Full steam ahead for gold prices as the precious metal pushes higher to new all-time highs again. Shares of the U.S. Gold Fund (GLD) are now trading 23% higher in 2025 and more than 35% higher over the last one year.
The move comes after the price of gold saw a “healthy correction” that involved its price dropping by slightly more than 5% in the opening week of April’s trading. Volume trading on the U.S. Gold Fund (GLD) has remained strong, suggesting that this trend is likely to continue higher.
Investors that have been looking for a “dip” to buy have recognized each dip in GLD shares as an opportunity, swooping in to buy each event. The last short-term correction in February – roughly 4% - resulted in a renewal of the longer- bull market trend as shares of the GLD rallied 10 from that short-term bottom.
Silver prices have seen similar moves higher but have been met with more volatility than gold of late as investors are growing more concerned about the outlook for industrial activity, which silver’s price is sensitive to.
I can’t remember a time when gold made more sense for individual investors as market volatility became a daily event.
Historically, investors had two options when market volatility started to ratchet higher. The first “classic” step was to start buying government bonds as a “safe harbor” investment. The idea was simple, there’s nothing more ironclad as the U.S. Government.
The second option was to buy gold. Gold has always been one of the “go to” assets to hold when things got rough in the market due to its stability making it a great store of value.
Then along came bitcoin.
Over the past decade, investors have been told that Bitcoin was a viable option for gold as a store of value with a bonus… you can spend it easier than you can gold. The idea seemed to hold water, until recently.
This may be an unpopular opinion, but Bitcoin ($BTC/USD) is a speculative investment, nothing else. A “store of value” is not meant to appreciate or drop 200% in a year, that activity is more in line with an IPO or penny stocks, both speculative investments.
Just ahead of the last bear market in 2022, Bitcoin had garnered the affection of investors as Meme stocks and other speculative interests were at an all-time high. Bitcoin became touted as a good alternative to gold in late 2021 as investors were preparing for what appeared to be an approaching bear market, triggered by inflation. The surge in activity helped Bitcoin to appreciate by more than 100% in six months as investors became “more defensive”.
Then it happened, Bitcoin posted its highs at the same time as the S&P 500 dropping -75% over the next year. The small cap Russell 2000 Index only dropped -35% over the same period and the S&P 500 -25%.
Today, Bitcoin has already lost -32% of its value over the last four months, a pace that it twice as fast as stocks.
Bitcoin is not your cash alternative.
Government bonds have a storied past when it comes to the safety of assets. From war time to recessions, investors of all types – including central banks and institutions – have flocked to the safety of the U.S. Bond market.
There’s a problem there too.
The “long bond” has been stuck in a bear market itself since 2021 with the value of the iShares 20+ Treasury Bond ETF having lost almost 50% of its value since its peaks in 2020.
The fact that the long bond has been in a bear market this long is a concern, but things got worse this week.
The recent turmoil surrounding the Trump Administration’s tariffs has led to what could be a freezing of the capital liquidity markets.
Without going into the econ 301 explanation, the bond market is the source of liquidity for capital markets. This is just one of the reasons that bond traders are considered the “smartest in the room.” Our stock markets would seize without the liquidity offered by the bond market.
This week, the bond market saw a surge in selling as institutions found the need to raise cash quickly. The dash for cash came while some countries – namely Japan and China – appear to be questioning the safety of the U.S. bonds traced back to the uncertainty that every investors feels about the current U.S. outlook.
The ability of the U.S. to issue treasuries is an incredibly important piece of the liquidity puzzle that drives the economy and stock market. For now, use of the long bond funds like the iShares 20+ Year Treasury ETF (TLT) should not be considered a safe harbor asset.
The headlines have been correct. Over the last five years we’ve seen a huge increase in demand for gold from both investors like you and me to central banks. Pay attention to the central banks for a minute.
The economists at these central banks have been calling for a situation like what we are seeing today. One that puts pressure on the US as the world’s superpower and Reserve Currency of the world for trade.
This week’s fears from other countries combined with the liquidations required by hedge funds to cover short-term liquidity needs caused by volatility was the trigger behind the Trump administration’s 90-day pause for its sweeping tariffs, not the administration’s move to force negotiations – something they had pledged that the tariffs were not meant to do.
The elevated concern surrounding the U.S. treasury markets is what is triggering the next surge higher for gold prices, something that will continue to be a bullish catalyst for the rest of 2025.
Using the U.S. Gold Fund as the easy way to trade the trend in gold, we’re seeing the ETF approach a psychologically significant price at $300. Investors should expect to see the price slow its aggressive move higher here, with a chance that some profit-taking may result in short-term weakness.
For reference, the price of gold in the futures market currently sits at $3,180 per ounce.
Expect that any short-term profit-taking will turn into another buying opportunity for the GLD shares with the move above $300 acting as another catalyst to drive prices 10% higher to a target price of $310 over the next 4-6 weeks.
As always, the easiest way to trade this bullish trend is to simply buy and hold the U.S. Gold Fund (GLD).
Our year-end target for the gold-based ETF calls for another 25% gain reflecting a target price of $275.
On March 5th I provided two trade ideas to help you take advantage of the rally in gold (Click here to review that article). The option that was highlighted in that article has already traded to gains of more than 100% as of today, so I an offering an updated option idea to leverage the expected bullish move.
Options traders may want to consider buying longer-term options to leverage the expected move. I personally prefer buying slightly out-of-the-money calls at the $305 strike price using the January 16, 2026 expiration.
Those calls are priced around $2,000 per contract at the time of this writing.
For comparison, a move to half of my target of $375.00 ($340) by August would result in an intrinsic value of $3,500, resulting in a potential profit of 75% compared to profits of around 14% from simply holding the GLD shares to the same price.
A move further to $360 before the January 2026 expiration date would result in an intrinsic return of 175% for the call option compared to 21% for the buy-and-hold approach using GLD shares.
As always. Investors should make certain that they have the necessary education and experience trading options while understanding the risks associated with options investing.
