Why Gold Is Going Ballistic

Part 1

(April 21, 2025 - Barry Stuppler, MintStateGold.com)

Gold has shown excellent appreciation in 2025. It started the year at $2,629 per ounce, and is currently up $751, trading at $3,380 per ounce, a 28.56% increase in just 3 ½ months. But, since the start of April, the gold price has gone ballistic. It’s up $260, or 8.3%, in just 14 Days.  WHY?

Central Banks

Central Banks and large worldwide financial corporations have stepped up purchasing. Their concerns about the effects of Trump’s tariffs and the high possibility of a trade war in the near future is causing them to dump U.S. Dollars and buy gold. We must remember that the U.S. Dollar is the world’s reference currency and many of these Central banks keep billions of U.S. Dollars to conduct world commerce.

The U.S. Dollar

The Bretton Woods system of 1944 was the first example of a fully negotiated international monetary agreement. This agreement required countries to guarantee convertibility of their currencies in U.S. Dollars, with the dollar convertible into gold bullion for governments and central banks. This was to prevent competitive devaluation and it established the International Monetary Fund (IMF) to monitor exchange rates. The Bretton Woods agreement ended in 1971, and since that time the U.S. Dollar has been the primary global reserve currency.  Most of the world’s leading Central Banks hold Gold, U.S. Dollars and domestic currencies for purposes of commerce and international trade.

Since the beginning of 2025, the value of the U.S. Dollar has fallen over 11%, with the U.S. Dollar Index dropping from 109.63 to 98.25. Most of this recent U.S. Dollar depreciation was caused by Central Banks and Financial Corporations running from the U.S. Dollar to gold. But you must understand that many investors have had faith in the U.S. Government securities and its currency for years. Now, Geopolitical tensions and Trump’s unpredictable tariff and trade policies are driving higher demand for gold, the only real Safe-Haven asset.

Many individuals in Asia, South America and the Middle East have experienced hyper-inflation and the destruction of their local currency in their lifetime. During the past 50 years, many of these people have moved from gold to the U.S. Dollar for the purpose of conducting commerce. But, based on the current news on Trump’s International polices and an upcoming trade war, many of these people are moving back to Gold and trading in their U.S. Dollar holdings, especially in Asia. Gold is truly a world currency and that is why many foreigners keep their family wealth in gold and not currency.

The higher price for gold is a reflection of a lower value of the U.S. Dollar and extraordinary demand from Central banks dumping the U.S. Dollar

Trump Tariffs and Possible Trade War

The Trump administration’s attacks on Social Security, Federal agencies, judges, and Universities are leading to a lack of confidence within the United States. Trump’s geopolitical and tariff polices are causing concerns around the world about a future trade war and a serious recession. Many U.S. economists feel that Trump’s Tariff’s will lead to higher inflation, an increase in unemployment and a 60% chance of a recession by year end.

China

The Chinese people and their government have for over 40 years been acquiring and mining huge amounts of gold. China is the largest producer of newly mined gold in the world, and they don’t sell anything into the world market. A sizeable part of the People’s Bank of China’s reserves is U.S. Treasuries and currency. Their gold holdings currently represent only 6.5% of total reserves (2,292 metric tons). Since the beginning of 2025, the Chinese people and government have stepped up gold purchasing and are dumping U.S. Dollars. China isn’t alone, other countries (i.e., Turkey, India, Brazil, Russia, and many European nations) are actively purchasing sizable amounts of gold with their U.S. Dollars.

Financial Markets

Since April 2^nd, the world’s financial markets (especially equities) have been moving lower because of concerns about the effects of the tariffs, fear of trade wars, and concerns about high inflation and unemployment which would lead to a recession. After helping some clients with an initial liquidity (margin calls) problem in the stock market, I am now seeing fresh gold buying for personal holdings and IRA’s.

On Wednesday April 16^th, after the Federal Reserve Chairman spoke about the upcoming tariffs being higher than anticipated, he spoke of his concerns about higher inflation and unemployment.

What to Own, and when to Sell

Many of our gold investors, not collectors, are focused on gold bullion coins that have premiums under 8%. Such as popular U.S. gold coins, (i.e., 1oz Gold American Eagles and Buffalos, plus U.S. $20 Gold Saints (1908-1928). Other popular gold coins that fit the 8% criteria are 1oz Canadian Maple Leafs, Krugerrands, and many pre-1933 European gold smaller coins.

I started buying/selling gold in 1970 and have thousands of clients that have purchased from our company. This year, I have spoken with hundreds of old clients with a sizeable gold profit, who are asking is it time to sell?  My answer, has been the same. IF YOU NEED MONEY, SELL JUST WHAT YOU NEED AND KEEP THE BALANCE.  IT’S GOING HIGHER.