Dear Fellow Investor,
When trading wrapped up on Friday, August 7th, the tape held a fascinating contradiction. If you blinked, you missed it—because this week, that exact conflict resolved itself in a massive way.
It started when gold went almost straight up — better than 7% — after the July jobs report showed the economy shed 23,000 jobs instead of adding the 80,000 everyone expected.
By earlier this week, December gold traded over $4,420 an ounce, its highest since the middle of June (with spot over $4,377).
Yet, in that exact same session, one of the largest gold miners on earth got taken to the woodshed.
Metal up. Miner down.
If that seems like a glitch, it isn't. It's the whole lesson—and it proves that while the market tape seemed conflicted last week, a major shift was already underway.
I want to show you how I read something most investors skim past.
Every quarter, big institutions have to file a form listing what they own.
Form 13F. It's public, it's free, and almost everybody reads it wrong.
Most people scan it for names. "Oh, so-and-so bought this."
That tells you very little. A large fund holds hundreds of positions, and plenty of them are there because a computer needed to fill a bucket.
I don't read filings for names. I read them for size.
Because a name is a guess. A size is a decision.
Anybody can nibble at a stock.
But when a manager makes one position his single largest holding, he has done something irreversible — he has put his career next to it.
He cannot quietly walk away from that. If he's wrong, it's on the front page of his own performance.
Position size is the only honest sentence in a portfolio.
Now apply that lens somewhere almost nobody thinks to point it.
Not at a hedge fund. At the United States government.
On May 21, the board of the Export-Import Bank of the United States voted — unanimously — to approve a federal loan of nearly $3 billion to build a gold mine on American soil.
Not a chip plant. Not a battery factory. A gold mine.
That financing package is larger than the entire market value of the company receiving it.
Read that sentence again, because it is the same signal as the fund manager and his largest holding, only louder. Washington did not nibble. It sized. And a loan board does not quietly walk away from a unanimous vote.
And I think I know why that miner fell this week while the metal rose.
Mining is a wonderful business on a spreadsheet, and a brutal one in the dirt.
Diesel, labor, water permits, grade surprises, a mill that goes down in the wettest month of the year.
When gold rallies 7%, a miner's costs don't stay still and its ounces don't come out of the ground any faster.
That is the ordinary miner's problem. It is not this company's problem, because the slowest and most expensive part of its life is already behind it — and somebody else is paying for most of what's left.
Roughly fifteen years of federal review. A federal Record of Decision — won. An Army Corps water permit — won. Final state permits — won, this January. A last stand in federal court this June, where the judge refused to halt the work.
Construction began last fall. The bulldozers are moving right now, as you read this.
And there is one more detail, the one that made me put everything else aside.
The deposit carries a second metal alongside its gold — one so critical to American weapons production that China formally banned its export to the United States.
Which is why you will find the war department's name, in writing, in the filings of a gold company.
Now step back one more level, because there's a bigger buyer in this market than any hedge fund.
In July, China's central bank extended its gold-buying streak to 21 consecutive months — its largest single-month purchase in nearly three years.
Central banks as a group bought a net 289 tonnes in the second quarter.
And in the World Gold Council's annual survey of reserve managers, 89% said they expect the world's official gold holdings to keep climbing, while a record 45% said they intend to add gold to their own vaults in the next twelve months.
Gold has now passed U.S. Treasury bonds as the number one reserve asset on earth.
That is not a bunch of names in a filing. That is the world's most conservative institutions changing asset classes.
So we have three groups making the same decision at the same time, for different reasons.
Central banks are sizing up because they no longer trust the paper.
Washington is sizing up because it has decided it needs metal coming out of American ground — and the second metal beside it even more.
And the ordinary investor is mostly still watching the miner that fell this week and concluding gold stocks don't work.
The institutions did this math quietly, over months, with analysts and site visits and lawyers.
You can do it before dinner.
I've put the whole file together — the company, the ticker, my entry strategy, the price targets in rising order, and the federal triggers still to come.
One note on timing, and then I'll let you go.
Second-quarter 13Fs hit the wire this past Friday, August 14th — the public's first look at whether the professionals added to gold again in the last three months. The next look after that doesn't come until November.
But the date I'm actually watching isn't a filing deadline. The final signature on that federal loan is expected in the second half of this year.
By the time that's a headline, it isn't information anymore. It's a receipt.
I'd rather you saw the position before the headlines catch up to it.
"The Buck Stops Here,"
P.S. Notice which side of this trade the ordinary investor is usually on. Bank of America, Jane Street and Millennium have research desks and 13F deadlines. You have one advantage they don't: you can own the whole position by Monday's open without moving the price. Here's the full file >>
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Written by Dylan Jovine