I think this gold rally is only just getting started. Physical gold held by central banks is getting increasingly scarce. This isn’t simply a price issue; it’s a matter of inventory and delivery. According to data from the World Gold Council, central banks have been net buyers of more than 1,000 tonnes of gold for three consecutive years: about 1,136 tonnes in 2022, 1,037 tonnes in 2023, and 1,045 tonnes in 2024. That’s a clear step up from the average of 400 to 500 tonnes a year over the past decade. Meanwhile, the “visible” buffers—such as free-float inventories in London vaults and deliverable inventories on COMEX—haven’t grown at the same pace. That’s why some experts are warning that the early signs of a global scramble for gold are already emerging. I’m no die-hard bull, and I don’t think gold can only move in one direction. But central banks’ shortage of gold isn’t something that can be solved by making a few statements or publishing a few reports. Central bank gold buying is a reserve allocation decision: it plays out over a long period and moves slowly. But when it continues, it gradually pulls physical gold out of the market, while increasing mine production and boosting recycled gold supplies both take time. During the COVID shock in March 2020, flights were grounded and refineries shut down. The spread between COMEX gold futures and the London spot price briefly widened to tens of dollars—an example of what can happen when the physical supply chain tightens and paper gold becomes disconnected from physical gold.

One more detail: weekend trading volume is only about 30% of weekday levels. The order book is thin and spreads are wide, so even a modest amount of buying can push prices up. Don’t rush to get out in conditions like these. When liquidity is low, prices can easily be driven by flows, and impatient traders can get shaken out. My approach is the same as ever: sell high and buy low; don’t chase the market. In practice, that means trading in batches: trim a little when prices surge, and add a little when they fall sharply. Don’t bet on just one direction, avoid high leverage, and keep plenty of cash on hand to manage volatility. My medium- to long-term view on gold is based on tight supplies of physical gold for central banks and hedging against fiat currencies, but in the short term, you still have to respect the market. What do you think? If you disagree, feel free to explain why.