Since the outbreak of the war, the gold price has been shaped by five months of intense algorithmic trading, where a steady flow of news has triggered algorithms’ buy and sell signals. Although gold rose modestly by 0.9% in July, closing at USD 4,044 per troy ounce, we view this period as consolidation in which ownership has shifted from weak to strong hands.

Gold price per troy-ounce (Oz) in USD

Looking at the bigger picture, gold has risen by 20.7% over the past twelve months, from USD 3,350. After five months of orchestrated decline, we are waiting for the next leg higher to begin. The case for gold reaching USD 6,000 and later USD 10,000 per troy ounce has become stronger than ever.

• The Fed’s balance sheet has started to expand again in 2026 (QE in disguise)

• US debt has risen to USD 39.68 trillion and is expected to surpass USD 40 trillion this autumn

• A 6% annual US budget deficit, equivalent to roughly USD 2 trillion

• Five months of costly war and many billions more required to rebuild weapons arsenals

• Global debt now exceeds USD 350 trillion, more than USD 100 trillion higher than ten years ago

• The dollar trade is extremely overbought; a reversal could turn recent headwinds into tailwinds

• More countries are reducing their purchases of US Treasury securities

• The US needs Japan to remain among the last buyers of US Treasuries

• Cost-push inflation, rather than demand-pull inflation, means the market may be positioned incorrectly for inflation and the rate path

• China and other central banks are accumulating more and more gold

• Gold has never been this oversold, creating an attractive entry point for strong hands

The market repeatedly assumes that the interest-rate path will bring inflation back to the much-discussed 2% target. Over the past six years, 64 forecasts for the rate path have proved wrong. The picture is further complicated by the fact that inflation can be measured in several ways: consumer-price inflation, asset-price inflation and monetary inflation. In addition, the models used to calculate consumer-price inflation change over time, both in what is included and how the calculation is made. The Fed will, for example, use trimmed mean inflation as an alternative measure going forward. It is remarkable that the market treats these reported figures as unquestionable truths.

Silver, meanwhile, ended the month below zero, falling 1.7% to close at USD 57.60. Over the past twelve months, silver has risen from USD 36.92 to current levels, equivalent to a gain of 56.0%. The same positive factors supporting gold also support silver, and the coming volatile upswing in silver could be even greater.

Silver price per troy-ounce (Oz) in USD

Despite the gains of recent years, the companies remain clearly undervalued relative to their cash flows. This correction therefore presents an unusually attractive opportunity to increase positions for the future return potential we see.

Gold and silver prices have remained strong for an extended period, allowing even weaker companies to strengthen their balance sheets. This has significantly reduced the risk of bankruptcy compared with the past. From a risk/reward perspective, the potential is difficult to improve upon.

Everyone who previously missed the opportunity to enter the market has now been given a second chance, and this new capital will be another factor driving prices in both commodities and companies.

The AuAg funds - Highlights

AuAg Gold Rush was our best-performing fund during the month, although all four of our funds had a negative month. Zooming out, AuAg Silver Bullet remains the best-performing fund over three years among approximately 1,500 funds on Avanza. Our ambition is for it to one day also be at the top over five years—where it currently ranks fifth—and ultimately over ten years.

AuAg Gold Rush has a more defensive focus, with a portfolio of larger companies and 40% exposure to royalty and streaming businesses—roughly twice the allocation found in traditional gold-mining funds.

The past three years have not been the best for royalty and streaming companies. However, over a longer period, including times when gold and mining companies have faced tougher conditions, the potential of AuAg Gold Rush over the coming volatile 10–20 years becomes clear. Here we see how these companies outperformed during the difficult period from 2014 to 2021.

Our two precious-metals funds are positioned at opposite ends of the risk spectrum. Investors can therefore choose either fund, or combine them in proportions that suit their portfolio risk profile.

Global Outlook with AuAg

The US is supporting purchases of yen in the hope that the Japanese currency will strengthen. This market intervention highlights weaknesses in the system and suggests that Japan may be one of the few countries that has not reduced its investments in US Treasury securities. The Japanese currency and Japanese interest rates can have a major impact on the US equity market. One concern in the market is that the yen carry trade could begin to unwind, forcing many investors to reduce their positions.

The yen carry trade involves investors borrowing yen at low interest rates and converting them into dollars to invest in assets expected to deliver higher returns, such as US equities and bonds. This trade has channelled substantial capital into US markets, increasing liquidity and asset prices. However, it may again be at risk because several factors could disrupt the sensitive yen-dollar ecosystem.

During the month, the Fed held its meeting and accompanying press conference. There was no change in rates, followed by a long speech that said very little. There is clear uncertainty over how to find a ”reason” to stimulate again. So far, the Fed’s balance sheet has only begun to increase cautiously. Will it take an equity-market crash, the interest costs associated with large debts, or further warfare for the Fed to have the cover it needs? When it acts, the message will be that it is the great saviour returning—the “White Knight”—and many assets will rise again, particularly gold.

As we wrote last month, leverage in equity markets is high. During the month, we saw several examples of the consequences of excessive speculation. The US fund Situation Awareness collapsed, while many private investors on the South Korean stock market used high leverage in pursuit of even higher returns. Worse than a casino.

Another phenomenon is President Trump’s service for selling his messages in advance to those who pay USD 100,000 per month. The peak of algorithmic trading—and perhaps its downfall.

We look forward to the day when news speculation and algorithmic trading no longer dominate the market, and when value investing returns. Blind index buying may also be due for a setback, and that may not be far away now that the market has become so concentrated. A modest AI and technology crash, triggered by hedge funds as the yen carry trade unwinds, combined with the Fed’s purchases of US Treasury securities to finance America’s borrowing needs and subsequent forceful intervention to rescue the market, could be favourable for our sector. We would not be surprised if this happens during the second half of 2026. Whenever it happens, Au-gust has already had a flying start.