Happy Thursday, GoldBuzzers!

The risks of mining were brought into clear focus yesterday when Freeport-McMoRan, one of the world's largest publicly traded copper producers, declared force majeure at its massive Grasberg mine in Indonesia following a fatal mud rush that killed two workers and halted operations at the world's second-largest copper mine and major gold producer.

Force majeure is a legal clause that releases companies from contractual obligations due to extraordinary circumstances beyond their control - essentially allowing Freeport to suspend deliveries to customers without penalty.

With production potentially down 35% through 2026, this supply shock sent copper prices surging almost 4% though Freeport’s shares took a 17% hit.

This incident highlights exactly the type of market-moving event that can create future supply shortages that drive precious metals higher - and Grasberg isn’t just about copper, it’s also one of the world’s largest gold mines.

In today’s Real Talk, I’ll give you my take on the big picture concerning lower mortgage rates.

So, let's dive in.

Gold finally took a breather on Wednesday, slipping to $3,747 per ounce after investors pored over fresh Federal Reserve tea leaves and the latest geopolitical developments.

Fed Chair Jerome Powell channeled his inner tightrope walker, striking a careful balance between stubborn inflation and a wobbly job market, repeating his 'challenging situation' mantra from last week. Despite the drama, traders are still betting on at least two more rate cuts before year-end.

Meanwhile, gold bulls found "comfort" in increasing global tensions: President Trump's continued support for Ukraine and calls for NATO to strengthen its stance against Russia kept safe-haven demand steady. All this uncertainty helped drive ETF inflows to a three-year high last week.

The Fed just cut rates and mortgage rates hit 6.26% - an 11-month low. While everyone's celebrating cheaper refinancing, I want to take a deeper look at what happens to money when borrowing gets easier.

The Mortgage Refinancing Rush

Refinance applications exploded by 58% in just one week. That's a massive response to a relatively small rate move.

Here's what this tells me: when rates drop even slightly, homeowners act fast. They understand that windows of opportunity close quickly in financial markets.

But investors should be thinking the same way about other opportunities right now.

The Hidden Lock-In Effect

Nearly 60% of existing mortgages carry rates below 4%. These homeowners won't refinance again anytime soon.

This creates the "lock-in effect." People with ultra-low rates stay put rather than sell and take on higher-rate mortgages elsewhere.

The result? Nobody wants to sell. Inventory stays low. Prices stay high.

Meanwhile, home prices have risen about 50% since early 2020, outpacing income growth significantly.

Why I'm Watching Gold During This Rate Cycle

Rate cuts typically weaken the dollar (which we’re seeing). Lower interest rates make yield-bearing assets less attractive compared to non-yielding stores of value.

That's where gold gets interesting.

Here's the historical context: During the last major rate-cutting cycle starting in 2020, gold broke through $2,000 per ounce for the first time in August 2020, hitting around $2,074 - while real estate was just getting started.

Gold is currently trading around $3,800, up around 45% this year, and still positioning for what typically comes next in these cycles.

The Real Estate vs Gold Calculation

Let’s look at the numbers:

Real Estate: Even at 6.26%, you can control a $500,000 property with $100,000 down. But that leverage cuts both ways when property taxes, maintenance, and insurance costs have all risen alongside home prices.

Gold: No carrying costs. No property taxes. No maintenance. Just pure exposure to what happens when central banks start printing money to fix problems.

Plus, anyone paying attention can see the problem with real estate accessibility when prices have already jumped 50% in four years.

What This Rate Environment Really Means

The Fed's first rate cut in nine months sends a clear signal: they see economic softening ahead.

What many people are missing while celebrating lower mortgage rates - the Fed cuts rates when they're worried about economic growth.

Gold doesn't care about job numbers or wage growth. It just benefits when central banks start the money printer.

Early in these cycles, precious metals often outperform real estate. Later, as conditions improve, real estate catches up. We're still early.

In my opinion, real estate at current prices offers limited upside - that 50% price increase since 2020 already captured much of the benefit from this entire cutting cycle.

Gold is set up for the usual playbook: weaker currency, inflation worries, and people looking for safe places to park money.

A quick roundup of some interesting stories you might have missed:

Silver's having an even bigger party – While gold's up 45% this year, silver just said "hold my beer" and rocketed 52% in 2025, breaking through $44 an ounce for the first time since 2011. NAI 500

If the Fed's independence gets meddled with, Goldman Sachs says kiss your bonds goodbye and hello to $5,000 gold, as spooked investors flock to the ultimate hedge against policy pandemonium. Investopedia

China just found the mother lode – Geologists stumbled upon what might be the world's largest gold deposit in China's Hunan province, with an estimated 1,100 tons of the yellow metal worth about $83 billion. Popular Mechanics

Barrick's Nevada jackpot becomes a "game changer" – Barrick Mining's stock just went on its biggest four-day tear in five years after their Fourmile project in Nevada showed it could pump out 750,000 ounces of gold annually. Bloomberg

A lucky metal detectorist in Romania just unearthed 121 Bronze Age gold goodies worth a fortune, dating back 3,400 years and proving ancient bling is still hiding in plain sight for patient hunters. All That’s Interesting

Central banks can't stop buying gold – The world's central banks are on a gold-buying bender, scooping up about 80 metric tons monthly. Bloomberg

That’s all for this Thursday, folks! Stay safe and I’ll see you on Sunday.

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Rick Adams
Founder, GoldBuzz
rick@goldbuzz.com