May 5, 2025 – Gold and silver prices ended last week lower. Capital moved back into the equity markets and the U.S. dollar moved higher.
Bond prices edged lower with the 10-year Treasury yield finishing back above 4.3%.
This morning, though, all these moves have modestly reversed.
The Federal Open Market Committee meets again this week. The overwhelming consensus among forecasters is for Jerome Powell and his team to leave rates unchanged.
Powell is getting public pressure from President Trump and his administration to lower rates. The rhetoric is likely to escalate if the FOMC stays the course.
Friday’s Close (Weekly Gain/Loss)
Monday Morning (Gain/Loss from Friday’s Close)
Gold
$3,254 (-2.3%)
$3,331 (+2.3%)
Silver
$32.25 (-3.2%)
$32.78 (+1.7%)
Platinum
$984 (-1.0%)
$988 (+0.4%)
Palladium
$982 (+0.6%)
$985 (+0.3%)
Gold : Silver Ratio (as of Friday’s closing prices) – 100.9 to 1
When to Sell Gold
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Gold has outperformed most asset classes for the last 25 years. If you think about it, that is a pretty remarkable run.
Economic conditions varied widely, but gold held up better in tough times as well as during periods of growth. In all likelihood, no one who held gold through the past couple of decades regrets it.
Why has gold done so well and when will that change?
Precious metals investors tend to focus on the economy, inflation, and central bank policy. There is another driver which could be a more reliable signal as to when gold’s shine will dim.
The gold price has run higher, often without regard to economic data and GDP growth. Making decisions about whether to buy or sell gold based on the economic outlook doesn’t make much sense.
Monetary policy has some bearing on the price over time, no question. But that does not mean selling gold when the Federal Reserve begins tightening is a good idea.
Investors would have, for example, missed the past three years where gold had some of its best performance — while the Fed hiked interest rates.
Price inflation and the gold price are well correlated. The cost of goods and services moved relentlessly higher over the past two and a half decades — similar to the gold price.
Yet there is still more to the story. The past three years, again, hint at something else going on as inflation slowed while gold accelerated higher.
The most important driver might be confidence.
Markets are complicated and it can be dangerous to oversimplify. However, one trend has been remarkably steady over the past 25 years. Confidence has been in overall decline.
People have lost trust in government, in banks, in other large multinational corporations, in their money – you name it.
Our institutions have been letting us down. Confidence, or the lack thereof, might just be the most fundamental driver there is in the gold market.
Swapping gold for other assets, such as stocks, will make the most sense when confidence has bottomed and begins to bounce.
The election of Donald Trump and the implementation of DOGE might be signals of a bottom in confidence. It’s fair to say roughly half of the nation feels the country is headed in a better direction.
However, the other half feels quite differently. And Congress has yet to join in the effort to rein in spending and limit government.
There is a lot of very difficult work that has to be done before trust is restored. And it isn’t cyclical in nature, like springtime inevitably following winter.
The last period when confidence was on the rise – and when gold underperformed other assets – was between 1980 and 2000.
What would it take for Americans to rebuild that level of political consensus? What are the core values this consensus will be built upon? What must banks and pharmaceutical companies do to reestablish the admiration of the public? Will people again share trust in the media and its interpretation of news events?
Trying to answer questions like these gives some sense as to how easy it will be for leadership to manage the confidence problem. It won’t be easy at all, and it isn’t a short term project.
At some level, it appears investors instinctively understand. The gold price, at least thus far, is signaling the bottom in confidence remains out of sight.
This week’s Market Update was authored by Money Metals Director Clint Siegner.
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