The Secret AI Catalyst Behind Surging Gold Prices

Gold prices are on a tear, having surged 25% over the past year.

The only question is how much higher they’ll go.

The current price of gold is about $2,420 per ounce — down only slightly from a record-high $2,450 in May. And the fact that everything seems to be working in the metal’s favor suggests another record-breaking rally is in the offing. 

The latest sign of encouragement came from the Federal Reserve. The Fed has been eying up a rate cut for most of the year, but hesitated in the face of persistent inflationary pressure. However, the latest string of data may have finally done the trick. 

The Consumer Price Index (CPI) actually fell in June, with prices contracting 0.1%. It’s the first time that’s happened since the pandemic. The core CPI came in at 3% over the last 12 months — its slowest pace since April 2021.

Traders are now pricing in an 88% chance of at least one rate cut by the September 17–18 Fed meeting, according to CME Group’s FedWatch tool. 

Political turmoil, for example. 

Russia’s invasion of Ukraine has turned one of the world’s most important resource-rich nations into a global pariah. And the resulting sanctions have complicated and restricted trade.

At the same time, the war between Israel and Hamas has inflamed tensions in the Middle East — another resource-rich region. 

In Asia, North Korea remains dedicated to developing its nuclear program and has resuscitated a Cold War-era alliance with Russia that will aid in that effort.

And China — once a key engine of global growth — is trying to balance its ambitions to colonize the Pacific and even the moon with a flagging economy.

Meanwhile, back here in the United States, we’re in the midst of the most chaotic presidential election of our lifetimes. One of the candidates just narrowly escaped an assassination attempt, and the other is just barely holding onto his party’s nomination after losing the entire country’s confidence.

Neither one seems at all prepared to improve our country’s fortunes over the next four years. And that certainly bolsters the case for safe-haven investments like gold. 

However, there is another, less talked-about catalyst for rising gold prices, too.

And that’s AI.

Indeed, gold doesn’t just look pretty — it’s actually an important component in many advanced electronics. 

In fact, almost every electronic device that you use daily — from your smartphone to your laptop to your TV — utilizes a small amount of gold. And the rise of AI is now further exacerbating demand.

As you may know, AI runs on high-performance chips, and almost all AI apps today use the H100 chip by Nvidia. It’s the most powerful microchip on the planet, essential for powering the $15.7 trillion AI revolution.

But what’s less known about Nvidia’s H100 chips is that they depend on gold to function. The metal plays a crucial role by bonding wires to establish durable, high-performance electrical connections.

There’s also gold plating on critical areas to prevent corrosion and ensure a stable connection throughout the device’s life span.

Similarly, gold is a key component in cutting-edge technology in the aerospace sector, where it’s used in rockets, shuttles, and rovers.

And it plays another crucial role in renewable energy technologies such as solar panels, wind turbines, and hydrogen fuel cells, as well as energy storage solutions.

So in addition to more traditional catalysts like monetary policy and geopolitical turmoil, gold prices are also benefiting from a new era of industrial demand.

In short, that’s why gold prices are trading at an all-time high and set to climb even higher in the years ahead.

UBS sees gold hitting $2,800 an ounce by the end of next year.

Citi believes the metal will break $3,000. 

And in truth, that might be lowballing it, considering the supply-demand equation is also favorable. That is, both the quantity and quality of gold being mined are trending down.

So if you think you’ve missed the boat, you haven’t. 

And better still, my Wealth Advisory colleague Jason Williams recently outlined the very best way to profit from higher gold prices. 

Not only that, but he’s got a strategy to exploit the burgeoning commodities supercycle that’s affecting uranium, copper, and silver prices too.

It’s all right here.

Fight on,

Jason Simpkins

Simpkins is the founder and editor of Secret Stock Files, an investment service that focuses on companies with assets — tangible resources and products that can hold and appreciate in value. He covers mining companies, energy companies, defense contractors, dividend payers, commodities, staples, legacies and more…

In 2023 he joined The Wealth Advisory team as a defense market analyst where he reviews and recommends new military and government opportunities that come across his radar, especially those that spin-off healthy, growing income streams. For more on Jason, check out his editor’s page.

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