March 2024 - Week 1 Edition

Gold Closes at New Record High Over $2,100 Per Ounce

On Friday morning, March 1, gold lived up to the old adage, “March came in like a lion,” as gold leaped up $40 in morning trading from $2,040 to $2,080 This was mostly based on news of higher-than-expected inflation within the Fed’s favorite inflation indicator, the “core” Personal Consumption Expenditure (PCE) Index, released at the end of each month.

At first, gold’s rise seemed like an odd reaction since the high inflation readings in the January Consumer Price Index (CPI) caused gold to retreat a bit. The theory was that high inflation would cause the Fed to delay its interest rate cuts by a month or two, keeping interest rates high.

The reason for gold’s move is the Fed watches the core PCE a lot closer than it watches the CPI, and the numbers indicated a return of serious inflation: Last Thursday, the U.S. Commerce Department announced the PCE index rose 0.3% in January and 2.4% in the past 12 months, but the more closely watched “core” PCE index, excluding food and energy, rose by 0.4% in January. It was the largest monthly gain in a year and +2.8% in the past year, well above the Fed’s elusive “target” rate of 2% inflation before the Fed begins to consider cutting key interest rates.

This probably means interest rates will stay higher for longer, as the Fed doesn’t want to appear to be involved with influencing the Presidential election by lowering rates right before the November election. So, they may hold rates at their currently lofty peak (5.25% for Fed funds) until the mid-summer, or even after the election. As we have been saying, gold has historically risen during times of high-interest rates in the late 1970s and 1980, or 2004-06 and recently.

Then, on Monday morning, March 4, gold gained another $40 in brisk trading to make an assault on a genuine record – topping the brief intra-day reading of $2,135 last December, which was not a real record to many, since gold opened and closed almost $100 lower than that figure that day. That made the $2,135 reading looking more like a bubble surge in the middle of daily trading. 

This is one of the reasons why we prefer to measure gold’s record high as a “closing” price, rather than intra-day. The previous official closing high for gold was $2,078.40, set on December 28, 2023, in London.

In a steady rise, April gold in the futures market traded at $2,128.40 on Monday morning, March 4, gaining $102 per ounce (+5%) in just three days of trading. Additionally, May silver was up at an even brisker percentage pace, from $22.25 on February 28 to $24.06 on Monday (+8.1%).

Before December 2023, the last time gold set a record high was in August 2020, during the peak of the COVID-19 pandemic. That was also in the middle of a contentious presidential election year between Joe Biden and Donald Trump. During that 2020 election year, as I have shown here, gold rose 24.4% and silver rose 47.4%.

Nearly Every Market is Up – While Most Economies are Down – What Gives?

Around the world, the top five economies are in recession or close to it (except the U.S.) but all market indicators are at or near record highs. What gives?  Gold hit a record-high close on Monday and the S&P 500, the DOW and NASDAQ all hit record highs on Friday, March 1. Even Bitcoin is closing in on a new record high and the U.S. Dollar Index (DXY) is up 2.5% so far this year.

Needless to say, this is an unusual situation and it is unsustainable. First of all, with the dollar up and metals up in dollar terms, that means precious metals are up an average 2.5% more in terms of other global currencies – and gold will be supercharged if and when the dollar begins to fall.

In addition, we have one of the most controversial Presidential elections ever. As I have shown, gold and silver have risen strongly in the last five presidential election years. Steve Forbes said in my interview with him in October, that gold could rise to $2,500 “and even more if the wrong guys win the election,” so we could see some massively higher moves in gold this year.

Speaking of this strange Presidential race, we have the spectacle of President Biden delivering a very late State of the Union speech two days after Super Tuesday this week. Besides his growing speech problems, he has a short fuse with Congress, so we’ll see if he goes off the teleprompter with them, as he did in East Palestine, Ohio, when he asked an aide, “Why am I here?”  We also see that the Supreme Court ruled 9-0, a unanimous edict, that former President Trump cannot be barred from any state ballots, so it’s “game on” for these two aging candidates from the last contentious election.

With gold at a record high, there will be more advertisements in more publications for bullion coins, which will generate more customers for bullion, and build a bigger base of gold and silver investors.

In our experience, about one in six of those bullion buyers graduate to rare coin customers within 12 months, building a base in the numismatic coin market too, which helps bid prices up in the far more limited population of rare coins, so this creates a healthy market for all of us. If you haven’t already reached out to your professional account representative, you need to do so now and take advantage of gold’s upward trend.

U.S. Mint Sells Nearly 2 Million More Silver Coins This Year

Turning to U.S. Mint coins, the U.S. Mint’s sales of U.S. Silver American Eagles are up 36% so far this year, rising from 4.85 million ounces in the first two months of 2023 to 6.6 million ounces this year.  Gold bullion coin sales are down for now but that isn’t likely to hold. Combining Gold American Eagles and Buffalo coins, the Mint sold 299,000 ounces in the first two months of 2023, and 201,000 ounces in the first two months of 2024 (-33%) but sales will likely be lifted in March by gold’s record highs.

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