Following a monthly all-time close in August last Friday above $3500, Gold Futures have begun the historically turbulent month of September by hitting new all-time highs above $3600 as bets for a series of interest rate cuts by the Federal Reserve intensify.
The silver price has also broken out to 14-year highs above $42, with not much technical resistance until all-time highs near $50 per ounce.
December Gold and Silver moved above $3600 and $42, respectively, mid-week after U.S. JOLTS Job Openings for July missed estimates with a minor decline to 7.18. But job openings-to-unemployed workers ratio fell to 0.99, the worst since 2021.
The news was followed this morning by a disappointing U.S. Non-Farms Payroll (NFP) report showing the economy adding a lackluster 22,000 new jobs in August, while the unemployment rate rose to a nearly 4-year high of 4.3%.
The monthly gold close above $3500 suggests a symmetrical triangle breakout target of $3850-$4000, while Silver Futures remain 20% below an all-time high near $50 set in 1980.
A quarter-point rate cut in the Fed funds rate is now fully priced in by the marketplace during the FOMC meeting on Sept 17-18, while bond markets have priced in a 55% chance of a reduction in borrowing costs at each of the remaining three meetings for this year. UBS analysts foresee four consecutive cuts.
Shifting monetary policy expectations, heightened concerns over the Fed's independence, along with geopolitical uncertainties and fears of a sovereign debt crisis have been driving the entire gold complex higher.
France may need a bailout by the International Monetary Fund (IMF) as it faces eye-watering public debt, political chaos, and threats of social upheaval, the finance minister warned last week.
The news followed The Sunday Telegraph in the UK reporting warnings from leading economists that Britain is heading towards a 1970s-style debt crisis, and a bailout from the IMF as well.
One economist, a former Bank of England rate-setter, told the paper that the UK's borrowing costs are higher than in Greece, and there will be an economic crash unless the chancellor reverses course.
This gold breakout is benefitting from the mere fact that France and Britain are even considering an IMF bailout, which warns that the potential buyers of debt are starting to flee.
Simultaneous fiscal woes in France and Britain will only trigger wider market turmoil, with rising yields affecting multiple economies.
In fact, a global slide in long-dated bonds extended this week, sending Japan's government borrowing costs to record highs, as mounting concerns over government debt sustainability and long-term inflation also rattled investors in Europe.
The big picture shows growing concerns over the increasing debt pile in the U.S., the UK, France, and Japan, coupled with massive debt issuance that came into markets to begin the month of September, which has historically been the worst-performing month for the U.S. stock market.
The biggest test is in Paris, where the government is on the brink of collapse, awaiting a confidence vote on Monday. Prime Minister François Bayrou wants to slash expenditure, but most members of parliament and the public are not comfortable with this.
With the government hanging by a thread, the RN party is betting President Emmanuel Macron's only path out of France's latest budget crisis will be to dissolve its deeply divided parliament.
The RN is the largest single parliamentary party in France and believes it could finally win a majority that would give the far-right unprecedented power over the eurozone's No. 2 economy.
Uncertainty surrounding the Federal Reserve’s independence are adding to the bond market pressures and general trader/investor anxiety, while assisting in keeping gold and silver well bid.
President Trump has openly criticized Federal Reserve Chairman Jerome Powell since he took office in January, while the move to fire Fed Governor Lisa Cook has rattled many traders and investors.
A U.S. court is set to rule on whether Cook can temporarily stay at her job, while the case of her dismissal by Trump makes its way through the legal system.
Trump’s war against the Federal Reserve may send gold prices to as high as $5000 an ounce by driving down investor confidence in the dollar, says Goldman Sachs Group.
In a note published Thursday, the bank’s analysts warned that Trump’s attempt to interfere with the U.S. central bank could further erode trust in dollar-denominated assets, thereby adding to gold’s safe-haven appeal.
A non-independent Federal Reserve could have the negative consequences of major foreign buyers, including sovereign nations, pulling away from U.S. Treasuries due to the politicizing of the U.S. central bank. That would mean higher borrowing costs for the U.S. government, and its citizens.
The number one issue for the financial system right now is whether bonds rally from here, or continue to break down in the face of the world's most powerful central bank likely beginning to cut rates despite inflation remaining well above its mandated 2% target.
If bonds rally, then the financial system continues to chug along despite the egregious levels of debt. But if Treasuries break down from here, then the secular bear market in bonds that began in 2022 continues, signaling that we are heading towards a sovereign debt crisis.
With governments having been borrowing endlessly year after year with no intention of ever paying anything back, global central banks are fully aware of this untenable situation and have been taking steps to prepare for what is coming.
Despite policymakers claiming that debt levels remain manageable, central bank actions of buying bullion and selling U.S. Treasuries over the past 5 years have spoken much more loudly than their words.
As a result, central banks now own more gold than they do U.S. Treasuries as a percentage of foreign reserves for the first time in decades. This is a tectonic shift away from paper assets that can be devalued, to hard assets that cannot.
Throughout history, governments have gone into default in these types of Ponzi schemes when they cannot sell the new debt to pay off the old, with gold being the primary beneficiary.
Meanwhile, both technically long-term extreme overbought gold miner ETFs reached major upside resistance levels this week. On Wednesday, some healthy profit-taking began to take place as GDX tested 2011 all-time high resistance at $66, and GDXJ rose to key resistance at $85.
With GDX and GDXJ having gained over 90% thus far in 2025, the miners have provided 3x leverage to the gold price.
Although AI stocks continue to garner most of the attention in the mainstream media, the lone gold stock in the broader benchmark S&P 500, Newmont Corp (NEM), is the top performer and has doubled in price with little to no fanfare.
With the mining sector possibly reaching an interim top this week, the higher-risk junior space still has plenty of catching up to do with lower-risk late-stage juniors, miners, and royalty/streamers.
While several late-stage developers and small-cap producers remain extreme long-term overbought with the sector, several earlier stage developers, and higher-risk early-stage juniors, are breaking out of huge accumulative basing patterns.
The real-money JMJ Portfolio is up over 125% thus far is 2025, massively outperforming both GDX and GDXJ. After painstakingly accumulating positions in high quality juniors heading into 2025, this summer’s price action is why being right and sitting tight is the best course of action following a confirmed significant breakout in this tiny sector.
Nevertheless, with an over-extended mining sector due for some healthy profit-taking soon, a buying opportunity in quality juniors is likely fast approaching.
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