Core Insights - Citigroup has raised its gold and silver price targets for the next three months to $4,000 and $55 per ounce respectively, reflecting a significant increase in silver's relative value potential [2] - Silver has surged 60% since 2025, outperforming gold by approximately 15 percentage points, indicating a higher beta coefficient for silver, which suggests greater volatility compared to the overall market [2] - Structural factors driving the price increases include concerns over U.S. debt, the sustainability of the dollar's reserve currency status, and the independence of the Federal Reserve [3] Group 1 - The report by Maximilian J. Layton analyzes the structural and cyclical factors behind the rising prices of gold and silver, highlighting concerns over global economic growth and the U.S. labor market [3] - Layton's team anticipates that the physical gold market will respond to high prices, but factors like declining jewelry demand and increased scrap metal supply will take time to affect futures prices [3] - Citigroup suggests that if concerns about economic growth, inflation, and tariffs ease by 2026, investors may shift from gold and silver to copper and aluminum markets [3] Group 2 - The potential dismissal of Federal Reserve Governor Lisa Cook could lead to a more accommodative monetary policy, while a ruling against tariff policies could widen the U.S. fiscal deficit, both of which may further stimulate gold demand [4] - On Tuesday, spot gold reached a historical high of over $3,870 per ounce before retreating, but later recovered to erase all intraday losses [5]

Core Viewpoint - Citigroup research indicates that both gold and silver are likely to continue their upward trends due to cyclical and structural factors [1] Group 1: Structural Factors - Concerns regarding U.S. debt, the status of the U.S. dollar as a reserve currency, and the independence of the Federal Reserve are identified as structural drivers [1] Group 2: Cyclical Factors - Ongoing weakness in the U.S. labor market, worries about tariff impacts, and broader global economic growth concerns are noted as cyclical supportive factors [1] Group 3: Silver Market Dynamics - The silver market is experiencing a persistent physical shortage driven by strong demand in the solar photovoltaic sector [1] Group 4: Price Forecast Adjustments - Citigroup has raised its three-month forecast for gold from $3,800 per ounce to $4,000 per ounce and for silver from $45.00 per ounce to $55.00 per ounce [1]

Financial Data and Key Metrics Changes - The first quarter results reflect a same-store gallon decline of 4.2%, impacted by temporal factors such as the non-repeating leap year and storms, accounting for almost half of the decline [10][11] - Retail margins were $0.02 per gallon higher in the first quarter compared to the prior year, with margins not compressed during the normal cycle of rising prices [12][13] - Cash flow from operations was $129 million in Q1, with total cash capital expenditure of $88 million, resulting in free cash flow of $41 million [26] Business Line Data and Key Metrics Changes - In the nicotine category, same-store sales for non-combustible products were up over 7% for the quarter, while total nicotine contribution margin increased by 2.8% on a same-store basis [17] - Merchandise sales were negatively impacted by a 30 basis point headwind due to the absence of a $1 billion jackpot from the previous year [15] - Sales in the candy category were up 15% year-over-year, indicating strong performance in certain center store categories [15][18] Market Data and Key Metrics Changes - The retail price of fuel averaged between $2.75 and $2.80 per gallon, significantly lower than previous years, affecting customer behavior and loyalty [11][12] - The company noted an increase in middle to high-income customers, now representing almost half of the loyalty program membership base, indicating a shift in consumer demographics [21][42] Company Strategy and Development Direction - The company is focused on enhancing store productivity and growth through new store openings, raze and rebuilds, and remodeling activities [31] - The strategy includes targeted promotions and loyalty programs to drive customer engagement and sales, particularly in the food and beverage categories [18][19] - The company plans for supply margins to normalize in the second half of 2025, anticipating a return to a more balanced supply-demand environment [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business model, stating it is inflation-proof and recession-resistant, with a focus on value-oriented customers [6][28] - The management highlighted that they are not pulling back on second-half guidance due to tariffs or supply chain uncertainties, indicating a stable outlook [30] - The company is optimistic about the impact of return-to-office mandates and sensible fuel economy regulations on long-term fuel demand [12] Other Important Information - The company added eight new stores in Q1, with ongoing construction of 18 new stores and 20 raze and rebuilds [24] - The effective income tax rate for Q1 was 14.1%, lower than the previous year's rate, due to recognition of energy tax credits [26] Q&A Session Summary Question: Trends in inside sales - Management noted that non-nicotine categories showed improvement due to digital pricing and promotional effectiveness, with expectations for better performance in Q2 due to Easter [33][34] Question: Update on retail margins - Retail margins in April were $0.28 per gallon, with the marginal retailer facing similar cost headwinds, indicating a structural advantage for the company [36][37] Question: Growth in middle and high-income customers - The increase in higher-income customers is attributed to a broader recognition of value, with similar purchasing behavior across income cohorts [40][42] Question: Traffic trends and consumer behavior - Traffic was impacted by weather-related store closures, but management is focused on maintaining competitive pricing to drive traffic [59][60] Question: Store build pace - The company expects to remain second-half weighted for store openings this year, with plans for a more even pace in the following year [64] Question: Operating expenses and staffing - The company is seeing a record number of applications for staff positions, which is positively impacting wage rates and overtime costs [74][75]