Category Archives: Investment

Excerpt from this week’s: Technical Scoop: Unexpected Jobs, Golden Safety, Drill Pressure 

Source: www.stockcharts.com

Another week, another record high for gold prices. The gold bugs are happy. But silver bugs remained baffled as silver continues to be in the doldrums, well off its 1980 and 2011 high near $50 ($175 and $67 in inflation- adjusted dollars). In inflation-adjusted dollars, gold still hasn’t exceeded that 1980 high. Gold needs to get over $3,300 to achieve that. Still gold’s run has been impressive, now up 9.3% on the year, including 1.9% this past week. Silver impresses as well, up 10.9% so far but only a feeble 0.6% this past week. The gold stocks continue to rise with the Gold Bugs Index (HUI) up 4.7% and the TSX Gold Index (TGD) gaining 3.8%.

Other precious metals and near precious metals also have been rising, but not so much this past week. Platinum fell 2.2% while palladium was down 8.3%. However, copper broke out, rising 7.2% (see chart and commentary that follows).  

We are seeing numerous recommendations from mainstream brokers and business writers to hold gold. Gold has caught all their attention. By that we mean physical gold in coins, bars, etc. Gold has no liability; however, gold stocks leveraged to gold prices do have liability. ETFs hold gold, but one needs to check how the fund operates as some may also hold stock. Gold, unlike Bitcoin, is real as you can touch it. As a monetary metal, gold has been around for 5,000 years and has acted as currency. The collapse of the London Gold Pool in 1968 led to the U.S., under President Nixon, ending the gold standard due to calls on U.S. gold that would have left the U.S.’s vaults empty. At the time, U.S. dollars were convertible into gold at $35/ounce. Following the collapse of the London gold pool a two tiered market developed with the official rate still $35 while in the

other market gold began to trade higher setting the stage for the end of the gold standard. We then entered the world of fiat currencies, where we have been ever since.

Gold is rising because of fear of tariffs and escalating trade tensions between the U.S. and China, and just about anybody. Gold, as we have so often stated, is a safe haven in times of geopolitical, domestic-political, and financial uncertainty. Today we have that in spades. Chaos and volatilty remain our themes for 2025.

London vaults are being cleaned out of gold (and silver). The amount of gold held in London fell a sharp 4.9 million troy ounces in January—a record. Traders, instead of rolling over futures contracts or cashing out have increasingly been asking for physical. They then take the physical and transfer it to vaults in the U.S. Fear of tariffs is driving the move. There is also increased demand from Asia.  London still has a lot of gold, but supplies are dwindling. Lease rates (borrowing costs) are rising, but discounts are being seen for gold stored there. The same thing has been happening with silver. This outflow is reminder of similarities that sparked the collapse of the London gold pool in 1968. All this is occuring despite no word from the Trump administration that gold and silver would be subject to tariffs.

Gold is still rising in that channel that could take us up to $3,000 or higher. We are encountering some resistance at $2,900 and more might occur once we hit $3,000. That’s not unusual. Support is now $2,800. A breakdown under $2,700 could signal more losses. Under $2,500 we could be headed for $2,400. However, we believe, given the strong fundamentals for gold, the odds of a breakdown are low. Even in a stock market crash gold outperforms. Not so much the gold stocks.

Source: www.stockcharts.com

Copper has broken out. The downward correction that started with the top at $5.20 back in May 2024 appears to over. The correction unfolded in a good ABC-type correction. The correction formed a symmetrical triangle. With the breakout, the potential targets are up to $5.70. There is resistance at $4.70/$4.80. Once over $5.00, new highs become highly probable. The leading copper producer is Freeport McMoran (FCX), while Chile is the country with the largest copper production with some 27% of global production. Chile also holds the largest reserves, estimated at roughly 19% of global reserves. We are currently entering overbought territory (RSI 72.4), but we note that overbought as a condition can remain for some time as we saw back in April/May 2024. Volume has picked up. We view copper as a leading indicator for gold. Copper is considered a near precious metal as coins in the past were made of copper. Copper with zinc is brass while copper with tin is bronze. Both brass and bronze are predominantly copper.

Source: www.stockcharts.com

Frustratingly, silver still lags gold by a considerable margin. The gold/silver ratio sits at 89. In October 2024 it did fall to 78, but since then gold has been outperforming. The all-time low for the gold/silver ratio was 14.6, set at the height of the late 1970s frenzy. At the other end, the high was 131.4 set during the 2020 pandemic crash. Since that high, we appear to be forming a potential symmetrical triangle top. We need to break under 75 to tell us that the next move should show silver outperforming gold. Near term, a break under 85 could confirm a top. Silver continues making what appears as a symmetrical triangle. But we need a firm breakout over $34 to suggest we’ll make new highs above $35.07. Targets could be up to $39/$40. A breakdown under $31 would be negative and could project down to $25. We don’t expect that, but do note it.

Source: www.stockcharts.com

The upward march for the gold stocks continues. This past week the ARCA Gold Bugs Index (HUI) gained 4.7% while the TSX Gold Index (TGD) jumped 3.8%. What’s important was that the TGD exceeded 400, suggesting to us that we should see new highs above the October high of 417. The all-time high set in 2011 remains still away at 455. But that’s better than the HUI, which is still down 49% from its 2011 high. Some of the key gold stocks have been making not only 52-week highs but new all-time highs. That bodes well going forward. We are also seeing some movement in the junior gold mining market, many of which trade on the TSX Venture Exchange (CDNX). On the year, the TGD is up 20.5% while the HUI is up 18.8%. So far, they have been the best- performing sectors. A break of 390 would be negative for the near term, but under 350 would start a bear market. The correction from the October unfolded nicely in ABC fashion.

Read the FULL report here: Technical Scoop: Unexpected Jobs, Golden Safety, Drill Pressure 

Disclaimer

David Chapman is not a registered advisory service and is not an exempt market dealer (EMD) nor a licensed financial advisor. He does not and cannot give individualised market advice. David Chapman has worked in the financial industry for over 40 years including large financial corporations, banks, and investment dealers.  The information in this newsletter is intended only for informational and educational purposes. It should not be construed as an offer, a solicitation of an offer or sale of any security.  Every effort is made to provide accurate and complete information. However, we cannot guarantee that there will be no errors. We make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the contents of this commentary and expressly disclaim liability for errors and omissions in the contents of this commentary.  David Chapman will always use his best efforts to ensure the accuracy and timeliness of all information. The reader assumes all risk when trading in securities and David Chapman advises consulting a licensed professional financial advisor or portfolio manager such as Enriched Investing Incorporated before proceeding with any trade or idea presented in this newsletter. David Chapman may own shares in companies mentioned in this newsletter. Before making an investment, prospective investors should review each security’s offering documents which summarize the objectives, fees, expenses and associated risks.  David Chapman shares his ideas and opinions for informational and educational purposes only and expects the reader to perform due diligence before considering a position in any security. That includes consulting with your own licensed professional financial advisor such as Enriched Investing Incorporated.   Performance is not guaranteed, values change frequently, and past performance may not be repeated. Continue reading →

Gold hits a record high above $2,900 an ounce early Monday on U.S. President Donald Trump’s promised steel and aluminum … Continue reading →

U.S. President Donald Trump meets with Japan’s Prime Minister Shigeru Ishiba (not pictured) at the White House in Washington, U.S., Feb. 7, 2025. 
Kent Nishimura | Reuters

President Donald Trump ordered a halt to the production of new pennies, which he said will help reduce “wasteful” government spending.
“For far too long the United States has minted pennies which literally cost us more than 2 cents,” Trump said in a Truth Social post. “This is so wasteful! I have instructed my Secretary of the US Treasury to stop producing new pennies. Let’s rip the waste out of our great nations budget, even if it’s a penny at a time,” Trump wrote.

It’s not clear whether the president has the authority to stop the manufacture of the currency. According to the U.S. Constitution, coinage power, as recognized by the Supreme Court, is “exclusive” to Congress. Federal law says the Treasury Secretary can mint and issue coins as necessary for the needs of the United States.
But at least one analyst on Wall Street expects that the penny’s days are numbered. TD Cowen’s Jaret Seiberg said the halt will likely to pass judicial review, leading to a shortage in the coin.
“We believe this order would survive judicial review, which is why this is likely to occur,” Seiberg wrote on Monday. “We worry about this leading to a shortage of pennies, which could force merchants to pay banks more for coins. It also adds legal risk for merchants and banks. That could create the crisis needed to force Congress to act.”
Seiberg said he expects this could support the move toward electronic payments, bolstering companies such as Visa, MasterCard and other real-time payment networks.
What is clear is that pennies cost to make than they are worth. In 2024, the U.S. Mint spent 3.69 cents to manufacture each penny, according to an annual report. That meant the cost of each penny has run above its face value for a 19th straight fiscal year.
The latest U.S. Mint report suggests the nickel better watch its back too. Each five-cent piece costs the Mint 13.78 cents to make. Continue reading →

Market analyst Michael Oliver predicts a precious metals boom, led by silver and gold miners, as the stock market falters. … Continue reading →

Gold has surged 4.8% in a week, nearing $2,870 amid trade wars, record central bank buying, and soaring demand. Will … Continue reading →

In the monthly bulletin reserved for GoldBroker clients, I analyze the historic rise in COMEX stocks recorded in January. For the … Continue reading →

China’s futures traders drove a remarkable $400 surge in gold prices this past spring, and now they are positioned to … Continue reading →

The U.S. has used tariffs since its founding in the 18th century.
They were primarily a way to raise revenue in the nation’s early days. Later, tariffs were largely used to restrict imports or as a bargaining chip to reduce trade barriers.
President Donald Trump’s use of the import duties has broken with historical norms, economists and historians said.

Shipping containers are seen at the Port of Montreal in Montreal, Canada, on Feb. 3, 2025. 
Andrej Ivanov | Afp | Getty Images

President Donald Trump imposed broad tariffs on China on Tuesday, while tariff threats hang over other major trading partners like Canada, the European Union and Mexico.
That may lead some to wonder: How have tariffs been wielded through U.S. history, and is Trump unique in his use of them?

The ‘three Rs’ of tariffs

The U.S. has used tariffs since its founding in the 18th century.
In fact, the Tariff Act of 1789 was among the first bills ever passed by Congress.
Since then, the U.S. has used tariffs to achieve three broad goals, said Douglas Irwin, an economics professor at Dartmouth College and past president of the Economic History Association.
Irwin calls them the “three Rs” — revenue, restriction (import barriers to protect domestic industry) and reciprocity (a bargaining chip to cut deals with other countries).

Using tariffs for revenue

Tariffs are taxes on U.S. imports, paid by the entity that’s importing the foreign good. Those taxes raise revenue to help fund the federal government.

For roughly the first third of the nation’s history — from its founding until the Civil War — the revenue motivation was “paramount” as a driver to impose import duties, Irwin said. The federal government relied on tariffs for about 90% or more of its revenue during that period, he said.

But things changed after the Civil War, Irwin said. The U.S. started to impose other taxes, like excise taxes, that made the nation less reliant on tariffs.
Tariffs generated about half of federal revenue from about 1860 to 1913, when the income tax was created, Irwin said.
The scale of the government expanded significantly in the 1930s — with the creation of New Deal programs like Social Security — and later for defense spending during WWII and the Cold War, said Kris James Mitchener, an economics professor at Santa Clara University who studies economic history and political economy.
Today, “tariffs simply cannot raise enough revenue to fund government expenditure,” Mitchener said. “There’s no possible way you could support the size of the U.S. military on tariff revenue.”

Restriction and reciprocity

From the Civil War to the Great Depression, the U.S. primarily used tariffs as a restrictive measure on imports, to insulate the domestic market from foreign competition, Irwin said.
For example, the Tariff Act of 1930, popularly known as the Smoot-Hawley Tariff, levied protective tariffs on roughly 800 to 900 different types of goods, accounting for about 25% of all goods imported to the U.S., Mitchener said.
Then, the post-Depression era — especially the post-World War II period — ushered in an era of “reciprocity,” Irwin said.
The U.S. helped create the General Agreement on Tariffs and Trade in 1948, the precursor to the World Trade Organization, which set global rules for trade and ushered in an era of low tariffs.
More from Personal Finance:What the ‘mother of all trade wars’ can teach us about U.S. tariffsCould Trump’s tariffs replace the income tax?Stockpiling ahead of higher tariffs is a big mistake
That said, the U.S. also used tariffs as a reciprocal bargaining chip before WWII.
For example, before the U.S. annexed Hawaii, it signed a free-trade agreement with the Kingdom of Hawaii in 1875. The treaty allowed for duty-free imports of Hawaiian sugar and other agricultural products into the U.S. In exchange, the U.S. got exclusive access to the harbor that would later be known as Pearl Harbor.

How the president’s tariff power grew

U.S. import taxes before the WWII era were pretty high, ranging from 20% to 50%, sometimes even reaching 60%, Irwin said. They have been “very low” since 1950 or so, he said.
The average duty on goods subject to a tariff was about 2% to 4% in the 2010s before Trump’s first term, Mitchener said.
“That’s what President Trump is trying to overturn, this sort of low period of tariffs we’ve had since World War II,” Irwin said.

Before 1934, it was Congress — not presidents — that had power over tariff rates and negotiations, said Andrew Wender Cohen, a history professor at Syracuse University.
But Democrats — then known as the political party of free trade — had an enormous majority around the New Deal era and passed the Reciprocal Trade Agreements Act of 1934, granting the president the right to negotiate tariffs in certain cases, Cohen said.
“That’s when the president gains a much more substantial authority,” Cohen said.
That power accelerated after 1948 during the “transformation of the whole global economic order,” he said.

Why Trump tariff policy is ‘very unusual,’ economists say

President Donald Trump in the Oval Office of the White House on Feb. 03, 2025. 
Anna Moneymaker | Getty Images News | Getty Images

That said, Trump’s use of tariff policy is “very unusual” among modern U.S. presidents, Cohen said.
For one, Trump “likes all three Rs” — revenue, restriction and reciprocity, Irwin said.
For example, on the campaign trail, he suggested that tariffs could replace the U.S. income tax to fund the government. He said during his campaign that they would create U.S. factory jobs and has threatened to use them to strongarm Denmark to give up Greenland.
However, there are tradeoffs, Irwin said. For example, restricting imports somewhat negates tariffs’ ability to raise revenue, because it diminishes the tax base for tariffs, he said. (Those additional duties may cause companies to import less or push people to buy less, for instance.)
“You can’t really achieve all three objectives at same time,” he said.
Additionally, no previous president has tried to link a U.S. drug crisis to trade policy, as Trump did with fentanyl.
“That’s a novel take,” Mitchener said.

Many presidents have used tariffs. For example, George W. Bush, Ronald Reagan and Richard Nixon applied tariffs to protect the U.S. steel industry, as Trump did in his first term, Irwin said.
“What’s unusual about Trump is, he’s not just picking out particular industries that he thinks are of strategic importance, but he’s blocking imports across the board almost with some of these countries,” Irwin said.  
Trump imposed a 10% additional tariff on all Chinese goods, for example, and threatened a 25% tariff on imports from Canada and Mexico.
“No president in recent memory has really used tariffs across the board or in a broad-brush way to achieve various objectives,” Irwin said. “They’ve sort of adhered to the rule that we belong to the WTO. That means we keep our tariffs low as long as other countries keep their tariffs low.”
Cohen agreed.

Global trade treaties, like the United States-Mexico-Canada Agreement (USMCA) Trump signed in his first term, establish a mechanism for nations to file grievances for alleged unfair trade practices, Cohen said. Nations can generally raise tariffs as a retaliatory measure if trade rules are breached, per the treaty terms, he said.
Trump’s recent unilateral tariff announcements are unique in this regard, he said.
“I can’t think of any precedent for that,” Cohen said.
“While the executive branch was given much more power since 1934, it’s always been subject to the specific terms of the agreements,” he said. Continue reading →

The silver market is forecast to record a fifth straight market deficit in 2025, with demand once again outstripping supply.

Analysts at the Silver Institute call the projected market deficit “sizeable.” 

The Silver Institute projects record silver offtake this year, with overall demand coming in at around 1.20 billion ounces.

Supply is expected to grow by 3 percent, but it won’t be nearly enough to feed growing demand. This will lead to a 149 million-ounce market deficit. While the gap between supply and demand will shrink by about 19 percent from last year’s level, it will remain “sizeable historically.” 

This supply shortfall will have to be filled by existing stocks of above-ground metal, potentially driving prices higher.

Silver Demand in 2025 

According to the Silver Institute, growing industrial and investment demand will be somewhat offset by sagging offtake in the jewelry and silverware sectors.

Industrial demand is expected to grow by another 3 percent coming off a record year in 2024. Continuing growth in the green energy sector – specifically solar energy applications – will continue to drive overall demand higher. 

Policies implemented by the Trump administration will likely put pressure on renewable energy initiatives in the U.S., however, analysts at the Silver Institute still expect global photovoltaics installations to reach another all-time high in 2025.

The rapid growth of artificial intelligence (AI) will also fuel demand for silver.

Silver is a key component in circuit boards, semiconductors, and connectors and is vital in reducing electrical resistance and enhancing processing speeds in AI applications. AI also requires massive data centers that rely on advanced cooling systems and efficient electrical transmission. Silver is used in heat-dissipation materials and high-speed connectivity components in these big data centers.

Silver is also an important input in the automotive industry. Even assuming slower growth in battery electrical vehicle production, silver demand is expected to remain robust in this sector due to greater vehicle sophistication, electrification of powertrains (albeit at a reduced pace), and ongoing investment in expanding related infrastructure. 

On the investment side of the coin, silver demand is expected to grow by around 3 percent due to increasing retail buying in the West. According to the Silver Institute, “As Western investors adjust to new price levels, fresh investment is expected to improve, and profit-taking will also ease.”

Analysts say there are several factors underpinning investment demand.

“Uncertainty over U.S. trade and foreign policy, record-high U.S. equities, and worries about U.S. public debt levels should all reinforce interest in portfolio diversification, which in turn will benefit silver and gold investment. Moreover, even if the pace of U.S. policy rate cuts slows in 2025, the consensus is still that they are coming. Coupled with sticky inflation, this points to potential declines in real rates ahead.”

Silver Institute analysts say that any kind of crisis could drive investment demand even higher.

Given the Federal Reserve is walking a monetary policy tightrope, and the economy has been distorted by decades of easy money policies, the likelihood of some kind of economic upheaval is elevated.

This is exacerbated by the fact that the central bank is caught in a Catch-22.

On the one hand, the Fed needs to keep rates elevated to address price inflation. 

On the other hand, the debt-riddled bubble economy can’t function in a higher interest rate environment.

Clearly, the Fed can’t do both, meaning rising price inflation or an economic meltdown are in the cards. In the worst-case scenario, we could see a combination of both – stagflation.

The demand for jewelry and silverware is expected to soften in 2025, with jewelry fabrication declining by about 6 percent.

According to the Silver Institute, India will account for the bulk of the decline due to higher local prices. Chinese demand is also expected to drop due to “cautious spending by consumers on non-essential items.”

Silver Supply in 2025

On the supply side, silver mine production is expected to grow by 2 percent to a seven-year high of 844 million ounces, with increased output anticipated from both existing and new operations in several markets. But even with the surge in mine output, the silver mining sector faces structural challenges. 

Silver mine output peaked in 2016 at 900 million ounces. Up until last year, silver production had dropped by an average of 1.4 percent each year. In 2023, mines produced 814 million ounces of silver.

According to Metals Focus, a combination of reserve depletion, mine closures, and a 20 percent drop in ore grades drove sagging mine output. 

With prices rising, silver recycling is projected to increase by 5 percent, with volumes breaching 200 million ounces for the first time since 2012. According to the Silver Institute, “Industrial scrap will be the key growth driver, particularly changeouts in ethylene oxide catalysts. Jewelry and silverware recycling will also rise, reflecting India’s price-led gains.” 

Silver Isn’t Priced for These Dynamics 

While silver gained over 20 percent in 2024, many investors consider it a laggard because it remains far below its all-time high, even as gold continues to set new records. Given the supply and demand dynamics, there is the potential for silver to shine in 2025.

The gold-silver ratio is hovering at around 90-1, indicating that silver is on sale when priced in gold. Historically, when the ratio gets distorted to this degree, it tends to snap back to the mean with a vengeance as the silver price spikes to catch up.

And as already mentioned, there is the potential for economic chaos in the coming months.

Furthermore, as analyst Jesse Colombo explained, bearish investor sentiment on silver due to its perceived underperformance last year is bullish from a contrarian perspective. 

When you add it all up, there are plenty of reasons to be bullish on silver and it appears at least some in the mainstream are picking up on these dynamics. Continue reading →

Silver is on the brink of a historic breakout, trading at $32.69 with projections hitting $50 by mid-year. With rising … Continue reading →