Sit tight and ride the gold bull: the upswing is just beginning
With money being printed like there’s no tomorrow, the backdrop for the yellow metal and miners remains auspicious, says Dominic Frisby. Here, he reviews his recent tips and suggests some more.


One of the best books on investment you will ever read is Edwin Lefevre’s Reminiscences Of A Stock Operator. It’s a thinly disguised biography of Wall Street legend Jesse Livermore, regarded by many as the greatest trader who ever lived. I am not alone in having a great affection for the passage in which Larry Livingston (a pseudonym for Livermore) recalls a veteran trader, old Mr Partridge, with whom the firm was extremely unhappy because he was giving “very little in the way of commissions”.
Every time old Mr Partridge was given a tip to sell a stock so that he could buy it back at lower prices, he would thank the tipster politely, smile and just say, “It’s a bull market”. He didn’t want to lose his position. Livermore concludes: “In a bull market your game is to buy and hold until you believe that the bull market is near its end”. “Money is made by sitting, not trading,” Livermore said. “It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!”
The other side of the trade
Should we keep sitting tight? Monday and Tuesday’s violent correction saw gold give back over $200, having hit a record peak above $2,070 last week. Silver lost a fifth of its value. However, to me this feels like a sell-off of the “healthy correction in a bull market” variety. One reason to think so lies in the other side of the gold trade: the US dollar. Gold is priced in dollars and so they have an inverse relationship; a fall in the dollar makes gold cheaper in other currencies. The greenback has been sinking since mid-March, when the US dollar index (a measure of the dollar against the currencies of its main trading partners) was at 103. Now it’s at 93.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
President Donald Trump wants a weaker dollar. He has said so many times. In an election year it matters even more. When the dollar is weak, assets tend to rise and so people feel richer. He wants people feeling rich. They will be more likely to vote for him. If the dollar goes to 88 – and bear in mind that it spent the entire period from 2006 to 2014 below 88 – then gold will be a good two or three hundred dollars above where it is now. On the other hand, precious metals’ collapse this week was precipitated by a stabilisation in the dollar.
The dollar has further to fall
From a technical (chartist) point of view I’d like to see gold come back to around $1,800 or just below, kiss that level and then set off to the races. If the US dollar rally continues then that looks likely. But downward momentum in the dollar is so great that at the moment I have to say I will almost be more surprised if we don’t hit 88 this year than if we do.
The euro in particular looks like it’s begun a new bull market against the dollar. Gold’s strength is not just a weak US dollar story. It is a weak fiat currency story. It is a global money-printing bonanza story. Take sterling. In the first half of 2019, gold was trading below £1,000 an ounce. It began 2020 at £1,150/oz. Now it’s north of £1,500/oz.
A global money-printing bonanza
Circumstances are different from 2011, the last time gold was this high. In 2011, the concept of negative interest-rate policies barely existed. The US national debt was almost half what it is now. The Federal Reserve’s balance sheet was sub-$3trn, compared with $7trn today. The European Central Bank’s balance sheet has tripled since 2011. The Bank of England’s balance sheet has – well, expletives are not acceptable in this magazine.
The US dollar index, meanwhile, was at 73, a full 20 points lower than where it is today. It was, as much as anything, the dollar turning up after 2011 that did for gold and especially, for gold miners. In 2011 the bull market was ten years old. The narratives were tired. This bull market is not mature – it is, what, three, four years old? When did it start? December 2015 at $1,050? Or August 2018 at $1,170? If you say the latter, then we are not even two years in. There are a lot of people out there who are new to the gold story – and it is a persuasive one. I haven’t even been asked to go on the telly yet to talk about gold. It all says this bull market is young and points to higher prices down the road. How much higher?
To read the whole of this article, subscribe to MoneyWeek magazine
Subscribers can see the whole article in the digital edition available here
Get the latest financial news, insights and expert analysis from our award-winning MoneyWeek team, to help you understand what really matters when it comes to your finances.
Dominic Frisby (“mercurially witty” – the Spectator) is as far as we know the world’s only financial writer and comedian. He is the author of the popular newsletter the Flying Frisby and is MoneyWeek’s main commentator on gold, commodities, currencies and cryptocurrencies. He has also taken several of his shows to the Edinburgh Festival Fringe.
His books are Daylight Robbery - How Tax Changed our Past and Will Shape our Future; Bitcoin: the Future of Money? and Life After the State - Why We Don't Need Government.
Dominic was educated at St Paul's School, Manchester University and the Webber-Douglas Academy Of Dramatic Art.
You can follow him on X @dominicfrisby
-
Could your family be at risk of an unexpected tax bill? How to keep your loved ones in the loop
Many families are out of the loop when it comes to planning the financial aspects of both retirement and inheritance
-
Rightmove: Glut of homes for sale in southern England drives asking price drop
Asking prices are 0.1% lower than a year ago, according to the property website, driven by challenges in affordability-stretched London and the south
-
Small UK industrial stocks are hidden gems
Opinion Ed Wielechowski of the Odyssean Investment Trust highlights three of his favourite British small-cap industrial stocks
-
Aurora Innovation is running on empty – is it overvalued?
Aurora Innovation, a maker of self-driving trucks, may have promised far more than it can deliver
-
'Ride the recovery in emerging markets': Gustavo Medeiros of Ashmore Group tells MoneyWeek
Interview What's the outlook for emerging markets? Gustavo Medeiros, head of research at Ashmore Group, gives his analysis and reviews progress in developing economies
-
What is the Enterprise Investment Scheme and should you have one?
The Enterprise Investment Scheme is tax-efficient and potentially lucrative. Taking a chance on the scheme could trim your family’s IHT bill, says David Prosser
-
The alcohol industry is suffering as consumers sober up – is it still worth investing in the sector?
Changing consumer tastes are rocking the alcohol industry, but the best players are adapting their strategies. Buy them while their shares are still cheap
-
A strange calm in credit
Corporate bond markets remain remarkably relaxed, with yields that offer little compensation for risks
-
'The City's big bet on green finance fails to pay out'
Opinion Insurers and banks are backing away from “green finance”, and there is not much sign of the green boom we were promised. That’s a problem for the City
-
Why is English football thriving – and can it last?
What has gone so right for English football? The national team has found its feet; the Premier League is swimming in money and profits are soaring