Gold (XAUUSD) has been showing essentially neutral-to-lightly-negative trend since end of global Covid lockdowns, largely because all metals – with precious metals just playing the same pattern – have been stuck in quiet consolidation mode until recently. We have been watching moderately negative trend channel resistance on gold for the past 6 months. Over the past 5 years, the price of gold has appreciated approximately 36% while the total return of the S&P 500 has been 60%.

But gold is the quintessential “anti-dollar” – the unalterable choice for those who don’t trust fiat currencies – so in a world of low real interest rates and cheap dollars, rising prices seem only natural. Alternatively, as interest rates rise, gold without a return will naturally become less valuable.

If gold's share of total reserves (currently 17%) approaches its long-term average (58%), gold prices have significant upside potential. It is estimated that global official gold reserves will reach 38,764 tons in the second quarter of 2023, breaking the historical record set in 1965. There was a turning point in central bank gold holdings shortly after the 2008 financial crisis, and they began buying gold thereafter. More than 7,000 tons.

For example, the People's Bank of China (PBoC) claims to own 2,113 tons of gold, and it's an “open secret” in the gold industry that the PBoC's reserves are much larger than the roughly 5,000 tons. Many other world central banks stopped reporting their gold reserves between 2020 and 2022, but independent research suggests, on average they added up to 10 to 12% since then. The story continues.