Three Questions of the Day
- Is the Fed suddenly going to get things under control?
- Will DOGE cut $2 trillion or even $1 trillion in government expenses?
- Is Trump going to magically reduce the deficit via tariffs or any other means?
Gold vs Silver
Gold acts like money. And central banks hold gold, not silver.
Silver sometimes acts like a monetary metal and sometimes acts like an industrial commodity.
But gold’s primary use is that of a monetary metal. Only a miniscule amount is used in industrial purposes.
Price Stability
On Wednesday, Fed Chair Jerome Powell said the Fed would not budge from its two percent inflation goal which it ridiculously defines as “price stability”.
Bonus Q: Does the lead chart look like price stability?
A: No, but it does look like periodic misguided faith in central banks.
Related Posts
January 10: Elon Musk Admits DOGE Can’t Find $2 Trillion In Budget Cuts
Anyone with an ounce of common sense knew that wasn’t possible. He won’t find $1 trillion either.
January 13: China’s Trade Balance Soars to a Record $1 Trillion
China’s exports surge while imports stagnate. Is global retaliation coming?
January 28: A Great Tariff Experiment as Trump Repeats Threat of Universal Tariffs
All eyes are on February 1 as Trump renews his threat for universal tariffs.
January 29: Trump Bashes the Fed Again, Cites DEI and Fake Climate Change
Trump is not happy with the Fed’s decision to hold rates steady today.
1. Price rises are not “inflation”
2. Price rises are scarcity
3. Synthetic scarcity due to policy decisions is not real scarcity
4. “Inflation” requires credit expansion/money supply expansion at a greater rate than the economy grows
5. There is/has recently been currently credit contraction/money supply contraction
6. The economy is/has recently been not growing
7. There is deflation worldwide, not inflation, evidenced by reducing trade and increasing lay-offs
8. If nominal prices rise during periods of deflation, it’s devaluation.
9. Devaluation is not “inflation”
10. Fiat currencies are devaluing not inflating, hence the nominal gold price is “rising” (i.e.: gold is money, and fiat value is falling relative to gold).
“From 1980 to 2000 there was inflation every step of the way, but gold fell from $850 to $250. There was inflation from 2011 to 2015 when gold fell from $1923 to $1045.”
I agree about 2011 to 2015 (PLUS the fact that by the 2000s, they were all lying through their ASSES about the real inflation rate anyway!).
However, between 1980 and 2000 we saw dis-inflation – i.e., a positive rate of inflation, that was coming down from the low teens to low single digits. Gold needs RISING inflation rates, not just positive inflation rates.
I believe that Musk/DOGE have already found $2 Million in Fed Gov waste.
The problem is, it is not easily cut w/o an avalanche of lawsuits, Congressional infighting, etc.
And if DOGE were to cut the $2 Trill, GDP would take a significant hit.
The Gov is cornered.
Time to revalue the FedGov’s gold reserves, devalue the USD and allow inflation, and take the bitter medicine that has been put off for several decades.
We’ll be in a far better place after.
During a recent appearance Simon Mikhailovich concluded with an illuminating story: Upon leaving the Metropolitan Museum of Art in New York with his granddaughter recently, he casually walked up to the array of hot dog vendors in front of the entrance, curious about the going rate. At $4 each, the price was much higher than the days of his youth, at least in nominal terms. With gold trading at approximately $2,700 an ounce, he made a mental note that one American Eagle would fetch about 675 hot dogs.
Mikhailovich has been tracking the price of New York hot dogs for many years, even finding pictures from other eras to flesh out the trend over time. In one picture found from 1906, hot dogs were three cents each, or two for a nickel. With the US dollar convertible to gold at a fixed price of $20.67, an ounce of gold would have bought 690 hot dogs.
Exactly. There is no real inflation, there is devaluation, and deflation. Nominal price rises are not inflation. Gold is real money.
since 2000, the price of gold has compounded on average at 10% pa for 25 years for most currencies. 12% + for GBP and some others… 8% for CHF and SGD…
but let’s just call it 10% on average….
THAT is the REAL INFLATION RATE. the collapse of currencies vs GOLD. That’s how much money has depreciated over these last 25 years. ~10% pa …
stop using CPI
Just got the renewal for private health insurance… an increase of just over 10% … the insurer cites ‘inflation’
Therefore that is the rate of inflation
Similarly my auto insurance is up over 10%
I believe the price of houses has been consistently about 100oz for an ok family house, and 250oz for a nice one.
Powell did the 50 basis point cut followed by a 25 point cut to try to goose the economy for Biden. Now, no cuts for Trump. Whoever claims Fed isn’t political is incorrect.
Trump appointed Powell because Trump knew that under both the Trump and Biden presidencies of the Uniparty, that Powell would print trillions of new dollars to create artificially low interest rares, and they did, which debased the value of the US dollar even more. Both the Republicans and Democrats appoint and confirm the Fed governors and the Fed helps both parties overspend, which damages the country by putting us further in debt.
Good news guys. Trump says “you’ll understand” the “short term” pain you’re gonna feel with sky high prices. It’s for your own good and those campaign promises to lower the cost of food don’t matter anymore.
I hope you stocked up on food like someone here told ya too. Food, fuel, and labor are going to enter a whole new dimension for you but it’s for your own good.
https://www.reuters.com/markets/us/trump-tariffs-stoke-us-food-inflation-despite-pledge-lower-costs-2025-01-31/
Promises made, promises NOT kept.
“It’s tariff turtles all the way down and inflation all the way up!”
Three thoughts: 1. The price of gold hits a record high…in USD. I don’t have time to look up how gold has traded in other currencies, but if it is not trading in record territory then there is an international capital flow to the USA – probably seeking security for war, fleeing financial problems in places like Europe, or both (and probably others). 2. Where is China going to park their excess reserves? They aren’t buying US debt any more because they may be going to war with us and they have seen their pals in Russia benefit from having gold reserves. 3. Gold priced in USD rising in the face of a higher USD – that’s interesting on its own.
Gold is at its all-time high in all currencies. Silver is more interesting.
Silver is nearly 40% off its all-time high in US dollars and is also well below its all-time high in mainland China, Hong Kong, Taiwan, Thailand, Vietnam, Switzerland, Israel, Jordan, and Saudi Arabia.
Silver is near or right at its all-time high in Euros and in South Korea, Canada, Poland, and Denmark.
Silver is significantly higher than the 2011 price in Australia, Japan, Norway, Sweden, Mongolia, Russia, Ukraine, Argentina, Turkey, Hungary, Indonesia, Brazil, and Colombia.
You lost all credibility at “(1) I don’t have time…”
If you’re not going to take even a moment to look up a key fact vital to your point, why should I read it?
Please show a little more respect to the commenters and to Mish.
Since a lot of bitcoin went up in flames in the homes in Pacific Palisades those with spare cash have rediscovered the merits of holding gold.
Anyone holding physical gold in those homes would have lost it too. It would have all melted into little rivulets at those temperatures.
Besides if you had to bug out with bitcoin all you need to take with you is a USB stick.
Gold should be buried in your backyard or on a deserted desert island.
Pretty sure @Doug78 was being facetious.
If the gold was in a safe it would still be there but your bitcoin would not.
Bitcoin keys can be memorized easily. Gold cannot be moved very far without risking someone taking it from you.
Gold could have been held in ETFs or through a service like Gold Money or Bullion Vault. Even Fidelity allows you to buy coins and have them store it on your behalf.
If you can’t put your hand on it, you don’t own it. You are hoping it will be accessible when you need it.
Bitcoin cannot go up in flames. Sounds like you need to learn a bit more.
But it CAN go “poof!” one fine morning! There is no coin in there. It is all a bunch of 1s and 0s, and they can all turn into just 0s!
“And we’re going to fight it in the streets.” – Hakeem Jeffries on Trump’s agenda.
Jeffries calls for violence in the streets.
Isn’t than an insurrection that gets you decades in the federal pen?
Powell needs to raise rates.
We’ll send the J6 pardon recipients after him if he does that. They know they’ll get pardoned again.
THAT would be throwing down the gauntlet against Trump! [lol]
FED has no control over short rates. That is a fantasy and history proves otherwise
Volcker is laughing uncontrollably at your ignorance.
If the FOMC dumped all the Fed’s T-Bills overnight and offered to pay 10% on reserves, you better believe short rates would spike to 10%.
Roughly speaking, if you plot the federal debt and the gold price, they have the same shape. Always will. The high in gold will be achieved when the federal debt stops rising.
The Fed should say that deficit spending is driving inflation and that if they don’t see a substantial cut in the deficit they’ll be raising rates.
They can’t credibly make that statement until reserves are back in line with historical norms.
Quantitative tightening – a strong tool which they deliberately speak very little about – still has a ways to run.
So long as the “deficit hypothesis” still has competition from the “excessive monetary base”, they’ll have trouble getting the necessary consensus to point the finger at Congress and make it stick.
It appears we have fooled the world for like 54 years. The gig is up on faith in the dollar as a currency. We export DEBT. Not much else
Debt and topsoil. We send a billion dump truck loads of topsoil a year into rivers and seas.
It’s official, Trump’s tariffs are a go…
https://www.cnbc.com/2025/01/31/trump-tariffs-on-canada-mexico-and-china-begin-saturday-white-house-says.html
I guess cocaine prices will be going through the roof now.
Popcorn bowl is full. Can’t wait for this to hit. The trade wars have begun. How long before a hot war?
You may be wondering why it took this long to announce the tariffs….simple answer: to give people time to position for profits.
My popcorn bowl is full and my positions are complete, time for reap profits from what the dummies have sown.
No biggie… we can score at the White House pharmacy… it’s free!
Cocaine addicts will pay through the nose.
Gee, You import cocaine and pay tariffs on it.
You really are dumber than a door knob or in other words Kamala Harris.
Milton Friedman laid the groundwork, money has a lag. If you look at money, then prices will trend higher in 2025.
Inflation is always and everywhere a monetary phenomenon. Saying tariffs will cause inflation- while technically, temporarily true – is beside the point. It’s like saying drinking a gallon of water will make you gain 8.34 pounds.
Pretty sure a gallon of water weighs 8.00 pounds? Where’s you get the .34?
That would be saltwater
$17,260 in 2025 dollars is about $133k. Let’s compare apples to apples.
Regardless of what he might say otherwise, Powell lowered interest rates 3 times in 2024 to try and help Harris get elected. The ploy failed and rekindled inflation. The piper must now be paid.
Emitting trillions due to Covid had at least as big an effect.
But that wasn’t a Powell decision. It was a political decision driven by politicians everywhere from top to bottom.
Powell had to create the money to buy the bonds the Treasury had to issue to pay the stimulus.
The fat guy signed them… they were supposed to be keepsakes!
Platinum which is MUCH scarcer than Gold hasn’t budged in price in 5 years. It remains around 1000 oz. Based on the gold price it should be something like 30-40K an oz.
Platinum and Silver are kept artificially low due to being industrial metals (if not, car prices would skyrocket due to needing Platinum). Or perhaps that’s the true price of such rare commodities and it’s Gold that’s artificially high due to group herd thinking causing excess demand.
Your closing sentence is the correct one.
See:
Extraordinary Popular Delusions And the Madness of Crowds
https://www.amazon.com/Extraordinary-Popular-Delusions-Madness-Crowds/dp/1897597320
One thing I didn’t mention but should have been obvious is that if I were a Platinum producer I would be demanding payment in gold in kind. As in 1 oz Gold for 1 oz Platinum. After all Trump said it best, ‘they are getting ripped off’ at $1000 oz.
Gold is a “monetary” metal. Silver & platinum are industrial commodities.
Apples & oranges.
Platinum is nearly 100% an industrial commodity – and had to compete with Palladium. Also the primary industrial use id catalytic converters of which there is no need in EVs.
Powell is probably buying GOLD.
Whatever. The world economy does not run on gold.
The average voter owns no gold.
The average voter could not tell you the price (in USD) of gold within 82.3%.
The average voter couldn’t pour piss out of a boot if the instructions were printed on the heel.
What’s your point?
Obviously, average voters should not be allowed to vote. Only above average ones should be able to vote. As back in the 18th century when only white property owners had the right to vote.
Property owner intelligence has degraded massively since those days. Democracy is simply no longer viable, and I needed to take charge and prevent American Stupidity from taking down America and the world with it.
I am the most intelligent person on the planet, therefore I should rule it.
You sell yourself short! You should rule the universe!!
What a capital idea!
As was said many times, the people who own the world, hold gold. I’d gamble with some amount of gold since that’s what the overlords hold as value.
People have been saying this for forever. But when it comes to hard times, if I find you have gold, I and my friends will take it from you, so what is the use then? It might just get you killed when it is found that you can pay with gold..
A gold owner would never let “you and your friends” know that they own gold.
Gold owners tend to be survivors.
Once you pay someone with gold, word will get around quickly that you have gold. Let’s not be naive.
There is too much money chasing assets. Easiest way to make it stop is start taking money out of the money supply.
And that will happen when interest rates are increased, leading people to put their cash in savings.
Time deposits and savings accounts are part of M2.
Actually, I believe savings accounts are now classified as part of M1.
Not under current monetary regime. Pre-GFC the way “interest rates were raised” was by reducing supply of credit explicitly. Since then they just pay interest on reserves without actually altering the supply of credit.
They are in fact slowly siphoning away the monetary base via QT, but they’re doing it slowly to avoid a high speed catastrophe.
“What’s changed is persistent Fed and government-sponsored inflation.”
Or to put it another way, debasement of the currency. The dollar is not sound, it is a sliver of a fraction of itself from early last century, but has held its position relative to other currencies.
100+ years ago a fine custom-tailored suit was 1 to 2 ounces of gold and that same amount will get you something similar today.
Martin Armstrong is crazy but his Socrates program predicts a complete change of form of government in 2032, 2 POTUS elections from now
The Fed is in control of nothing
The entire system is going to reset and soon
I wrote on my bangpath substack today Will AI Be The Grey Swan That Crashes The System?
If AI reduces full time jobs by even 10% as much as Goldman thought it would nearly 2 years ago, we are looking at complete revolution
Now either Gold is up because enough people see something like this coming, or it is the US overplaying its hand with sanctions and dollar payment system weaponization causing price insensitive buying by global south central banks
Or both
Yep. This is all a reset. No one trusts the systems that have been in place for the last few hundred years. They are not able to keep up with the changes technology is imposing on the people. We are in uncharted waters. The next few years are going to be a massive reset.
The change in government is that China takes over.
Wait till Mish hears about bitcoin.
$4,055 an ounce in Canadian dollars.
Ouch!
What about in Egyptian pounds? I purchased 15 half ounce 21kt gold bangles for about 500 Egyptian pounds each 30 or so years ago. To buy them now would be about 65,000 pounds each. Great hedge against inflation and the decline in exchange rates. In 30 years what will be the inflation rate in the US and what will the USD be worth (or worthless).
Over 4,000,000 South Korean won.
My friend who still works for the Fed Govt did not retire with me a year ago. He is now talking weird as if he is actually considering retiring. I say “if you didnt want to retire a year ago, why would you want to now?” He says “cause everything has changed now.” Trump is an empty box, but his banter and half-baked decisions can indeed “change the whole picture.” And I think he’s gonna make changes in the Fed if not now, then soon. Dictators dont care about inflation or societal violence. He’s gonna borrow and spend big time, and who cares what happens. And the gold people know it.
4 star under Obama?
Your friend should get a letter soon, if he hasn’t already.
Air Traffic Controllers did:
https://www.thedailybeast.com/trump-admin-emails-air-traffic-controllers-quit-your-jobs/
I guess the “common sense” guy decided that 1 person could do the work of 3, if it is “acceptable” for 1 person to do the work of 2.
All 2.2 milllion federal employees got that OPM offer letter
I would not be surprised if gold blows right thru the 3k point and governments start to make it illegal for individuals to hold again. Lots of potential instability out there both politically and in world markets..
Making it “illegal for individuals to hold gold” would only increase its value on the black market. In any event, the level of compliance this time would be very close to zero. This is not 1933.
It was made illegal because the US was on a de jure gold standard at the time and too much gold flowed out of the Fed. There are no ties to gold in the banking system today. The Fed doesn’t even have any gold; they turned it over to the Treasury back in the 30s.
That’s not what the Fed’s official Balance sheet says.
https://www.federalreserve.gov/faqs/does-the-federal-reserve-own-or-hold-gold.htm
You most likely looked at the “gold stock” on the H4.1. That is the value of the gold CERTIFICATES that the Fed got in exchange for giving up its gold. The certificates were no doubt given to them so as not to blow a hole in their balance sheet by simply taking the gold.
US gold is the property of the Treasury.
The only way out is to buy a remote property, with good water and soil and a place to raise livestock and live off of the Grid. ALL of those items may change from time to time when neighbors want your meat in exchange for their rice or wheat.
What makes you think you neighbors wont want your property/soil/livestock in the face of basically lawlessness if things get that bad.
Plant vegetables which mostly grow underground, such as potato, carrots, beets, onion. Nobody under 40 will ever find them hiding in plain sight.
They are coming to the house first… probably while you’re asleep.
Some under 40’s may not even know to look up for some things like apples.
The bulbs grow underground, however their leaves grow above ground and require sunlight.
Great scheme until you need an MRI.
How many years would it take someone to learn how to live off the grid? To learn how to hunt, butcher and preserve meat & fish? To farm? To use tools? To build and repair stuff?
This is a lifestyle you choose usually early in life. It isn’t something that you decide to do tomorrow.
Many years ago I had a neighbor who related that just before the collapse of 1929, prices began to go through the roof. He was a driver in California and had to buy a new shirt for his job. A few years earlier, a shirt cost $1.25. In 1929 the same shirt was going for $26.00. Everyone was lauding the money they had made in the market.
He didn’t trust banks or the market, so he squirreled away quite a stockpile of cash. After the crash he bought out the company that he had worked for and began buying up many garages on the west coast. He put together a large company during the depression with his pile of cash. He was lucky that he didn’t live in Weimar Germany.
I can’t help but wonder that we today live in Weimar 2.
whatifalthist on YouTube has a really great video comparing the USA to Weimar Germany.
50% of gold is used for jewelry.
Nonsense – very little gold is in jewelry
It’s almost all in bars or coins
Bitcoin is better than gold in every way.
Until you want to pay for bullets when the grid is down.
If the grid goes down permanently, most people will die. Those who survive will be people who can work together, not those who have the most guns. When the power comes back on, Bitcoin will be there. During this time, your gold will be lost or taken away from you by bigger men.
LOL – no, it won’t. The “bigger men” won’t know who the gold owners are.
I admit I don’t know anything, but you might want to take that up with wikipedia and literally hundreds of other sources. “The world’s consumption of new gold produced is about 50% in jewelry, 40% in investments, and 10% in industry.”
https://en.wikipedia.org/wiki/Gold
Granted that says newly minted rather than the entire gold supply, but still. It’s a far cry from “very little”.
Again – your statement is nonsense because you are confusing new gold vs gold in existence
Nearly 100% of gold ever mined is still in existence.
Yearly production is miniscule.
This is a serious mistake
The supply of gold is 100% of gold ever mined minus what is lost at sea, buried and forgotten, on in valuable art pieces in museums.
Of the rest nearly all in bars.
Finally, most gold jewelry – chains rings ect is really a monetary use, but that amt is miniscule
You confuse supply with annual production, a major error
Yes I understand, I addressed that point.
But more to the point, the world gold council estimates above ground gold is 212,582 tons, of which 45% is in the form of jewelry.
https://www.gold.org/goldhub/data/how-much-gold
Total above-ground stock (end-2023): 212,582 tonnes
Mined gold, yes. But mining is only about 1.5% of existing supply, annually.
Sadly, gold miners not benefiting much from any of it.
Sadly they have not gotten the memo. Although a few have. AEM looking good. RDS (explorer) +100% past few months.
But hang tight. CRE is on the horizon. We will be rewarded eventually.
My favorite ounces are the ones I bought in 2002 for under 400.
Give it time.
Profits are for the finance people, not the ones that do the work.
Sometimes I wonder if people like Mish really think that the Fed plays it straight in times like this, versus telling us what is ostensibly the straight dope while they are actually playing some complex metagame. I’m sure JPow is more than smart enough to know that he is in a near impossible spot, but that he is obligated to present things as if he is 100% transparent. Boy he must hate the bond and gold markets rn.
I have commented on this before.
The Fed believes the nonsense they preach on 2% inflation, inflation expectations, the Phillips curve and all kinds of garbage.
There is no diversity in thought. You get in that position by thinking the same way as the rest.
So you’re saying they need more DEI?
Probably short on gentiles.
The upside of all that garbage is that it can be fed into AI, and then the FED can be retired.
While gold sets record highs, $Melania has set a new low every day since it’s introduction. Currently at $2.05.
really? Im shocked considering Melania is an Einstein https://www.bbc.com/news/world-us-canada-43256318
People need to understand that $melania is an olifactory NFT , and buy, buy buy!