Gold added $98.70 on Friday. In one day. When a five-thousand-year-old asset starts moving like a hot tech stock, it is usually trying to tell you something.
Here is the week. Gold rose 7.2% to $4,340.70 on Comex, the main U.S. metals exchange. Friday alone was a 2.33% jump. Silver did even better — up 9.97%, the single best-performing asset of the week. It beat every stock index, every bond, and every barrel of oil on the board.
Nobody buys metal like that because life is going smoothly.
For perspective: gold’s 52-week high is $5,318.40. So this is not a metal breaking into new territory. It is a metal climbing back toward it, in a hurry.
Three reasons, one theme
Reason one: the Fed. Earlier, traders had priced in a 42% chance the Fed would raise interest rates. Then a weak jobs report moved the odds back to 58/42 in favor of holding steady. Gold pays no interest, so every rate hike that fades from view makes gold look better by comparison.
Reason two: central banks kept buying. The World Gold Council reports that government purchases of gold picked up again in the second quarter. Governments have been quietly stacking gold for years, and they prefer not to explain themselves.
Reason three is the fun one. Tether — a company that issues digital dollars, money designed to live on the internet — added 14 tons of physical gold last quarter. Tons. As in, weighed. A firm invented to replace old-fashioned money is stockpiling the oldest money there is. Make of that what you will. The gold market made of it a buying spree.
The argument behind the price
The louder story is in Washington. The President is reviving his effort to remove Fed Governor Lisa Cook. He sent a letter that starts a 21-day clock. Meanwhile, Fed Chair Kevin Warsh went to print to defend the inflation goal, writing that it is “only a target, and it is 2%.”
Set aside who wins. What matters for gold is that the fight exists at all. When the people who control the money are publicly arguing over who controls the money, the metal nobody controls goes up. Every time.
Notice what gold is not doing. It is not predicting next month’s inflation. It is not predicting the end of the dollar. It is charging a higher price to insure a fight that is getting louder — the way home insurance costs more in a storm-prone town.
What we are doing: nothing
We are not buying gold this week. That is the point of already owning it.
Our gold holding — the iShares Gold Trust, ticker IAU — went into the Capital Wealth Growth Portfolio months ago as exactly this kind of insurance. Insurance against contested votes, contested seats, and contested credibility, with November already on the calendar.
That discipline cuts both ways. Clients who found the gold position boring all spring were paying the premium that covered this week. Boredom is what working insurance feels like most of the time.
Insurance you buy after the storm has a different name. It is called regret.