Gold Is Being Remonetized (Uncut) 04-24-2025

Gold Is Being Remonetized – Why $10K Gold & $50 Silver Are Now in Sight | Florian Grummes

Welcome back to Kitco News, I’m Jeremy Safran. Well, gold is pulling back from its record highs above $3,500 an ounce, but a fresh wave of sovereign buying may be underway. It turns out Azerbaijan’s state oil fund added nearly 19 tons in the first quarter, now holding over 165 tons of gold, more than 25% of its entire portfolio.

Meanwhile, Treasury Secretary Scott Besson says that, quote, there’s an opportunity for a big deal when it comes to China on trade, and he’s hinting at a potential reset in global capital flows. Now, in contrast, we’ve got silver surging today, up more than 3%. But as we’ve seen before, percentage spikes in silver can be deceptive.

So is this just noise, or is it the early signs of a breakout? Joining us now is our friend Florian Groomis, of course, Managing Director of Midas Touch Consulting. Joining us on a late evening from Dubai, we appreciate you making the time. Good to see you, Florian.

Thanks for having me again, Jeremy. It’s a pleasure to be here. All right, let’s talk about that sovereign accumulation, because Azerbaijan’s state oil fund, as I mentioned, just added 18.7 tons of gold in Q1 alone, and gold making up over a quarter of its portfolio.

It’s not the first time we’ve heard rumblings of this, but what does this tell you about the ongoing trend of central banks and sovereigns accumulating gold here? Well, it clearly proves that gold is being re-monetized into the system. Since 1971 and the end of the gold standard, basically, when Nixon closed the gold window, gold has been moving out of the system, more or less. Yes, central banks kept holding it, but overall, it didn’t play an important role anymore.

And now we’ve seen, since a few years, more and more demand from central banks, especially, of course, from China. But as you said, also sovereign web funds are now buying into it. And I think this trend is still in the first or second inning here.

I think this has a long way to run. Yeah, that’s what I was going to ask you, because, I mean, as I mentioned, we’ve been hearing these rumblings about central banks and other sovereign wealth funds kind of picking up gold. But does this shift the long-term floor if this continues to happen? Well, I mean, look, gold is rallying now since two and a half years, more or less, since the triple low at 1615 in autumn 2022.

And of course, you have the typical behavior. At some point, things are getting radical and spiking, and everybody’s rushing in. And of course, we also know that there’s no rush like a gold rush.

So here we are. Gold had a big pullback the last two days, 3,500 is a psychological number. But I think in the bigger scheme of things, this is not an important top at all.

I think we’re going to see much higher gold prices down the road. I think 5,000, even 10,000 is no problem. I think in my first Kidco interview a few years ago, I said $9,000, and I still stick to that.

You still stick to it. 9,000 in the long term. I mean, when do we see? OK, we see $4,000 gold this year.

We see 5,000 this year. I mean, there’s a lot going on, including these trade deals, obviously. But what are your thoughts on that? It’s an interesting question, obviously.

I mean, from the 70s, we know that gold can run higher for two or three years and can remain and stay overbought, and people just running behind the train. So it seems like we could be in a scenario like that. Of course, we see $20, $30 drops in five minutes, and we can see $100, $200 drops in a day.

But overall, the trend is very much intact. I would be surprised if gold comes much below 3,000. I think that’s probably already the worst case.

And yeah, $4,000 is possible. I mean, you’ve seen how things have been accelerating the last few weeks, and I don’t see that this is anytime soon really stopping. I mean, quite the contrary.

I mean, now it looks like silver has entered the dance floor and probably will pull back gold higher as well. OK, well, you and I are going to discuss silver in a minute. But before we do that, there’s been some news today with Scott Besant speaking in Washington, and we also got to talk about this U.S.-China big deal.

I mean, when we’re talking about Trump, he’s signaling a potential reversal on his aggressive China tariff stance, saying he wants to be, quote, very nice in negotiations, a major shift following weeks of financial market volatility, as you’ve seen. Now, the S&P 500 is rebounding, Treasury yields are pulling back, and speculation is rising over a new trade deal framework that could reshape these global capital flows. Besant today says that there’s an opportunity for a big deal with China.

If trade tensions ease and tariffs are reduced, what’s the likely impact on gold and silver prices in the short term? I mean, of course, they could pull back if there is an ease indeed coming. But at the same time, I assume gold already is pricing in rate cuts and more stimulus from the central banks. So again, I don’t think that this will violently turn around here and make a huge pullback or even a multi-month, longer-term correction.

In the bigger scheme of things, I believe still that we are in a cracker boom and that this is basically pushing everything higher because the loss of the purchasing power of most of these, or if not all of those, fiat currencies. And I mean, it’s an intact bull market. You get a pullback here and there, but I don’t think we’ve seen the grand finale, so to speak.

I haven’t seen lines and lines of people in front of gold dealers desperately wanting to buy gold and silver coins. So I don’t think it’s an important top that we’ve seen yesterday. Yeah, I wonder when that retail audience will start jumping in.

Hey, do you believe that this is a genuine pivot, though, when it comes to these tariffs? Is this just an election year optics? I mean, Trump recently posted on Truth Social an interesting post saying, quote, the golden rule of negotiating and success is he who has the gold makes the rules. So what kind of scenarios do you see playing out this year in terms of trade? I mean, first of all, I think it’s really important to understand the way Mr. Trump is negotiating. Right.

And I mean, he’s been doing this apparently since the 1960s or 1970s. And obviously in his age nowadays, he’s not changing his style. Personally, I’m much more of a diplomatic kind of guy, but he’s very aggressive.

And he comes in with like extremely high expectations or demands and then still tries to get a good deal in the end of the day. I think for most people, obviously, this is difficult to digest or difficult to handle. And he’s been basically controlling the discussion and everything in the media, in the markets for months now.

It’s unbelievable. One guy. But it looks like he’s becoming successful here with this strategy.

China has probably realized that they also have to back down a little bit. And let’s see how this all plays out. I think it’s important really to understand in the bigger picture that the transition from one powerful nation or most powerful nation to the next one in the history of mankind has never been peaceful.

So from the Portuguese to the Spanish, to the Dutch, to the French, it’s never been peaceful. And then from the French to the British as well, the only more or less diplomatic, peaceful transition happened within the Anglo-Saxon regime from the British to the Americans. And we all know that China has been growing massively over the last 20, 30 years and is challenging America now.

And until Xi Jinping came in power, we had this symbiotic kind of trade relationship between America and China, where China was producing all these cheap goods and products and America was buying them with their dollars. And the Chinese reinvested their dollars into the U.S. treasury market. And when Xi Jinping came into power, slowly but surely, the Chinese changed their strategy and are now not buying as much treasuries as they used to.

Actually, they’re reducing their holdings. And America has to interpret that as an attack on the U.S. dollar regime. And I think President Trump is the only one who really dares and understands that there needs to be taken drastic measurements.

You cannot continue like the last five decades. I mean, we all know that the way that the Western societies and economies work is basically unsustainable. It’s all debt based.

The demography is terrible for the Western countries and you need to change something. And he’s trying that. I’m not sure if the measurements that he’s taking are really the right ones and whether he will be successful, but at least he’s the one who’s trying to do something here.

If you take over an insolvent company and want to save that company, you have to turn around things 180 degrees and you have to take brutal measurements and steps. And of course, it’s hard and it’s short term pain, but probably there is a long term gain here. So I think that’s the only chance remaining for the Western world.

Otherwise, in 20, 30 years, we might be enslaved by Chinese robots. You know, I mean, it’s a hard cross scenario, but it is probably coming if we don’t get our things in order here. Well, we are watching things play out, obviously, in real time.

I’m curious, you know, how does China’s dominance in rare earths and gold buying impact the West position? I mean, we learned this week. That China is accelerating its push to internationalize the yuan and gold is now front and center in that effort. The People’s Bank of China says it’s considering setting up overseas warehouses for the Shanghai Gold Exchange in a move designed to expand the use of the yuan denominated gold contracts globally.

I mean, this comes as China encourages state owned firms to settle overseas transactions in yuan currency as well. And then, of course, expand cross-border lending. What’s the strategic importance of that move, Florian, and how could this shift the global gold flows? Well, I mean, as I just explained, China is challenging the US dollar system and they’re doing it since the introduction of the Shanghai Gold Exchange, where there’s only physical gold being traded and all those future contracts, while at the COMEX and the LBMA, there’s at some point maybe 200, 250 paper ounces of gold for one real ounce of gold.

And that’s how the price finding has happened over the last few decades. So China is challenging that. I’ve been talking about this for years now that, of course, they need to back their yuan in some form with gold to gain the trust, because you and I, we would not like to hold Chinese yuan at this point.

You wouldn’t really want to make an investment into it, right? So they need to gain that confidence and that trust and they will do it by using gold. And somehow they are introducing it into the yuan system and they’re giving the trading partners the option or the opportunity to basically settle trades in physical gold. And I mean, we know that the Saudis, for example, were able to use their yuan that they received for the oil in Shanghai to get physical gold.

And I think that’s continuing. And, for example, that’s a big reason to believe that gold will stay strong and continue its move higher. It’s a super exciting, interesting times that we’re living in, historic times.

Right now. And I don’t see any other way forward than higher gold prices overall. Again, of course, the volatility is increasing.

It’s getting more and more crazy. But as long as you keep your methods physically in your own hands, you don’t have to worry about anything, right? Well, we’re talking about that de-dollarization, you know, we’ve continued to talk about it here. And the PBOC is pushing for blockchain and expanding the cross-border interbank payment system, the SIPs.

I mean, could you could gold settle via SIPs or CIPs? You know, could it become a viable alternative to SWIFT? Maybe down the road. I mean, it really depends how all these trading partners want to do business in the longer run. It depends how strong the West can remain or maybe become strong again.

Right now, of course, it looks like China is doing everything to build its own system. And I mean, there’s not a secret that they control half of Africa, I guess, when it comes to the resources. And they’re a big player on the oil market, a big player on the copper market.

And if you’re a trading partner with them, yep, you probably will appreciate any alternative for payment trails if they can offer it and if it works out. And if it’s on a blockchain, OK, then why not? I mean, I think all these things are coming at the same time. It’s going to be very interesting.

Yeah, we’re in interesting times every day. OK, well, let’s get back to the tariffs and kind of talk about this U.S. deficit problem. Obviously, we have in its first fiscal monitor report released Wednesday, the International Monetary Fund said that tariff revenue may help narrow the U.S. deficit slightly in 2025.

Do you agree with this? And more importantly, could this, you know, short term improvement in fiscal metrics maybe dampen the bullish case for gold or is it more structural debt issue here? Are we too entrenched? Well, I mean, the deficit, the U.S. deficit is an exponential function, right? And they desperately do need to do everything. And they’re doing now everything to turn things around. And I think tariffs can maybe help to bring it down a little bit.

Obviously, getting rid of USAID, it was helpful. I think they will do other drastic measurements sooner than later. It needs to be attacked because, as you know, like if you’re insolvent, you don’t have a lot of options anymore.

So I don’t think that this will be challenging for gold. I mean, we know that the Americans also, I mean, lots of gold has been shipped to America from London and also from Switzerland over the last three, four months. In fact, that was probably one of the main drivers that so much physical gold left the LBMA in London and has created a lot of problems for those people that have sold for decades unallocated gold contracts.

And now that the smart money, the big money, the institutional money, the sovereign money wants to know, is the gold really there? They basically have to tell them, well, it takes eight, nine weeks that we maybe are able to send you the gold. So that situation is not going away. Of course, higher prices might ease a little bit the situation in the short term.

But I don’t think that this will bring gold down dramatically. So instead, I think that down the road, I think that America will maybe also introduce new ways of using gold within the system, maybe backing with treasuries by gold, whatever. I mean, there’s lots of ideas circulating already.

And I think they’re also trying to get as much gold as possible into America right now. That’s actually happening. We are in a gold rush and gold is being monetized, re-monetized into the system.

And I think this is a longer process. This is not just a few months. Yeah.

I wonder if that had anything to do with the Truth Social post that Trump had put out there saying he who holds the gold. Right. I mean, that’s a classic, classic one, a classic quote.

It has been the truth. And again, I mean, people have to accept and realize like China has picked gold. They didn’t pick Bitcoin, they picked gold.

So and that’s what’s going on. It’s gold is being re-monetized. The smart money needs to make sure that the gold, the physical gold is there.

And as you know, for the last five decades, lots of paper gold has been sold and the physical gold is rather rare and hard to get on, especially in the quantities that they need. Let’s talk about this little pullback here, because we’ve seen a sharp pullback, obviously. Gold hit that record of $3,509 an ounce yesterday.

And at the time of recording this June, gold futures were down more than $120, trading below $3,300 an ounce. Big hundred dollar swings here. What are your thoughts in terms of this trend? I mean, I know that you just said we got like $4,000, $6,000, maybe even $9,000 gold.

But is this just short term profit taking? Yeah, I think it’s short term profit taking. I mean, $3,500 is a psychological number. I think I had a price target also around that area.

Look, of course, gold is very overbought on all timeframes, so I would not necessarily recommend to run into the store right now and buy gold. It’s very overbought. But at the same time, if I look around and listen to most of the people, everybody is basically expecting a big pullback.

And I don’t think it’s going to happen. I mean, can it pull back from $3,500 to maybe $3,000? Yeah, that could happen. It looks like in the very short term, if you want to know exactly, could be a head and shoulders kind of topping formation building here.

So if gold is not able to get back above $3,370-ish, then there is room probably towards $3,070 on the downside. So that would be probably $200 from here. But I mean, this run up has been so crazy over the last two or three weeks.

I think it would be totally healthy and good if it pulls back and takes a breather here. I’ve been saying again and again, especially in the last few weeks, that as long as silver doesn’t show up to the party, I don’t think that we’ve seen any important gold top here. And I still believe in that.

Silver has been only following gold so far. Gold has been on its own. Yes, the general stock market has found a low two weeks ago.

We’ve seen I think the VIX hit like around 60. This is I think five times in the last 35 years we’ve seen these extreme fear kind of readings. So most likely this correction is done for now in the short term and the markets will recover.

So the stock market will recover and Bitcoin, crypto will continue to recover. And of course, if you look at money flows and liquidity, maybe that’s enough reasons for gold to maybe consolidate sideways above $3,000. But again, I think I mean, that’s what we’ve seen over the last two and a half years.

Gold never came back really big time. It’s been mainly if there was a pullback, it was consolidating sideways over time and then it basically just collected some energy and steam again to run higher again. So I don’t think that this is a big, important short term top here.

Again, I wouldn’t be surprised if gold can hold up above $3,000 in the next few days and weeks. Maybe if silver really takes over now, it doesn’t even go that low anymore. We have one open gap, I think around $3,175ish.

There’s a little gap. Usually these gaps in 80% of the cases are getting closed. So that’s maybe a number to keep in mind.

But overall, you see these crazy moves. I mean, it’s up $100, $200, then it’s down $100. You have to be really, really very cool, strong nerves if you are a trader in these markets.

But of course, at the same time, huge opportunities. And for the physical, again, I said it before, if you hold physical gold and silver, there’s nothing to worry. In fact, it’s great times.

Florian, with the gold and silver ratio, I mean, it’s above 100. I mean, we haven’t seen these levels since the COVID crash. What does that signal to you about market sentiment and potential reversion? Well, of course, in terms of silver, also in terms of oil, gold is dramatically overvalued here.

But you can also say that, like we know, silver always lacks, always does its own thing, always deceives everybody until finally, suddenly it shows up. And so I’m not too worried. I understand that many of the silver bucks, the silver investors, also the silver mining stock investors are disappointed here, seeing gold going higher like crazy and silver just barely following it.

But I believe that this penny that we’ve seen two weeks ago when silver also basically came down to $28, roughly speaking, I think all the weak hands are out of the silver market now. Any leveraged traders got basically killed in that pullback. And it reminds me of what we’ve seen in the COVID crash in March 2020, when silver went down to $11.

And then a few weeks later, it started to catch up with gold. And then in the summer of 2020, suddenly silver took over and went from $20 to $30, 50 percent gain in just five weeks. So this is what silver can do.

So are we in the same context? Are we in the same context now? I mean, I know that you set a goal for $45.50 target on silver for late spring. I mean, is there is that the technicals that you’re kind of looking at here for the breakout? Yeah, exactly. I wrote a piece just last weekend where I said, like, this was an ice cold shower and basically awakening the silver bulls, because usually once a market is freed from the weak hands, then these rallies can start.

And I believe still what I’ve been saying now for a few weeks and months that silver will show up and we’re going to see prices around $40, maybe even $50 by late spring, early summer. And I think everything is on the table now. And today was the first day where you’ve seen gold acting rather weak and correcting.

And then silver took over and basically helped gold coming back on its feet, more or less. But silver took over and showing signs of life on its own. And that’s very important.

And I think that can continue dramatically over the next few weeks. So my money is on silver now. It’s extremely undervalued, like you pointed out.

The gold-silver ratio above 100 is basically a joke. I mean, we know that in the earth it’s 10 to 1. I had been speaking with Keith Neumeier a few weeks ago, and he mentioned that basically in their production, it’s like a 7 to 1 kind of ratio, yet the market is trading at above 100 to 1. So silver has a lot of room to catch up here. And I’m not telling anything new, but we all know it’s one of the very few commodities to trading below the 1980 high.

So I’m in the three-digit silver camp in the mid to longer run. And in the shorter term, until the summer, I would say, yes, we’re going to see $40 to $50 a month. Interesting.

And I mean, to your point, we haven’t really seen the retail audience or investors really come and grab the physical metal itself. I mean, silver inventories on the Shanghai Stock Exchange are at an eight-month low. How significant is this? What does it tell you about the demand in China, Florian? Well, I mean, we know that the demand is through the roof in China already for quite some time, not only through the industrial demand.

We’ve seen last year, for example, double-digit premiums in the Shanghai Gold Exchange for silver, physical silver. And now we’re seeing lots of outflows from the Shanghai volts. We also see lots of inflows into the COMEX volts.

I think silver is basically replaying what gold has been doing now for the last four or five months. And so, yeah, fasten your seatbelts, I would say, it’s going to be very exciting. We know that the silver market is in a deficit for the last four years already.

It’s very hard to bring new projects online. I mean, we haven’t talked about the mining stocks yet, but we know that it used to take maybe eight to 10 years to bring a mine online. Now it’s more like 15 to 17 years.

And there is not a lot of silver projects and silver mines coming into production anytime soon. So this market will remain tight. Don’t forget, India is buying a lot of silver as well.

I think it’s finally time to really be a silver bull. What’s your, like, what would change the thesis? You know, what would change your $50 call or even accelerate it right now in the market? What do you think? That’s the interesting discussion that we also have in my Telegram channel from time to time. Like, usually I would say we’ve seen a top at $50 in 1980.

We’ve seen a $50 top in 2011. So technically speaking, this $50 level is strong resistance. It’s also a psychological number.

So if the market were really up to that number, you would expect a pullback again, right? Maybe back down to where we are trading right now, maybe $35. But then again, I mean, things are escalating and accelerating. And it could also mean that silver just breaks through that $50 and runs higher towards maybe $90 to $100.

I mean, it’s on a very long term chart, silver has this huge cup and handle pattern like the last 45 years. And on a linear chart, we’re not talking, I mean, on a linear chart, the last 45 years, the depths of the cup points to $90, $95. So I think silver can easily double, triple, quadruple from here.

But given the fact that $50 is a resistance, I think I’d still conservative if I said $50 by the summer. OK, I got to ask you then, before I let you go, Florian, I know it’s late there. Let’s talk mining stocks.

You just brought it up. Give me a couple of faves. Maybe, I mean, we know that the revenue is up.

I mean, we know that with these metal prices, obviously, a lot of the majors are making some great cash flow right now, including Keith. You just brought up Keith, too. Any favorites? What are you looking at? People have been disappointed thus far.

Yeah, I think it’s very important to understand that the big gold producers, their margins are exploding like we have never seen in the past. And basically, if you look at the all-in costs, not only they’re all-in sustaining, but the all-in costs for the gold that they’re producing at these prices now above $3,300, let’s say, they literally print huge amounts of cash on a daily basis. And of course, they at the same time depleting their resources.

So they need to find new projects, new mines, acquire new projects, and acquire new ounces in the ground, basically. And this is going to happen rather sooner than later. I’ve been talking about it for a while already.

Yes, it’s always hard to time these kind of things. But as far as I know and what I hear from the industry and the people that I talk to, lots of talks are happening and the majors are very much looking into all these projects. And of course, the larger the project that a developer or an exploration company has in the ground in a safe jurisdiction, the more interesting for these big producers.

So anything Canada, America, obviously, is on the top of the list. South America, Africa is already a little bit more difficult, but still interesting probably. And so that’s where I’m interested in and where I’m looking in.

So big multi-million ounce projects where you can find an ounce of gold for less than $10 at these prices. I mean, the whole sector is ridiculously undervalued and it’s probably whatever you pick should do well over the next, let’s say, one, two, three years. But if you look at, for example, First Mining Gold, they have more than 12 million ounces of gold in two projects in Canada valued at less than $10 an ounce right now.

And I’m pretty sure they will be able to sell one of those projects to a big producing company. This is just one, Skeena, for example, they all have multi-million ounces in the ground and I think it’s coming. I understand that many of the mining stocks have disappointed investors over the years.

It’s a challenging, it’s a difficult sector, but now with gold at these prices, it will come. It’s actually already starting. I lied to you.

I said it was the last question, but you just brought up a couple of these majors and they’re great, including some of this M&A we’re seeing in this space. What about the juniors? Yeah, look, I mean, I think some of the majors have done really well. Of course, Newman and Berwick have rather disappointed.

Agnico, Alamos have done exceptionally well. And I think now, especially the silver mining stocks are especially interesting if silver would now really start its move over the next few weeks. I assume that many of the juniors will be taken out at some point.

I assume also that now with numbers coming out, probably mainstream investors, the generalist money kind of like slowly but surely will wake up to the fact that the numbers are insanely good now that the gold sector is producing. You have to understand that it was, politically speaking, not correct to invest in gold mining stocks. All these ESG things have basically created an environment where the generalist money had to stay away from it.

Also, the whole investment scene has changed so much with passive investment, ETFs, etc. that many of those mining stocks were simply too small to be invested in. And I think, as you rightly pointed out, M&A activity will trigger this move into the mining stocks.

And when it comes to silver, one of my favorite stocks, full disclaimer, they’re also a partner of mine, is Silver Tiger Metals. I think that’s one of the companies that is close to bringing a mine online within the next one or two years, probably. They’re waiting for the permit in Mexico.

Mexico itself has improved dramatically thanks to Mr. Trump and his tariffs. I think the Mexican government under Claudia Scheinbaum now is aware that mining is a very important sector. The sentiment has been terrible over the last few years.

And I think Mexico is coming back full force. And Silver Tiger, they have a great project. And basically, they have a modification permit.

So it doesn’t take too much to get this permit. I assume in the next few days, weeks, months, who knows, it can be around the corner already. And I think as far as I understand, they already have all the debt that they need for the financing of the mine on the table.

So with some luck, they could go online and become a producer maybe mid of next year, end of next year or latest by 2026. As I said before, there’s not many silver producers around. The whole sector is undervalued and you probably can throw a dart and whichever you pick should do well over the next few weeks and months.

Yeah. Yeah. Well said.

People are finally starting to wake up some good upside here. OK. A big thank you to Florian Grumis, of course, founder of Midas Touch Consulting, joining us from Dubai.

Get some rest, my friend. Great to see you. Thank you.

Appreciate it. Thanks, Jeremy. All the best.

Appreciate it. And of course, for more expert analysis on gold, silver and market volatility, be sure to watch our full interview and subscribe to Kitco News. I’m Jeremy Safran.

Thank you for watching. We’ll see you next time.