The Major Engines for Gold’s Traditional Gains are … Changing Gears

Remember the days when gold was labeled as an “inflation hedge,” and that was it. Just watch the Consumer Price Index (CPI) numbers, and inflation would react. Then, gold became known as a “crisis hedge,” responding to wars or geopolitical tension. Then came a better measure, as a “dollar hedge,” which was considered a bet against the decline of the dollar. However, that measure was devalued when nations began to trash their own currencies in a race to the bottom, trying to weaken their currencies for trading gains.

More recently, gold rose or fell based on Federal Reserve interest rate decisions by the Federal Open Market Committee (FOMC) in its eight annual meetings. In between meetings, gold would rise or fall based on the expectations of the next Fed policy shift. What a waste of time!

Then, after the conflict with Iran began in March, gold retreated from its high. So much for a crisis hedge. The inflation rate rose, driven by energy prices, but gold did not follow inflation upward. The dollar gained some power but not enough to move gold – dollar moves of 1% or 2% are trivial. 

Then, there’s the shift in gold ETF demand. North American traders are generally slaves to the momentum trade “if gold is rising, I’ll buy it” vs. the opportunity investors in Asia “when gold declines in price, I will buy more.” Gold ETF demand has been soaring in Asia and in many overseas markets, but not so much in America, as traders seldom have patience to buy and hold.

As an example, a North American analyst who sees this trend clearly, Jurrien Timmer, Director of Global Macro at Fidelity Investments, says the fair value of gold, based on a Gold & Liquidity regression between global M2 and gold, “is around $5,000” ($4,980, to be specific). 

In explaining his market analysis, Timmer wrote earlier this month, “Loose fiscal policy combined with loose monetary policy is a clear negative for the dollar … and a clear positive for gold.”

Typically, whenever financial, political or other world events lead to a continued increase in the buying of gold and silver bullion coins for diversification or as a form of financial insurance, we see a bull market in rare coins follow in about six to 18 months. That’s because many of those new precious metals buyers are introduced by leading coin dealers to classic rare coins. My experience shows that about 10% to 20% of these new bullion coin buyers start collecting and investing in rare coins, which creates a significant new demand for the limited universe of rare coins, thereby causing their prices to increase.

Additionally, as we saw after America’s sesquicentennial celebration in 1976, when the number of rare coin collectors exploded because of new products from the U.S. Mint, I predict the same type of reaction now. America’s semiquincentennial celebration continues to see new coins created by the U.S. Mint and more and more collectors are getting into the market. That increases demand and drives the prices of rare coins higher. The old saying, “Get in while the getting’ is good,” would apply here.

Saxo Bank’s Ole Hansen Explains the Gold Market Better than Most

Ole Hansen, Head of Commodity Strategy at Denmark’s Saxo Bank, has been a clear-headed gold analyst for decades. He sees it potentially reaching $6,000 per ounce in 2027, if “structural drivers” remain intact. In his latest posts, he said, “US 10-year real yields hit their highest level in more than 20 years,” at 2.63%, a 0.76-point increase since the start of the year, “while total gold-backed ETF holdings continued to recover following a drop in H1 [the first half of] 2026.”

Real yields are the level of currently available Treasury yields over the prevailing inflation rate.

Now, Hansen says, “Real yields are rising, with the 10-year tenor reaching its highest level in 20 years amid sticky inflation and a renewed surge in long-end government bond yields,” yet “instead of triggering another wave of ETF liquidation, investor demand for gold is resilient.” 

Hansen added that high and still-rising real yields are no longer necessarily bearish for gold prices, citing “central-bank demand, the return of ETF buyers in the West alongside already robust demand from investors in Asia suggests the investor base supporting bullion has broadened.”

He is also paying attention to a revival in gold investment demand. He said gold ETF demand is at a 7-month high, and investor demand is “firm, even with yields still elevated.”

Chinese Demand Remains Strong – As Always

China is the #1 world gold producer and consumer, as its central bank keeps exchanging its massive hoard of dollars (from its trade surplus with the U.S) into gold in its foreign exchange bank. Chinese citizens are also avid gold investors. Chinese ETFs added 44 metric tons this year, through the end of August, an increase of 18% over 2025, according to the Shanghai Gold Exchange. China is the dominant global gold market and the economic uncertainty of its real estate and stock market continues to add to the luster of gold with the 1.4 billion Chinese.

China’s central bank, the People’s Bank of China (PBoC), added more than 20 tons of gold to its central reserves in August, its biggest single month of gold purchases since October of 2023.

These August purchases brought China’s total official holdings to nearly 2,400 metric tons. Also, China has added to its gold reserves for 22 consecutive months, while adding 80 metric tons of bullion in the first eight months of 2026. Most China observers would say – China is adding more bullion than official reports disclose, as China is a notably secretive gold buyer.

In this context, it’s interesting to note Goldman Sachs’ $4,900 gold forecast for 2026 did not include significantly elevated demand for gold in China or buying gold derivatives, so gold remains the “secret” hobby and obsession of central banks and private investors worldwide.

I would like to point out that the Congressional Budget Office estimated the FY2026 national deficit will hit $2.1 trillion, with the overall national debt exceeding $40 trillion.

J.P. Morgan, UBS, Commerzbank, Bank of America and Citibank all believe gold will reach at least $5,000 an ounce. I’ve written for years about buying on the dips; it’s time to make your move because central banks bought more gold in the past four years than the previous eight years combined. As I stated above, these types of price increases have historically been good for rare coin collectors, which is why you should call one of our expert account representatives today to go over options that are right for your portfolio.

Gold is down slightly over the past week, while silver was up 2.6%. The two metals have played leapfrog over the past year, with silver sometimes eclipsing gold, and other times gold leading the way.  The platinum group metals (PGMs) have not been as strong, as they are lower-capitalization markets.

Gold ETF holdings increased for eight consecutive days, bringing 2026 net gold ETF purchases to 1.46 million ounces. Total gold in ETFs reached 100 million ounces, the highest level since March 3, just after our military action with Iran began. Global gold-backed ETFs rose $18 billion in August, the second-best month ever.