“The whole way I’m driving out, I’m thinking I’m going to pull out this freaking $100,000 nugget.”
Mike Hewlett, a 50-year-old welder from California, recently expressed his gold fever mindset as he chased the allure of riches. With gold prices soaring above $4,300 per ounce, he has shifted his passions from snowboarding, skiing, and dirt biking to prospecting in hopes of striking it rich.
Hewlett’s adventures led him to discover a small piece of gold, roughly the size of his pinkie fingernail, in the woods near Mount Shasta. He recounted, “I was jumping all around like you see in cartoons and stuff.” When he weighed his gleaming treasure, he found it valued at $175.
Sometimes, even the slightest chance of achieving something great is enough to embark on a new adventure. The thrill and hope of prospecting in California’s well-explored mountains in 2025 reflect this spirit.
Hewlett is not alone in his gold-seeking venture. Fellow treasure hunter Cody Blanchard, a sanitation worker from Sacramento, has also caught the gold fever. Recently, he uncovered quartz veins laced with gold using a metal detector.
Blanchard shares, “The thrill of that first gold find in the wild can’t be beat, and keeps people coming back. It’s like a heroin addiction.” Alongside his gold discoveries, Blanchard has even stumbled upon antique buttons from Levi’s jeans dating back to the 1800s, still attached to fragments of faded denim.
Picks and Shovels
As history has shown, the true wealth during gold rushes comes not from finding gold itself, but from selling the tools for prospecting. The modern gold rush of the 21st century has sparked an online frenzy and a new wave of influencers making money through their adventures.
Chris Spangler, a 39-year-old healthcare administrator for the U.S. Navy, shares his family’s prospecting journey on social media, amassing 430,000 followers. His digital presence has brought in approximately $30,000, which surpasses the value of their gold finds.
With gold prices climbing higher, even small flakes and nuggets are becoming increasingly valuable, at least in monetary terms.
This rising value is part of the larger issue of dollar debasement. As the currency diminishes, gold appears to be worth more, even though its intrinsic value remains steady.
This distinction often eludes those who should understand it. Warren Buffett has referred to gold as a “pet rock,” highlighting its lack of income-generating potential compared to stocks or real estate. He favors investments that build wealth and compound over time.
Recently, JPMorgan Chase CEO Jamie Dimon suggested that gold “could easily go to $5,000 or $10,000.” He also mentioned that, “This is one of the few times in my life it’s semi-rational to have some in your portfolio.”
If owning gold is considered semi-rational at over $4,300 per ounce now, why wasn’t it fully rational to invest in gold three years ago when prices were under $1,700 per ounce? What about in July 1999, when gold was priced at just $253 an ounce?
Both Buffett and Dimon, for sound reasons, lean toward government-backed currency rather than gold, having benefitted immensely from dealing in fiat money.
Gold, however, highlights the flaws of a system that enables the wealthy to profit at the expense of the laboring masses, all while the government devalues the currency.
Debasement or Speculation?
On January 1, 2025, gold was priced at $2,624 an ounce. Today, that price has surged to over $4,300, marking a dollar-value increase of 64 percent. But does this truly reflect an increase in gold’s intrinsic worth?
Despite the perspectives of Buffett and Dimon, gold’s enduring value lies in its 5,000-year reputation as a reliable store of wealth. Over the ages, its value remains consistent, while recent price hikes indicate the declining worth of the dollar.
This idea holds mostly true, yet, like tech stocks or tulip bulbs, gold can occasionally become a target for speculation. Increased prices often attract speculators drawn by the prospect of quick profits.
These opportunists might bid up gold’s price, driven by the hope of reselling at an even higher value—currently, the pressing question is: How much of the gold price’s 64 percent gain is attributed to dollar devaluation versus speculation?
Finding a clear answer is complex…
In recent years, central banks have emerged as significant gold buyers. Factors such as the seizure of Russian reserves and ongoing trade disputes have prompted them to shift away from dollar reserves in favor of gold. The World Gold Council’s 2025 Central Bank Gold Reserves Survey reports:
“Central banks have accumulated over 1,000 tons of gold in each of the last three years, a significant rise from the previous decade’s 400-500 tons annual average. This increase has occurred amid geopolitical and economic uncertainties, complicating the outlook for reserve managers and investors alike.”
Such aggressive buying by central banks places a solid support beneath gold’s price, assuming they continue to buy and do not sell. Given the current geopolitical tensions and the instability surrounding currencies, including the dollar, it appears unlikely that central banks will sell off their gold holdings anytime soon.
The Great Gold Fever of the 2020s
When we compare gold’s price to the Dow Jones Industrial Average (DJIA) using the Dow to gold ratio, data reveals the most expensive points for gold were in February 1933 and January 1980, requiring just 1.94 and 1.29 ounces of gold to purchase the DJIA, respectively. Comparatively, gold was at its least expensive in June 1999, demanding 41.98 ounces for the same transaction.
Today, approximately 10.5 ounces of gold are needed to buy the DJIA. While gold isn’t currently a bargain, it hasn’t reached the extreme prices typical of a gold fever bubble. Such a bubble would entail gold priced over $10,000 an ounce, a DJIA drop exceeding 60 percent, or a blend of rising gold prices and declining stock values.
Some of this year’s gold price increase is indeed speculative, while part can be attributed to central bank purchases and the ongoing devaluation of the dollar.
In the short term, gold appears overbought. An anticipated correction of approximately $500 to $700 per ounce may occur soon.
This trend may mirror the selloff that happened from April to May this year, when gold dropped from roughly $3,425 to $3,187 per ounce. Following this, we could expect a pause lasting several months before gold resumes its upward trajectory.
This phase will likely filter out the less dedicated investors who bought gold for the first time in 2025, viewing it as a short-term investment.
For gold to reach the extreme bubble phase, it will require a complete gold fever moment characterized by unparalleled excitement, obsession, and greed, paralleling the late 1970s.
Gold is certainly witnessing increased interest compared to one or two years ago. However, the story of the great gold fever of the 2020s is far from complete.
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Sincerely,
MN Gordon
for Economic Prism
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