Albert Edwards Explains ‘Batsh-t’ Precious Metals Rally

“Batshit crazy.” That’s me. Ask around. Somebody, somewhere will emphatically attest.

But in 2025 I’m in good company. Because that characterization — “batshit crazy” — also applies to the precious metals complex.

On Wednesday, as spot gold breached $4,000, SocGen’s Albert Edwards took a few minutes away from — I don’t know, whatever you do when you’re Albert Edwards on a random October Wednesday — to talk about the rally. And the connection with the Japanese macro-policy landscape, something Edwards knows a thing or two about.

“The likelihood that the gold price is responding to further currency debasement is evidenced by the fact that the whole precious metals complex is going ‘batshit crazy,’ not just gold,” Edwards wrote, adding that “it seems likely that the surge in precious metals reflects acknowledgment that we are heading back to QE/YCC.”

On the left, above, is the “batshit” chart. On the right is gold with 30-year JGB yields, which have obviously exploded higher in recent years.

“This is not a spurious correlation,” Edwards said, of rising long-end yields and ever higher gold prices. “[It] reflects the increasing subservience of monetary policy to fiscal dominance.”

Yes, it probably does, and as Albert alluded to, QE and YCC are a manifestation of fiscal dominance when carried out in the service of capping government debt service costs. That dynamic’s almost surely coming to America given Donald Trump’s avowed determination to commandeer US monetary policy. (See “YCC: Coming Soon To The Fed“)

Edwards built his career around the contention that — and I’m quoting directly from his Wednesday missive — “Japan is a bellwether for Western markets.” He used that to segue into a brief account of Sanae Takaichi’s likely macro-monetary policy bent which, in a nutshell, will look quite a bit like Abenomics.

The figure above’s just more eye candy. You can write the punchlines yourself. Here’s a template: “If you think gold’s expensive in dollar terms, just look at it in JPY!” I prefer a stylized version which implicitly lampoons the yen in needlessly caustic terms: “Gold’s parabolic rally makes it worth roughly a bajillion yen.”

Takaichi will officially become Japanese prime minister later this month, and as Edwards emphasized, she’ll pursue “the economics of her mentor” which means “a currency debasement policy camouflaged as a side effect of super-aggressive QE.” Precious metals, Albert wrote, are “already responding to the fiscal dominance, which means more currency debasement and more inflation.”

Edwards hasn’t lost his flair for pointed zingers. “As a big fan of Margaret Thatcher, it seems auspicious that Takaichi’s election comes 100 years to the week that Thatcher was born,” he went on to write. “But while Thatcher would have approved of the new leader’s plans to deregulate, the Iron Lady is surely spinning in her grave at pressure on the BoJ to finance the deficit.”