CENTRAL BANK BUYING REACHES NEW HEIGHTS
Central banks have doubled their gold purchases since the Ukraine conflict began, with China's central bank expanding reserves for four consecutive months. The World Gold Council reports central banks purchased over 1,000 tons for the third straight year in 2024, with fourth-quarter buying surging 54% year-over-year.
HISTORIC MARKET DISCONNECT
"You have this absolutely bizarre disconnect between the gold price, which has just broken $3,000 an ounce, and gold equities which are still trading as if gold was $1,800 an ounce," notes Ross Norman, CEO of Metals Daily. Major producers like Newmont and Barrick Gold are trading at significant discounts to the S&P 500's average P/E ratio, despite generating record cash flows.
GOLDMAN RAISES TARGETS
Goldman Sachs has raised its year-end gold target to $3,100, while Macquarie suggests prices could reach $3,500 if U.S. budget deficit concerns persist. JPMorgan Chase and Bank of America both view the looming trade war as a tailwind for gold through 2025.
WHAT THIS COULD MEAN FOR INVESTORS
With mining stocks severely lagging physical gold prices, analysts point to a rare opportunity in the sector. One U.S.-based exploration company has attracted particular attention, securing major funding from a billion-dollar competitor amid rising trade tensions. With Trump's April 2nd policy implementation approaching and gold hitting new highs, market observers suggest the current disconnect between gold and mining stocks may not last much longer.