Tor Martin Flesvik isn’t ready to call it quits on gold just yet.
The Partner at Knightsbridge Associates opened his recent market commentary with a tongue-in-cheek reference to Austin Powers’ Goldmember: “I love gold! The look of it! The smell of it! The taste of it! The texture!” But his message to investors is dead serious: Don’t be so quick to cash out of the precious metal.
With gold hovering near $3,400 an ounce in August, marking a 145% surge from its November 2022 lows, many fund managers are looking to book profits. “This is not an unreasonable move, given that the current bull run has yielded approximately 145% gains,” Flesvik acknowledges in his note to clients.
But he’s urging restraint. “However, I would caution against acting too hastily,” he writes. “While much of the momentum may have waned, further gains could still be forthcoming.”
What sets Flesvik apart from the crowd is his contrarian take on what’s actually propelling gold higher. While most analysts point to inflation fears, he’s having none of it.
“The prevailing belief that gold prices are primarily driven by inflation is misguided,” Flesvik states bluntly. “In my view, this bull run has little to do with inflation.”
The numbers back him up. Despite gold’s moonshot to record highs above $3,500 earlier this year, inflation has remained relatively tame at 2.7%, nowhere near the double-digit levels that historically sent gold soaring.
Instead, Flesvik points to what he calls a “more complex constellation of drivers”: mounting geopolitical tensions, escalating trade wars, efforts by emerging markets to reduce their dollar dependence, and growing doubts about U.S. fiscal discipline.
His timing looks prescient. Central banks have been on a four-year gold buying spree, scooping up more than 1,000 tonnes annually, while the dollar’s share of global reserves continues its slow decline.
Perhaps Flesvik’s most pointed observation concerns the U.S. government’s spending habits. “Notably, the United States has not recorded a fiscal surplus since 2001,” he notes. A stark reminder, as the federal deficit has swelled to $2 trillion over the past year, and the national debt approaches $37 trillion.
Such fiscal deterioration typically provides long-term support for gold, as investors seek refuge from dollar-denominated assets. But for Flesvik, the implications run deeper than portfolio diversification.
“This fiscal unsustainability is eroding confidence in U.S. monetary and fiscal policy,” he argues, the kind of structural shift that can power multiyear rallies in precious metals, regardless of what inflation is doing.
Flesvik’s most compelling case may be his historical analysis. “Gold bull markets have lasted an average of 4.5 years, and we are currently in year 2.5 of this cycle,” he writes. “The average percentage gain during such periods is 323%, with the record-setting bull run from 1976 to 1980 achieving an extraordinary 701% increase.”
If those patterns hold, there’s still significant upside ahead. The current rally, which started from November 2022, with lows around $1,429, has indeed hit the 2.5-year mark. Should it follow the historical playbook and stretch toward the average 4.5-year duration, gold could keep climbing through 2026 or 2027.
Central Banks Keep Buying
Recent market action supports several of Flesvik’s themes. The dollar has posted its worst first-half performance since 1973, tumbling more than 11%, while gold has surged 26% in the first six months of 2025 alone.
More telling is the continued appetite from central banks. Official sector purchases added 20 tonnes in May despite record gold prices, with 95% of central banks surveyed expecting to boost their gold reserves further. That’s a marked departure from previous cycles, when central banks typically became net sellers near market peaks.
The trade tensions Flesvik highlights have only intensified. Trump’s tariff reimposition, including 25% levies on Canadian and Mexican goods and 10% on Chinese imports, has created precisely the kind of uncertainty that historically benefits gold.
From a chart perspective, gold recently broke out of what technical analysts call a massive 13-year cup-and-handle pattern, suggesting the bull market has structural legs beyond short-term factors. The breakout echoes patterns from the 1960s that preceded multi-decade precious metals rallies.
J.P. Morgan Research now forecasts gold hitting $4,000 an ounce by the second quarter of 2026, while some analysts project potential moves to $4,400.
Several factors support Flesvik’s bullish stance. The structural drivers he identifies, such as fiscal deterioration, de-dollarization, and geopolitical fragmentation, show little sign of easing. If anything, they’re accelerating as global monetary systems undergo their biggest shake-up since Bretton Woods.
Unlike previous gold rallies powered mainly by Western investment demand, this cycle enjoys unprecedented central bank support, providing a more stable foundation for sustained price gains. And American and Western investors have been notably tepid participants compared to previous cycles, suggesting plenty of capital remains on the sidelines.
While acknowledging gold’s spectacular run, Flesvik’s focus on structural rather than cyclical factors offers a framework for understanding why this bull market might prove exceptional. His analysis suggests investors fixated on gold’s percentage gains could be missing the bigger picture.
In a market where many are heading for the exits after spectacular gains, Flesvik’s message is clear: sometimes the most significant opportunities come from staying the course when others lose their nerve.
For more information, please visit knightsbridgeuk.com.
