First half 2025 PMs summary

Reposting this report, correcting for the gold price typo. Free for all to read.

It’s been a spectacular 2025 for precious metals so far. Will it continue into H2? With fiat currencies losing credibility, the answer is a resounding YES

In quiet trading during a week foreshortened by US Independence Day, gold has held up well, while silver has been squeezed higher. In European trading this morning, gold was $3,340, up $65 from last Friday’s close and silver at $36.80 was up 86 cents.

Monday was the last trading session of the first half of this calendar year, and precious metals have beaten the socks off all other investment categories. Platinum is up 47%, palladium 24%, gold 23%, and silver 22.7%. Even copper previously recognised as monetary in coinage was up 21%.

On behalf of their clients, portfolio managers hold almost none of these categories or their derivatives. Their mindsets are stuck in Nasdaq, up 6%, the S&P up 4%, and the 30-year T-bond up 1%. On these numbers, no one appears to be complaining to their managers —yet.

But there is a silent cohort which is losing big money: foreign investors who own nearly $40 trillion invested in dollar-denominated deposits and underlying financial assets. The dollar’s trade weighted index has declined a net 10.7% since 1 January, wiping out modest gains in equities and bonds. The TWI’s chart is shown next:

For now, against other currencies the dollar appears to be in free-fall. And it is no comfort to foreigners that President Trump is racking up more debt and calling for a lower dollar and lower interest rates. Foreigners will increasingly realise the prospect of currency losses is wiping out the value of underlying financial investments. The prospect of a dollar cascading lower is highly likely when $40 trillion seeks an exit.

Not that other currencies are in a better position, demonstrated in the UK this week. Starmer’s government failed to force through some relatively minor changes to welfare costs, alerting everyone to the political impossibility of reducing spending at a time when tax revenues are falling short due to the unarguable calculus of the Laffer curve. The top 1% of UK earners pay 30% of all income tax receipts and thanks to the chancellor’s first budget, these milk cows are leaving in droves.

This is the developing background for gold and silver for the rest of the year. Gold is on an unstoppable tear:

The price has found solid support in the region of the 55-day moving average. Importantly, the long-term 12-month MA is gaining upward momentum, which is immensely bullish limiting any price consolidation.

Comex open interest is still remarkably low, confirming that the gold price is running away without speculative interest. This is next:

It is further confirmation of investor indifference. Just imagine what happens when investors realise that they are missing the best game in town.

When they do, they will probably buy silver on the basis that gold has already risen but silver has been left behind, with a gold/silver ratio still over 90. That being the case, silver’s surge is in its infancy:

Again, we see moving average momentum accelerating in a commodity which has been in supply deficit for several years. Silver is a more restricted market than gold and therefore more volatile.

It is not so much gold, silver, and other metal prices rising bullishly, but led by the dollar fiat currencies are rapidly losing purchasing power. Evidence is mounting that the fiat currency era is coming to an end.

Central banks realise this, which is why they are scrambling to secure bullion in place of dollars in their reserves. National wealth funds and wealthy Chinese and Indian families are also buying. In the first half of this year, stand-for-deliveries on Comex’s main gold contract totalled over 24 million ounces (746.5 tonnes), a rate that’s accelerating from H2 2024’s 649 tonnes. Comex has become a source of supply for foreign buyers of gold bullion.

Silver’s stand-for-deliveries in H1 2025 were over 250 million ounces at 7,786 tonnes. Much if this demand is likely to be commercial. Nevertheless, it will put a squeeze on markets desperate for physical liquidity.