Source: Barron Chinese

Everything is related to the trade war initiated by Trump.

The concerns raised by the tariff issue have disturbed many investors, but gold bulls are enjoying the vast amount of uncertainty brought about by US President Trump's tariff threat.

Gold has risen about 8.5% this year and is currently priced at nearly $2,900 per ounce. In 2024, gold prices rose by nearly 30%.

Gold mining stocks perform better than gold. The VanEck Gold Miners ETF (GDX), which includes gold mining stocks such as Newmont (NEM), Agnico Eagle Mines (AEM) and Barrick Gold (GOLD), has gained more than 18% so far this year.

After a sharp rise in 2024, gold has seen a considerable increase this year. It is more cautious to remain vigilant about this, but it is worth noting that if the price of gold continues to rise, gold mining stocks are likely to still be There will be greater room for growth.

This round of gold rise has not only driven by buying from central banks in various countries, but also driven by buying from retail investors. Data released by the World Gold Council late last year showed that Poland, Turkey, India and have been big buyers of gold.

World Gold Council senior market strategist Joe Cavatoni said in an interview with Barron's magazine: "Emerging market central banks are active buyers of gold and they will continue to buy it." ”

The World Gold Council said in a report released on Wednesday (February 5) that gold demand hit a quarterly high in the fourth quarter of last year, and the demand outlook for 2025 is very good.

World Gold Council pointed out in its report that "central banks and ETF investors will continue to drive demand growth as economic uncertainty supports gold's role as a risk hedging tool." /p>

All of this is related to the trade war initiated by Trump. There is something unusual about the continued rise in gold, because its rise occurs when the US dollar is also strengthening.

Frank Watson, a market analyst at Kinesis Money, pointed out that the dollar rise is “usually a negative factor for gold denominated in dollars”, however, “U.S. tariffs bring a lot of money to the economy and inflation. Uncertainty, so the attractiveness of gold as a hedge tool has not diminished.” That is to say, the impact of Trump's trade may exceed the impact of a strong dollar on gold.

Silver prices have also been rising, up about 14% so far this year. Alex Ebkarian, chief operating officer of physical precious metals trader Allegiance Gold, pointed out in an email to Barron's magazine that gold and silver prices were priced due to uncertainties in the market. It may continue to rise.

2Gold and silver price trends from February 024 to February 2025

Blue: Silver

Black: Gold

Note: Data as of 20:29 ET on February 5, 2025; Source: FactSet

Ebkarian said: "In high-risk environments, The attractiveness of physical gold and silver has become more prominent because they can eliminate counterparty risk and are reliable means of store of value. "He also noted that JPMorgan Chase has recently planned to deliver about 40 value. The billion-dollar gold bars "apparently hedging possible trade disruptions."

As for how much gold prices can rise, Michael Arone, chief investment strategist at SPDR Business, a subsidiary of State Street, believes that due to the global situation, gold prices may be this year. At some point, it broke through $3,000 per ounce.

Arone wrote in his research report, "Geo-risks and structural changes in monetary and fiscal will also boost the prospects of gold. Central banks will continue to buy gold this year, and gold prices will continue to gain support. All These may eventually release some pent-up investment demand. ”

This is also good news for gold mining stocks. Although gold mining stocks have risen sharply this year, their valuations are still reasonable. The VanEck Gold Miners ETF's expected 2025 P/E ratio is only 12 times, below the 15-year average. The ETF's price-to-earnings ratio is about 45% lower than the S&P 500, and usually its price-to-earnings ratio is 20% lower than the market.