The Central Banks’ Biggest Secret Is Out… And It’s Sending Gold (And Gold Stocks) to New Highs

If you had asked me two months ago which would be higher in early 2025 (gold or Bitcoin) I wouldn’t have even let you finish the question. Bitcoin all the way. I mean, for Pete’s sake, Trump was attending Bitcoin conferences and even launched his own memecoin (because of course he did). I mean come on, gold? That’s what your grandpa buys when he doesn’t trust banks.

And yet, here we are. Gold has climbed nearly 10% year-to-date to $2,925 an ounce and is hovering at record highs. Over the past year, gold has gained 43%. On the other hand, Bitcoin is still trying to find its footing after a volatile start to the year. And now Goldman Sachs, the definition of old-money on Wall Street, is saying the gold rally might just be getting started.

Goldman just increased its year-end gold price target from $2,890 to $3,100 an ounce. The reason is simple… "structurally higher" central bank demand. In other words: the world’s biggest financial institutions are hoarding gold like they know something we don’t. Goldman estimates that this trend alone could add 9% to gold’s price by the end of the year. Oh, and ETF inflows are giving it an extra shot in the arm too.

But that’s only one piece of the puzzle. If Trump’s tariff policies bring more economic uncertainty (we all know they probably will), Goldman thinks gold could hit $3,300 per ounce by year-end. And if central banks get even greedier and start buying 70 tonnes per month instead of the projected 50? We’re talking $3,200 by December.

So yeah, it turns out gold isn’t just an outdated hedge for boomers worried about the apocalypse… it’s actually a pretty solid investment right now.

While the S&P 500 and Dow Jones have put up respectable gains of over 20% and 15% respectively in the past year, gold has been in a league of its own. And it’s not alone… silver is up over 40% for the year, and platinum is up more than 10%.

Naturally, gold stocks are having a field day too. Barrick Gold is up 16% year-to-date and just posted its highest net earnings in a decade. Their operating cash flow jumped 18% last quarter, bringing their 2024 total to $4.5 billion. It has also returned capital to shareholders, spending $500 million on share buybacks and $700 million on dividends. The SPDR Gold Shares ETF has also gained 10%.

Not everyone is buying the gold hype, though. New York Stock Exchange strategist Michael Reinking warned that there are "signs of short-term exhaustion," and veteran trader Kenny Polcari says, "It feels a bit tired to me... I’m not chasing it up here."

Fair enough. Gold has been on a rocket ride, and nothing goes straight up forever (except inflation and taxes). But Goldman’s long-term thesis still holds… central banks are buying like crazy, inflation concerns are real, and economic uncertainty isn’t disappearing anytime soon. Even if gold takes a breather, the trend is looking strong.

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Stock.News does not have positions in companies mentioned.