ROSS NORMAN – Is gold defying gravity ?
As I see it, you have two options: either to believe the laws of gravity have been suspended, or to accept that gold and other precious metals exist within an entirely new paradigm. Simply claiming that the markets are massively overpriced and will return to “normal” marks you as a dinosaur who has yet to understand that fundamental changes have occurred.
So, can the laws of gravity be suspended? The answer is no. Anyone who knows me is aware that I am not nearly as smart as I like to pretend, so I will admit I had a little assistance from AI, which states:
“The laws of gravity cannot be suspended, blocked, or turned off based on current scientific understanding. Gravity is not a force that can be shielded or neutralized by any known material or technology; it results from the curvature of spacetime caused by mass, according to general relativity, and acts universally on all matter.”
Getting to the point, it is crucial to understand exactly what this new reality entails, because when it changes, so will gold. I believe precious metals sit at the crossroads of shifting geopolitical and economic tensions. The unipolar world, where everything revolved around the US dollar and US treasuries, has vanished—alongside globalization. Today, we live in a bipolar world where the West has weaponized access to its markets, payment channels, and monetary systems against those that do not align with it. Sanctions and the seizure of foreign assets are viewed by many parts of the world as acts of aggression that have undermined trust in institutions once thought above such politics. Irrespective of which side you support, the fact remains that a new iron curtain has emerged. Notably, there is growing momentum within the EU to use the frozen Russian central bank assets—approximately €200 billion held primarily at Euroclear—for Ukraine’s benefit through new financial instruments or loans.
The more the West asserts its influence, the more others seek alternatives. It’s simple. And this is not just about finding a safe haven asset that is independent, cannot be inflated away, is universally trusted, and is no one else’s promise to pay—it is more than that. This is the response from dissenting nations; it is the weaponization of access to certain commodities. In my view, the price gains are not simply the result of shifts in reserve management but are compounded by supply chain constraints and increased hoarding. In that context, a doubling of the gold price in two years, a 58% rise in silver prices year-to-date, 74% in platinum, and 39% in palladium starts to make sense. The illiquidity, tightness, and high borrowing costs (leasing) of these precious metals only confirm this perspective.
In summary, this new politicization of commodities elevates their strategic importance beyond pure supply and demand dynamics. We are witnessing record prices despite slowing global growth: commodities are no longer just cyclical assets but tools of statecraft. The mindset of purchasing managers at industrial companies, where this trend is most apparent, has shifted from just-in-time to just-in-case. Meanwhile, reserve managers at central banks have recognized that commodities are reasserting their role as strategic portfolio hedges—both against inflation and geopolitical risk.
Within this framework, the increasing resource nationalization occurring globally makes sense. Vulnerable governments want to reclaim what they see as theirs, whether rightly or wrongly. Whether it is Mali, Burkina Faso, Niger, or Guinea introducing new mining codes that give the state bigger stakes, stricter local content requirements, or the revocation of existing licenses—foreign mining companies face renegotiations of permits, greater demands for local ownership, and sometimes expropriation or license revocation. These issues reflect the greater importance sovereign nations now place on commodities. This also heightens supply and investment risks for transnational mining companies. On top of ongoing protests and permit disputes over ESG and environmental concerns, miners must also price in the risk premium of simply having their assets seized (ask Barrick). But I digress.
Since mid-2023, gold prices have risen with only short periods of consolidation and very little profit-taking. This shows that buyers are high conviction and high quality. High quality—such as central banks—means these buyers have a multi-generational perspective, unlike speculators who perhaps have a short, disinterested view of the underlying asset.
If I am right—and I welcome pushback (email below)—then this price move still has legs to run. What will signal an end to the gold bull run? Watch for an easing of Asian premiums as a temporary pause signal, but most importantly, some harmony returning to global affairs as governments learn to coexist more amicably—fat chance.
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Ross Norman
CEO
MetalsDaily.com
ross@metalsdaily.com