Should investors still be buying gold above $4,000?

In this week’s global macro analysis: Gold is closing in on the unthinkable, $4,000 an ounce. As 2025’s final quarter unfolds, markets are witnessing a historic rally in precious metals. Driven by fear, fiscal uncertainty, and speculative momentum, gold has shattered record after record, defying traditional correlations with stocks and risk assets. But can this parabolic rise last? And will silver and mining stocks follow suit, or crumble when the fever breaks?

Gold accelerates into $4,000!

As the last quarter of 2025 unfolds, markets are building some great rallies.

First, let’s talk about gold. Gold bugs are undoubtedly beaming these days. The precious metal is seemingly defying gravity; breaking one record level after another. As I pen this letter, all eyes are fixed on the important $4,000 psychological level. Expectations are high enough that gold will soon trade in four-digit level starting with a number 4.

Seasonally, gold is too moving into a relatively strong month (October). According to some statistical calculations (eg, barchart.com), October is marginally positive for the metal. In the past two Octobers, gold rallied by 4.15 and 7.29 percent respectively (see below).

Source: barchart.com

Interestingly, the tenth month of the year typically secures good price stability for gold prices. The average return for October is computed at about 1.23 percent, whilst the worst return is at -3.02 percent. This is the lowest drawdown amongst all months.

November, however, is not a good month for gold. The average return is the lowest (-1.19 percent); inevitably this means prices will more volatile (see below).

Source: barchart.com

Gold’s fear-driven rally co-existing with surging stock markets

However, gold’s historical seasonal tendency is not what is driving its stupendous bull run. Fear is.

It is the fear of worsening geopolitics, the fear of deteriorating fiscal budgets and the fear of a market ruction. Tariffs (more truck tariffs this week) only added fuel to the fire. Historically, gold’s parabolic rallies were driven primarily by intense macro fear.

The first episode happened in 1979/80, when investors feared a complete breakdown of the dollar system. The next gold parabolic run occurred nearly three decades later, in 2011, when the market feared a breakup of the EU. This year could see the third great episode of fear-driven rally in gold. Fiscal dominance and unsustainable sovereign debt levels are two supporting pillars of elevated gold prices.

In some ways, the current macro market picture is puzzling. At one end, gold is surging amidst economic uncertainties and political negativity. At the other, investors are continuously FOMO’ing into AI/crypto/tech stocks as if these downside risks don’t exist at all. The paradox of markets!

The nearest period in which both asset classes (gold and stocks) rallied strongly in tandem was 2006/7, during the era of the ‘goldilocks’ (or Great Moderation as the former Fed chair Bernanke called it). Synchronised upswings, however, brought about a synchronised declines. Both slumped in 2008.

Do not be surprised in both stocks and gold both correct simultaneously in the future.

Is gold’s rally sustainable?

The most relevant question for investors today is this: How much further can gold run? Is gold, like many AI stocks, turning in a ‘bubble’? Should we still chase it?

Financial Times recently labelled gold’s buying frenzy (£) a ‘gold plated FOMO’. That’s not far from reality. But like many FOMO episodes, prices break down sooner or later.

Gold is on track for the eight consecutive weekly record high. Demand is overwhelming supply; with the gold bulls aiming to clinch the $4,000 target this week. Momentum traders, trend-following funds and other speculative capital are dominating the long side of the trade.

But as soon as gold’s momentum falters somewhat, these nimble trading funds will dash to the exit door en masse. Price swings will be huge, and amplified by leverage.

If you can remember one thing about a chart pattern, it is this: Parabolic price moves are never sustainable long term. Gold is no different.

Moreover, the US stock market itself is running hot. Any wobbly action there may spill over to overbought risk assets like gold, and spark a corrective wave.

While the S&P 500 sits at new highs now, the reality on the ground is already throwing out some warning signals. Inflation, for one, is ‘heading the wrong way’, as the Fed Bank of Chicago President Austan Goolsbee warned recently. The other warning sign was FirstBrands’ and Tricolor’s sudden bankruptcy in September.

EU – especially France, the seventh largest economy in the world – is the third area of concern. Political instability there will lead to weaker markets, sooner or later.

And remember, November could be a weak month for gold.

Silver to conquer $50?

Like gold, Silver is staring at an important psychological level: $50.

This level was touched (not breached) only twice in its history. In 1979 and 2011. Now silver bulls are aiming to break this level – for good.

For far too long, silver was trading in relatively ‘undervalued zones’. While gold has been running at new all-time highs for years, silver lagged, and was trading far beneath its 1979 highs. It may play catch up this time.

Look at silver’s inflation-adjusted charts. Just to return to its 1980 ‘real’ peak, silver requires a big run to triple digits! In other words, silver may even outpace gold in the mania phase of the current precious metal bull run. A leadership change is a possibility.

Source: X

Junior PM Miners (GDXJ) eyes 10-week bull run

Forget about buying Microstrategy (MSTR) now. Instead, it is more fashionable – and profitable – to buy precious metal miners.

Elevated gold and silver prices are minting fortunes for the shareholders of PM miners. The ETF Junior Gold Miners (GDXJ), for example, is enjoying the best run in decades. It is up ten consecutive weeks since the summer (see below). Many individual miners have advanced far more than this fund.

Like gold, the question now is whether one should chase sector higher. The short answer is ‘maybe’. It is only a yes if you know the miner intimately. Its portfolio of assets, funding position, jurisdiction and financial statements et cetera – factors that are very important in determining the value of a PM miner.

Absence any detailed knowledge of any miner, but still wish to gain exposure, holding a PM Miner ETF is the better way. Wait for a correction to initiate position.

Still, given how far some miners have rallied, going ‘all in’ on PM miners at this point is not exactly a wise thing to do. Many PM miners shareholders are sitting on sizeable profits. They will be eyeing to exit on further strength just to crystallise some long-term profits.

In trading it pays to remember the old adage: “What the wise do in the beginning, fools do in the end.”