The name says a lot about both the U.S. and gold with one suffering a collapse of trust and the other reveling in what looks to be the first steps towards a possible return to the “gold standard” which ruled international trade for 100 years, up to 1971.

At its simplest, the debasement trade involves selling U.S. assets, especially government bonds, and buying gold because it is seen as safer than the U.S. dollar – a remarkable switch acknowledged by two of the world’s richest men, Ray Dalio and Ken Griffin.

What alarms Dalio, founder of the US$92 billion Bridgewater hedge fund and Griffin, founder of the US$445 billion Citadel fund, is the U.S. Government’s US$37.8 trillion debt mountain, and 125% ratio of debt to gross domestic product (GDP).

“Gold is a currency,” Dalio said. “It is the second biggest reserve currency, and you’re seeing changes in monetary order that are reflecting those things, somewhat like what happened in the early 1970s.”

China is leading the charge out of the U.S. into gold, reportedly buying an extra 40,000 ounces in September to now be sitting on 2377 tonnes, slipping past Russia with its 2326t to ranks as the world’s 6th biggest owner of gold. India is also a keen gold buyer as it also seeks to limit exposure to the U.S.

While a trip back to the future, with gold displacing the dollar as the world’s most important currency, seems unlikely there is ample evidence of a fundamental shift in values as investors place their faith (and cash) in assets beyond the reach of governments.

Bitcoin is another winner from the debasement trade, as are gold’s close precious metal relations, silver, and platinum. Over the past 12-months, the value of a Bitcoin has risen by 105%, roughly double gold’s 54% increase. Silver is up 60% and platinum is up 74%.

Those price moves have unleashed a global FOMO (fear of missing out) feeding frenzy as investors load up on gold whether in its bullion form, ETFs or shares in mining companies.

The flipside of the gold rush is growing concern about the economic outlook and overpriced stock markets, with both the International Monetary Fund and the Bank of England warning about the potential for a sharp share price correction.

Gold’s mad dash upward even worries London gold specialist Ross Norman, who said midweek that while repricing gold was far more than speculative froth, it was also a warning about the state of financial markets.

Norman said the stampede into gold was notable for three factors:

  • The repricing of trust which speaks directly to deepening global concerns about sovereign (government) balance sheets, the sustainability of fiscal policy and unsustainable debt. “It is a flight to quality as other assets appear vulnerable.”
  • The speed and scale of the rush, with gold only breaching the US$3000/oz mark seven months ago and the rapid move to US$4000/oz validating the fear of a profound loss of confidence in paper assets, and
  • A shift to the world’s eastern hemisphere, highlighted by the fact that both the rise to US$3000/oz and to US$4000/oz occurred during Asian trading hours. “Gold is now signalling that the global centre of gravity is shifting east,” Norman said.

In Australia, the gold rush accelerated this week even as the price retreated from its all-time high of US$4058/oz reached early yesterday, in the hours before a Gaza peace deal was announced.

The ASX gold index rose by 3.5% over the week, led by sector leader Northern Star which traded up to $24.53, perhaps on its way to the $30 price target set on Monday by Bell Potter.

Gold’s dominance of the Australian market can be seen in the 97% rise in its XGD index (including 21% over the past four weeks) as the overall market managed a modest monthly rise of 2%.

Gold moves and news included:

  • Greatland Resources bouncing back from its post-listing sell-off with a rise of $1.07 (15%) over the week to $8.36, down slightly on its midweek all-time high of $8.62. Citi has a $9 target price on the stock.
  • Strickland Metals, up 4c to 19c after reporting a major copper and gold hit during drilling at its Rogozna project in Serbia with a hit of 191.2 metres assaying 0.5 grams per tonne of gold and 0.5% copper, with higher grades in sections of the drill core.
  • Mithril Silver and Gold, up 5c to 63c after reporting rich silver assays of up to 3300g/t and 2g/t of gold over a narrow 1.3m intersection at its Copalquin project in Mexico.
  • Haranga Resources, up 4c to 17c after reporting confirmation of previously reported high-grade gold assays of up to 6g/t over 20m from drilling at its Ibel South project in Senegal.
  • St Barbara, up 5c to 58c after raising $58 million to support investment in the Simberi and Atlantic gold projects.
  • Predictive Discovery, up 13c at 56c after announcing a merger with Canada’s Robex.
  • Capricorn Metals, up 67c to $13.98 after securing support for its Warriedar Resources takeover. Barrenjoey has a $19.25 price target on Capricorn.
  • Minerals 260, up 7c to 32c after reporting shallow, high-grade intersections during drilling at its Bullabulling project in WA with a best hit of 10m at 7g/t, and
  • Leeuwin Metals, up 8c at 25c after reporting high-grade gold grading more than 5g/t from the first hole at the Evanston project in WA.

While gold was snatching the headlines, stocks exposed to the rare earth family of metals was moving up almost as quickly led by Lynas which announced a joint venture to expand its downstream exposure to permanent magnet production in the U.S.

Lynas rose by $3.01 to a 14-year high of $20.49 after the deal with Noveon Magnetics was announced, steaming past Wednesday’s $19.55 price target of Morgan Stanley.

Another significant rare earth move was from Hastings Technology Metals which rose by 21c (62%) to 54c as investors digested the full impact of its deal with Andrew Forrest’s private company, Wyloo.

Lindian, which is selling African rare earth material to Iluka’s new WA processing facility, rose by 3c to 36c. Brazilian Rare Earths added 71c to $4.89 and Power Minerals added 8.2c (83%) to 18c after announcing a deal covering ground near the Mountain Pass mine in California.

Most copper stocks rose during the week as the squeeze on copper supply worsened after a series of outages at major mines drove the price of the metals up to US$5.06 a pound.

Develop got a boost from the copper price and from a new cashflow report on its Silver Springs project in WA, adding 16c to $4.49.

Other copper winners included FireFly Metals up 5c to $1.37. Sandfire, up $1.51 to $16.60. Aeris, up 10c to 56c and AIC Mines, up 3.5c to 45c.

Lithium stocks continued to emerge from wintery conditions, led by ioneer which rose by 8.7c (52%) to 25c thanks to interest from U.S. investors in its Rhyolite Ridge project in Nevada.

IGO also continued its recovery, adding 26c to $5.47. IGO is now up 77% from its 12-month low of $3.09 reached in April. Liontown added another 6c to trade at $1.01 after tweaking its sales agreement with the U.S. car maker Ford.

Other news and moves of interest included:

  • Assay laboratory operator ALS rose by 62c to $21.82 thanks to increasing exploration drilling funded by the recent capital raising round. Morgans has lifted its price target for ALS from $20 to $24.60, and
  • Paladin led a weaker uranium sector with a rise of 24c to $8.96. Boss slipped 5c lower to $1.98 while Deep Yellow was down 4c at $2.01.