Gold’s Bull Run Is Not Just A U.S. Dollar Story

Frank Holmes
4 min readApr 23, 2024

Last week, I had the pleasure of hosting a webcast on gold and gold mining stocks, and I was happy to be joined by portfolio manager Ralph Aldis. Thanks to all who participated!

Regretfully, I’m not permitted to share a replay of our discussion since it was intended for financial advisors, but there are a few key points I’d like to highlight.

Gold hit a fresh all-time high of $2,432 per ounce recently, marking what Ralph and I see as one of the great gold breakouts since the end of Bretton Woods. The yellow metal’s appeal as a hedge against uncertainty, coupled with steady monthly purchases by central banks, has not merely raised the price floor but should help the asset achieve new highs in the coming weeks and months.

Preserving Purchasing Power Across Borders

Gold’s recent surge isn’t just a U.S. dollar story. The precious metal is also making historic breakouts in various currencies around the world, from the Japanese yen to the Chinese yuan and Indian rupee. This global phenomenon underscores the universal appeal of gold as a store of value and a means of preserving purchasing power.

Chinese retail investors are leading a significant influx into the country’s gold-backed ETFs. In March alone, Chinese gold ETFs saw an impressive inflow of RMB1.2 billion ($164 million), marking the fourth straight month of positive flows, according to the World Gold Council (WGC). The investing spree propelled total AUM in gold ETFs to a staggering RMB35 billion ($5 billion) by month’s end.

Historic Central Bank Demand Reshaping The Gold Market

Gold’s bull market can be attributed to several factors, including negative real interest rates, expanding government debt and the ongoing de-dollarization efforts by BRICS countries such as China and Russia. As central banks continue to print money and governments run massive deficits, investors are increasingly turning to gold as a way to protect their wealth from the erosion of fiat currencies.

One of the most striking developments over the past several years has been the historic demand from central banks. These institutions have been accumulating gold at an unprecedented pace as they seek to reduce their dependence on the U.S. dollar and create an alternative global reserve currency. As I said during the webcast, China may need to buy the equivalent of eight years’ worth of total global gold production to rival the U.S. dollar.

Consolidation In The Gold Mining Industry

We’re seeing an incredible amount of merger and acquisition (M&A) activity in the gold mining sector. Gold producers are struggling to grow their reserves organically due to the lack of new, large discoveries and declining reserves at existing mines. As a result, many companies are turning to M&A as a way to expand their production and take advantage of the bullish gold market. Below are the top 10 largest mining deals of 2023, starting with Newmont’s acquisition of Newcrest for approximately $15 billion.

This consolidation is creating some exciting opportunities for investors. By owning shares in well-managed gold mining companies, investors can gain leverage to the rising gold price while also benefiting from the potential upside of successful M&A transactions.

Diversifying Portfolios With Gold And Gold-Related Investments

Higher prices have not necessarily resulted in greater investment in the U.S., and Ralph and I believe investors may be leaving an opportunity on the table. Even as the price of gold has crept up over the past four years, the number of shares outstanding in the SPDR Gold Shares ETF (GLD) has declined, indicating demand has a lot of catching up to do.

For investors seeking exposure to gold without the risks associated with individual mining stocks, gold royalty and streaming companies offer an attractive option. These companies provide upfront capital to gold miners in exchange for a percentage of future gold production or revenue. This business model allows royalty and streaming companies to generate high margins and strong cash flows with minimal operational risk.

Both Ralph and I believe that gold’s role as a safe-haven asset is becoming increasingly important. With central banks buying gold at historic levels, M&A activity heating up in the mining sector, and the metal making new highs in various currencies, the case for owning gold and gold-related investments has never been stronger.

Speaking of gold, I had a great interview with Proactive Investors last week which I invite you to watch. Check it out by clicking here.



Frank Holmes

Frank Holmes is the CEO and chief investment officer of U.S. Global Investors, an innovative investment manager with vast experience in global markets.