“He that has many friends, has no friends.” Aesop
“The hare with many friends” John Gay, 1727
This is the third weekly analysis on precious metals I have written as a year-end 2025 review and outlook for 2026. ICYMI… I wrote about platinum on December 14 in “the 78th element” …and silver in “what I know about silver now and what I won’t know until it’s too late” on December 28.
Unfolding today is an in-depth look at gold in an ever-changing world and its role for over a century, ending with the CME Globex opening tonight, January 4, 2026, at 6 PM EST. By the end of this essay, you may or may not have a new opinion of gold tomorrow and beyond, but I assure you will have a deeper sense of why gold is different this time. Let’s begin.
All fundamental trends are simply expressions of too much supply going down and an excess of demand going up. However, in platinum and silver, fundamentals were not the primary driver of stunning rallies last year. These two metals are suffering from near-catastrophic shortages; in a nutshell, they are—or have been, rather—supply stories that went up (rare), and there is no more acute supply situation in any market than a physical shortage, compounded by a liquidity squeeze, compounded by relentless bad gamma. That is silver in a few words. Platinum is a story of going from a soggy glut to a severe shortage that will take time to fix. But… once speculators get wind of a shortage in a thin metal like nickel or PGMs, they buy it and make it worse.
Gold is actually the opposite. Gold is nicely balanced with an easy-to-see marginal excess of demand in all fractal samples. On Friday I wrote: “Gold is probably the most well-behaved bull market of the lot. Clear fundamentals and enduring narratives without FOMO or crowded froth. I think there will be good opportunities for the patient (investor) in 2026.” Gold is a demand market. Supply is prudentially subdued and well-managed. Buyers are official, wealthy, sophisticated, and sticky.
Gold Has No Enemies
“In truth, the gold standard is already a barbarous relic.” John Maynard Keynes, 1923
For most of my career, gold has been characterized as a relic, a threat, and worse. Its faithful owners: perma-bulls, kooks, and fringe. Gold has been regulated, liquidated, confiscated by governments, obsessively investigated by the courts, and castigated by treasury secretaries since William E. Simon. The list of invectives goes back almost 200 years.
The post-war Black Friday Gold Scandal of 1869 ended in the Treasury selling $4 million of gold. The Coinage Act of 1873 provoked William Jennings Bryan’s 1896 “Cross of Gold” speech. The UK suspended gold convertibility in 1914 and replaced it with paper notes to fund WWI with fiat money. FDR confiscated it with the Gold Reserve Act of 1934 and devalued the dollar. Europe followed suit in 1935; Belgium, France, Netherlands, Italy, Switzerland, and Czechoslovakia nationalized it and devalued their currencies.
England passed the Gold Control Act in 1939 and banned exports. Germany looted it from occupied countries, and most of Europe shipped their gold to America for safekeeping out of the reach of Hitler. By 1944 and the Bretton Woods Agreement fixing a statutory price of $35 an ounce, nearly every extant ounce of free-world gold was held in US custody. For the next decade, European debt and inflation were legendary and, by 1952, effectively all known above-ground gold was American property (except Great Britain and Russia).
The London Gold Pool collapsed in 1968 because Jacques Rueff demanded convertibility while America was funding Johnson’s “Guns and Butter Great Society.” Nixon shut the window in August 1971 to stave a “run,” and the next four years defined gold for the next 50 years.
Students at Kent State University were murdered in broad daylight by the National Guard protesting the war in Vietnam in 1971. The daily death toll of American soldiers scrolled down the TV screens every night at the end of the evening news. The dollar was hammered, the Snake was broken, the stock markets went into a decade of dark bear markets. The misery index inspired wage and price controls. New York City threatened insolvency. Interest rates went as high as 20% in 1979. Nixon was impeached in 1974. And somehow… gold was legalized in 1975 because the public demanded it and a democrat Congress, being political, voted for it.
William Simon, a wealthy bond trader and Treasury Secretary under Gerald Ford in 1975, conducted two public auctions of from federal stockplies ostensibly to demonstrate that gold was “an ordinary commodity like pork bellies.” The first auction on January 6, 1975 offered 2 million ounces but only sold 754,000 ounces at prices circa $40/oz below the market with Simon’s enthusiastic approval. If he could have sold it $100 under London spot, he would have just to prove his point. The second auction on June 30, 1975 was for 500,000 ounces and all of it sold at lower prices. Gold steadily lost 50% of its value for a year and bottomed in September 1976 at $99.90 when Mao died.
Henceforth and for the next 50 years, gold was considered an enemy of the fiat financial universe. Any suppression of its role as a monetary asset was desirable. Beirut in 1983? Desert Storm in 1991? Shock and Awe in 2003? As soon as shots were fired… gold was slammed and opened $50 lower the next day. By 2008 and the GFC, gold crashed with everything else.
The Bottom: 1990/1999
Global central bank (CB) gold reserves in 1985 totaled approximately 36,745 tonnes. During the downturn, CBs began aggressively selling gold reserves to reduce reliance on what was seen as a non-income-producing asset. Canada sold 99% of reserves by 2003. The Bank of England had 2,543 tonnes in 1950. Gordon Brown sold 445 tonnes on the dead low in 1999, leaving the BOE with a scant 310 tonnes by 2002. Switzerland sold 60% in 1999 on the lows by public referendum, the Netherlands 39%. Argentina sold 80%, among others of lesser amounts like France, 19%. The US sold nothing.
Project finance and forward sales by the mining community added to a decade of intensely bearish sentiment. The rush to indiscriminately dump central bank gold in the 90s threatened the very life of the gold industry and, by 1999, the Central Bank Gold Agreements were essential to stave off a total collapse of gold prices. A coordinated limit (initially 400 tonnes/year) among European banks acted like a circuit breaker on public exchanges. In that context, major European CBs stopped selling altogether. However, leasing and multiparty hypothecation… not so much, as the EFP market in late 2024 came a cropper.
These actions in another century set the stage for a precious metals reawakening in 2025 not unlike a distant quake deep beneath the ocean sending a tsunami towards unsuspecting shores.
Tomorrow in Hindsight: 2024/2025
A year ago, the total market capitalization of all known extant gold, or above-ground stocks (AGS), was approximately 216,265 tonnes and worth about $18.2 trillion. By December 31, 2025, net new mine production had added roughly 3,750 tonnes, pushing AGS to around 220,000 tonnes. With the price closing near $4,330 an ounce, up about 65% on the year, the market cap of all extant gold jumped to roughly $30.7 trillion, or $100 billion more than US GDP at $30.6 trillion.
The largest holdings in the world are jewellery at $13.6 trillion market cap, which saw consumer spending of about $195 billion in 2025. Investment holdings (bars, coins, and ETFs) stand at around $7.1 trillion and took in net new flows of roughly $280 billion (ETF $105 billion + bar/coin $175 billion). Total central bank official holdings sit at about $5.4 trillion and rose by around $120 billion from net purchases. The other category…mostly industrial and tech uses that are hard to recycle…comes in at roughly $4.6 trillion, which grows but slowly through ongoing fabrication.
These Data Are in Themselves Bullish for Gold Prices
Almost half of all known gold is diffusely held in the form of jewellery, representing an extremely stable base of ownership. Investment holdings, including bars, coins, and exchange-traded products, equal roughly 23% of the total holdings and act as a fluid, readily available buffer stock whenever prices move sharply. Central banks hold approximately 18% of total holdings and represent anchored and growing long-term reserves. The other category is large but mostly embedded in products, which is extremely stable.
Lastly, gold has been a Tier 1 asset (with a 0% risk weighting, equivalent to cash for capital adequacy purposes) since the original Basel I Accord in 1988. On July 1, 2025, Basel III suggested gold might be elevated to High-Quality Liquid Asset (HQLA) status, meaning “a low correlation to risky assets.” Institutional and high-net-worth wealth already include gold as a balancing portfolio asset. HQLA status would enhance gold’s appeal to that quarter and support continued demand.
Overall, the investment and central bank segments are growing apace, while jewellery and industrial remain a broadly stable foundation for half of over 7 billion ounces of AGS.
Where Did the Money Come From to Buy All This Gold?
Thin air, actually, for most of it. It came from a keystroke tapped out by the very central banks that bought it and from the credit lines of financial institutions that administered and marketed derivative products like GLD and SLV ETFs. With $25,000 minimums, ninety-five percent of bars and coins, went on plastic or wire transfers. No one pays cash for jewelry on 5th Avenue.
One of the obvious benefits of being a central bank is the ability to alchemize gold reserves at will. During the gold standard years before WWI, countries fixed their currencies to a specific amount of gold. If a country had a trade deficit, it paid the difference in gold from its reserves.
Thus the money supply contracted, causing lower prices, increasing interest rates and the local currency, making exports cheaper and more competitive and demand for imports went down. The opposite happened in surplus countries: incoming gold expanded money supply, raised prices, lowered exports, and increased imports. These organic adjustments were called the “price-specie flow mechanism” by David Hume in the 1750s… They tended to restore balance over time without tariffs or devaluations.
The problem was periods of unnecessary stress were common. Although after a lifetime of observation, the current system is no better. The issue today is, pardon my candor, habitual cheating which is impossible with gold… but that’s another essay for another time.
A Few Necessary Points on Supply and Demand
Full 2025 supply-and-demand numbers are still preliminary, but total supply looks to come in flat to marginally higher at around 5,000 tonnes versus roughly 4,975 tonnes in 2024. Demand trends have clearly shifted away from China’s earlier dominance toward a broader mix of Indian buying, various central bank acquisitions, and ETFs, bars, and coins.
Chinese imports peaked mid-2025 and then fell sharply in Q4—down 50–60%. Meanwhile, record ETF inflows and sustained central bank buying created enough marginal excess demand to more than offset the Chinese drop and push prices to new highs in December. As a rule, jewellery demand runs about 40% of total offtake, investment another 40%, and central banks 15–20%. In 2025 jewellery slipped to around 35%, investment rose to about 45%, with central banks and technology/commercial fabrication making up the rest.
The four most transparent demand segments that together capture the main narrative of 2025 were: weaker jewellery, record ETF inflows, physical bar-and-coin buying, and persistent central bank accumulation. In the last two years (2024–2025), central banks added an estimated 1,037 tonnes in 2024…a record year…and 850 tonnes in 2025. Poland, Turkey, China, India, and Kazakhstan are the leading buyers. China, of course, has been buying steadily and aggressively for over a decade. However, none of the major 20th-century sellers have been buyers.
Together these four sources of demand came to about $595 billion in value last year, using the average 2025 price of around $3,450 an ounce. Put another way, roughly 3.2% of the 2024 total gold market cap increased the value of it by almost 69%. The power of a transparent price in a competitive auction, regardless of quantity, can revalue trillions of dollars of assets in a single settlement. Keep in mind most buyers were simply adding to existing holdings.
Gold miners have shifted their focus to lower ore grades to keep output and revenues stable, decelerating reserve depletion. All-in sustaining costs face modest upward pressure into 2026 (8%ish), but with prices averaging well over $4,000, margins remain easily $2,500–$3,000 an ounce for a second straight year of extraordinary profitability. It does not get better than this because it has never been better than this… except perhaps a third year would be better than this. I didn’t see anything exciting in scrap and recycling other than an 11% bump in 2024, which is the highest since 2012, and another increase of 300t in 2025. I doubt scrap will be the camel’s last straw.
Jewellery demand, on the other hand, fell roughly 19% in tonnes in 2025—which is exactly what you’d expect when prices surge 65%. Luxury houses deliberately absorbed much of the rally with moderate prices, preserving brands and exclusivity; keeping sales growth healthy. Tiffany, Cartier, Bulgari, Van Cleef, etc. had a decent year by keeping retail increases to a 3–13% range. If gold goes higher, that will be good for silver and platinum. Unfortunately, you’re better off giving pewter jewelry than palladium!
From a high level, gold is an exceptionally well-balanced and well-managed industry at every point in the supply chain: globally, officially, financially, and industrially. Gold mining is geographically dispersed but heavily concentrated in China, Australia, and Russia. The dealing community has shifted resources away from New York to better service the new centers of demand. London still covers Russia, Africa, India, Singapore, and Hong Kong. The Americas remain relevant but they are getting smaller in relative terms. The Comex was once the undisputed center of the precious metals universe but now functions mostly as a warehouse that settles prices for the night shift.
Charts and Technical Analysis
There is a shortage of gold futures which means somewhere in the chain of custody, there is a shortage.
This is probably one of the more important gold charts illustrating why gold is so strong. Gold prices began this rally in October 2023 with open interest circa 492,000 on the Comex. Today, on January 4, 2026, they are at 478,000, having not moved at all from quarter to quarter for the entire duration of this $2,500 dollar 100% rally.
What this means is if someone wants to be long Comex futures, he has to buy them from another long because there are no new sellers of futures. The knock-on conclusion is simple.
Supply data tells us new mine production has been flat for 2 years and all of the demand segments are growing, even jewellery albeit down a bit this year. Those rising data are correlated with prices. Futures open interest is not because… the Comex has ceased to be a primary market. No one sells gold on the Comex except hedgers of inventories which are temporarily high and EFP swaps that are extremely risky for low returns. Gold is bought and sold in London and Asia and, at every opportunity to ship it out of New York, it goes out.
Why is This Happening to the Comex?
The ghost of William Simon still holds sway. Gold still is for weirdos and bad for Americans in America. It was an enemy of the state from the get-go in 1975. It still is. Regulatory agencies encourage suppression and aggressive exchange surveillance, labyrinthine rules and limitations and waivers are mostly trap doors and carveouts for the banks.
Over time these restrictions made large private sector transactions in deliverable futures impossible. However, the suppressive and exclusive powers conveyed to the financial sector were an irresistible source of legal manipulation and highly profitable for years, decades. “So, sue me.” And there were many lawsuits.
The final cost when the bills came due? The destruction of the Comex as a deep auction and transparent venue and… silver in Q4 2025. Gold may yet follow to Comex perdition. The elements of a derivative silver-like shortage are there.
Technically Speaking
Nine consecutive quarters of higher highs and higher lows illustrates the vertical force of long time-frame range extension. Each quarter’s range beginning in October 2023 is larger than the previous quarter. This implies an extreme imbalance, a tectonic financial shift, and an unrelenting and panicky urgency to buy gold. In my opinion, there is a very low probability the 2023/2024 range will be re-auctioned for some considerable time, many years… if ever.
The April 2025 low of $2,949 is the bottom of a liquidation void (Trump’s April “Liberation Day”) which reset the value of every major risk asset including equities, metals, and energy. If that low in gold is ever violated with volume and narrative authority, it would imply a watershed deflationary wave, in my opinion.
The April 2025 high is the top of that void in April from which all buyers of all assets beneath it now own anchored control of them. I don’t think I’m going to get a chance to buy at that level in the context of an AI revolution, but I’m going to be mentally prepared to buck the panic if we get another shot at it or any high-volume penetration into the $3,900/$2,900 zone.
Reading the chart from the left for reference, the major move to $1,900 in August and September 2011 began in July 2001 at $250/oz. Slow-stochastic %D remained above 90% during the entire move (above 90 is bullish in a trend, bearish in a range). When gold finally did capitulate stale length in 2013, it held a tight range for 6 years and went up. I foresee that as a long-odds worst case for long entries at current levels. We are 3 years into this bull run.
Daily data implies a point of control may be forming near or around $4,050. If we see development around $4,000 in 2026, I plan to observe carefully with a view to buying weakness. New highs on good volume and fresh narratives would imply the longer time-frame auction is still unresolved. One caveat is the cost of carry in a contango market. If gold trades horizontally for a few months as it did from April to September, the rolls can be expensive so be prepared for rolls going in.
Note: Rising open interest at any time now would be a red flag indicating a new supply of futures for sale (for instance the mines exploring project finance), whereas usually it would mean new demand for length. It’s nice to have that little jewel to use in the crow’s nest.
My Vibe
Gold has no enemies. Four words to counter the most dangerous four words in trading: “It’s different this time.” Gold is not frothy or squeezy. It is not complicated. Investment demand is rising. Central banks are buying, notably China and India representing more than a third of the world population and 20% of global GDP. For most of the planet’s people and GDP in 2025, gold is not anathema to fiat prejudices.
A factoid of interest: In 1952 world population was 2.58 billion and the total known above-ground supply of gold according to the Federal Reserve was 1.7 billion ounces. Therefore in 1952 there were 0.66 troy ounces or 20.53 grams of gold for every living person. Today world population is 8.27 billion people and the total known above-ground supply of gold is 7.07 billion ounces. Therefore 0.85 troy ounces of gold or 26.44 grams per person, soon to be an ounce per capita on or before 2040 and rising.
For now, all trends in force are healthy and higher without Trump’s AI gambit. His looming trillions and Wall Street are betting on equities and crypto. If they’re wrong, even a little bit wrong at that scale of risk, the flight to gold will make this one look like a bounce.
Having said all that 2026 be like… the best is yet to come!