When a nation’s gold reserves shift from one country to another, investors should pay attention.
Vast volumes of gold shifted out of Europe just before World War II broke out in the late 1930s.
As the Nazis stormed across Poland, countries desperately pulled gold reserves from their vaults and shipped it to the US for safe storage.
Well-connected, wealthy investors did the same thing… evacuating gold holdings to the US months before war broke out.
Rising gold imports into the US was a clear sign of trouble ahead.
So, given the historical implications, this headline caught my attention last week:
“Germany considers withdrawing 1,200-ton gold stockpile from the US in riposte to Trump”
According to the article, Germany is considering repatriating its stockpiles of gold from a vault in New York over worries about Donald Trump’s ‘unpredictable policies.’
Germany has one of the world’s largest stores of gold, so shifting it is no small matter. But I suspect there’s something deeper at play here.
That’s why I called on our resident gold expert, Brian Chu, to get his take…
According to Brian
…‘I think this move is part of something much bigger.
We watched how a record amount of gold left the Bank of England for New York in late January and early February.
Around that time, President Trump and Elon Musk talked about auditing Fort Knox to see how much gold was inside.
With the latest news that Germany wants to withdraw its gold, countries seem to be scrambling to have gold “on hand.”
To me, this seems like some kind of reckoning is coming up, and a country’s gold reserves matter.
Since the news in late January, gold has risen by around 10% in US dollar terms, pushing past $3,000 an ounce.
In Aussie dollar terms, gold is breaching $5,000 an ounce.
The combination of fears over a potential global recession sparked by the US Federal Reserve holding firm on interest rates, the Trump administration imposing tariffs on countries worldwide, and reduced business confidence helped spur a flight to safety.
In the past, the US dollar and gold competed for haven status. However, with the Trump administration throwing a wrench into the global economy with tariff wars, gold knocked the US dollar off its perch.
Central banks buying and countries repatriating gold show that gold is the most crucial game.
This should signal to everyone that gold is reasserting its status as money and a symbol of power.
With this tariff war, the US will wait for countries to come to the table to negotiate. And it’s prudent to turn up with enough chips on the table.”
I think there’s a lot to be said here.
Just to add, Brian has been telling his readers about this set-up in the gold market well ahead of these latest developments.
Telling his paid readership group to buy gold and gold stocks on virtually every dip over the past three years.
They’re reaping the benefits of that now.
With markets in fear mode, holding gold and gold producers seems sensible for at least part of your portfolio.
If you want more of Brian’s insights and recommendations for stocks to buy, I suggest checking out his latest work here.
Until next time
Regards,
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James Cooper,
Editor, Mining: Phase One and Diggers and Drillers
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