Daniel Oliver, founder of the hedge fund Myrmikan Capital, which focuses on micro-cap gold and silver mining companies, believes the gold market is in the early stages of a major bull run, with the long-term price potentially reaching $12,000 per ounce. He points out that mining stocks remain undervalued even after strong rallies, while gold ownership among professional investors and domestic institutions is still extremely low.

In a recent client report, Oliver stated that the Federal Reserve is caught in a monetary printing trap, unable to simultaneously cut interest rates and reduce its balance sheet. He anticipates that Kevin Warsh, a potential Fed chair nominee under Trump, will be forced to pivot towards quantitative easing, despite Warsh's past criticisms of the Fed's bond holdings.

This perspective comes as the gold price hovers near the $5,000 mark. The metal's repeated breaches and retreats from this level largely reflect growing market uncertainty about the U.S. dollar and American assets.

Oliver's analysis centers on the fragility of the U.S. debt structure and its long-term impact on gold. He identifies private equity as being at the core of an impending dollar collapse, which would drive up financing costs and repel foreign capital.

The Federal Reserve faces a monetary policy dilemma. Oliver notes that after the 2008 financial crisis, the Fed under Ben Bernanke began large-scale bond purchases to boost bond prices, suppress interest rates, and inject massive reserves into the banking system. Subsequently, the Fed started paying interest on bank reserves to maintain a floor on rates.

Currently, the interest rate the Fed pays far exceeds the yield on the bonds it holds. According to Oliver, the Fed has accumulated $245 billion in operating losses since 2022. He states that this entire mechanism necessitates accelerated money printing and deeper central bank losses for the issuer of the national currency.

Warsh would face $10 trillion in Treasury debt maturing within the next 12 months, forcing the government to roll over these obligations. Oliver expects that, despite Warsh's previous dissatisfaction with bonds on the Fed's balance sheet, he will ultimately have to turn to quantitative easing.

Oliver divides the gold bull market into three phases. The first phase began in 2022 when the U.S. froze Russian dollar assets, attracting seasoned gold investors. He believes international capital flows have left U.S. financial institutions "carrying insane amounts of debt."

The second phase, which has not yet begun, will reflect the market's realization that the Fed cannot save private equity or control interest rates without buying the entire bond market.

The third phase will involve a government bond death spiral: "The higher rates go, the bigger the interest payments, the worse the deficit, the more Treasury supply, the higher rates will go," he says. Oliver concludes that the end result will be either a government default or an order for the central bank to purchase all Treasury debt, effectively destroying the dollar.

Citing economic theory, he adds, "There is no means of avoiding the final collapse of a boom brought about by credit expansion. The only alternative is whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."

Regarding a rational gold price, Oliver explains that historically, markets have forced central banks to maintain gold reserves between one-third and one-half of their balance sheets. This implies a gold price between $8,395 and $12,595 per ounce. Given that the real value of long-term U.S. debt is lower than the Fed-manipulated market price, panic could temporarily push the gold reserve ratio to 100%.

Oliver emphasizes that mining companies are still undervalued despite strong performance. He notes that even with soaring mining stock prices, inflows into gold mining Exchange-Traded Funds (ETFs) remain lackluster. The number of shares outstanding for the VanEck Junior Gold Miners ETF fell by a third between 2024 and 2026. "This lack of interest indicates we are in the very first stage of a bull market," he remarked.

Gold ownership among professional investors and domestic institutions remains exceptionally low. Oliver stated, "Mining companies will continue to benefit from rising gold prices, but the real explosion will begin when the market starts to reprice valuation multiples. As capital floods into the sector panic, major miners will perform well. Junior miners should perform even better, as their projects will become impossible to ignore."

He also observed that, for the first time since founding Myrmikan, junior miners are beginning to reject financing deals, signaling an improvement in industry fundamentals.