Gold is having one of its best days of the year. The yellow metal has decisively broken the $4,200 per ounce barrier, signaling a likely close above the 50-day moving average – a key technical level that hasn't been crossed in nearly a year. The last time this happened, gold was trading around $3,350, and it went on a generational run.
The miners are responding in kind. Agnico Eagle Mines (AEM) was up over 9.5% intraday, while Newmont (NEM) rose about 7%. The VanEck Gold Miners ETF (GDX) was up around 7.2%, with Azuria Capital founder Tavi Costa noting a clean technical breakout.
Between the Hormuz and the Fed
One of the main reasons behind this rally is unquestionably President Donald Trump's optimism regarding the Hormuz agreement. "It could happen. Tomorrow or the next day," he said, adding: "We're moving along very nicely. You'll find out. We'll know in 48 hours."
Although the price of oil influences the miners' margins, the connection between the metal and Trump's foreign policy runs far deeper than cost inputs. Gold's rallies have been tethered to expectations of interest rate cuts. The year started with rate-cut expectations, which evaporated with war-driven energy inflation. Although the Fed has held rates, a threat of rate hikes still remains an overhang on the metal that, unlike a treasury, pays no yield.
At the July 28 meeting, three Committee members voted for a 25 basis point hike. The CME FedWatch tool places the odds for the September 16 meeting at 55-45 in favor of a hike.
Hoarding the Metal
Miners live and die by the difference between their production costs and the market price of the metal. They work hard to keep the first one low and pray for the second one to be as high as possible. But what happens when they don't have to sell?
According to John Rubino, an author and long-time fiat currency critic, companies that adopt that approach run a physical ETF. They move the excess metals on the balance sheet and benefit through long-term price appreciation.
Rubino detected such a move in a recent First Majestic Silver (AG) earnings report. Compared to 676,637 silver ounces and 2,732 gold ounces as of March 31, 2026, the firm now holds 1,007,450 silver ounces and 4,730 gold ounces in finished goods inventory.
A legendary Canadian mining executive, Robert McEwen, pursued such an approach while managing Goldcorp (later acquired by Newmont) in the early 2000s. McEwen believed the metal was undervalued and withheld around 10 to 15% of the annual output. The strategy created a sizeable reserve and, once liquidated in late 2003, doubled the quarterly net earnings, creating a special dividend for shareholders.
