May 2024 - Week 4 Edition

Gold Sets New High ($2,444) and Silver Reaches 11-Year High at $31.80

– Plus Copper (at $5), All Driving Up the Cost of the Three Olympic Medals 

The London settings for gold and silver on Monday, May 20 were $2,244.35 for the AM gold setting and $31.80 for mid-day silver – an all-time high for gold and an 11-year high for spot silver. In the futures market, gold hit a record high of $2,454.20 on the June contract and silver hit an 11-year high of $32.75 on the July futures contract on Comex. What’s more, copper reached an all-time high of $5.20 per pound. Those are the three metals dominating sports medal news for the upcoming 2024 Paris Olympics! 

Enough sports talk. What does it tell us that gold and copper are each trading at all-time highs and silver is at an 11-year high – all on the same day? During 2024 alone, there have been seven days, including Monday, in which all three metals closed at 52-week highs on the same day.  The first such day this year was April 3. Before that, the most recent occurrence was July 21, 2020 – during the last Trump/Biden election year. Before that, you have to go back to January 2011.

Also, an important note, is that global gold physically-backed gold exchange-traded funds, or ETFs, saw net inflows of more than $1 billion over the past week, the largest weekly inflow since October 2023, according to the World Gold Council.

The Close Correlation Between the CPI and the Three Olympic Metals 

According to research from Bespoke Investment Group, during gold’s long bull market run from mid-2002 to January 2011, there were 42 days when gold, silver and copper each hit 52-week highs on the same day, but in the previous 12 years, from 1990 through May of 2002, there was not a single day when all three metals hit 52-week highs. From February 2011 through June 2020, there wasn’t a single day when all three metals hit 52-week highs; however, since the 2020 election and Bidenomics, we may be in store for another long run of these tri-medal/metal gains. 

Here’s the inflation correlation: From February 2011 through June 2020, a period when there wasn’t a single day when all three metals closed at 52-week highs on the same day, the year-over-year Consumer Price Index averaged just 1.8%. Then, from July 2020 through April 2024, when the seven days of tri-metal 52-week highs began, the average CPI shot up to 4.8%. 

Even though the Consumer Price Index for April seemed to come in lower than expected, it may increase in future months, since the Biden Administration last week raised its tariffs on Chinese electric vehicles (EVs) almost four-fold, from 27.5% to 102.5%. This clearly seems like a move to gain voter support in Michigan, a key swing state. The Biden Administration also more than tripled tariffs on lithium-ion batteries from 7.5% to 25%, even after Ford Motors said it is losing $100,000 on each EV it makes and markets. Biden’s loyalists appear oblivious to the fact that American automakers, like American consumers, are tired of this failed EV experiment being pushed down their throats. 

Tariffs on steel and aluminum are also rising from 7.5% to 25%, as well as semiconductors and solar cells from 25% to 50%. There is also a new 25% tariff on ship-to-shore cranes, plus a 50% tariff on medical syringes. These are huge price increases designed to punish China but in practice they will punish many American consumers. 

Meanwhile, the war in Ukraine is escalating with a Russian attack planned on Ukraine’s second-largest city, Kharkiv. A recent battle cost over 1,000 deaths on each side in this long war of attrition, with no end in sight. Now, with Iran’s government vacated after a helicopter crash, China in a trade war with the U.S. and deficits soaring, the three main all-news cable networks can only talk about the Trump trial 24-7 – as if a soap opera sideshow is all the public cares about? 

Gold, silver and copper are all reflecting the real world around us – outside the Trump show trial!  Don’t look now but we are only $60 away from mine and Steve Forbes’ prediction of $2,500 gold in 2024!

“But What About 40,000 Dow Under Biden? Isn’t That Great?”

I often get asked this question about “Biden’s Bull Market” at conferences, especially now that the Dow hit 40,000, so I asked Gary Alexander, my “elder stats-man” to run the numbers for me: 

The Dow Jones Industrial Index on January 20, 2017, (Donald Trump Inauguration Day) stood at 19,827 and it rose to 31,188 the day he left, for a 57.3% gain.  Biden’s 40,000 Dow represents a 28.2% gain from 31,188, so Trump doubled Biden’s gain. 

The Consumer Price Index (CPI) rose only 7.7% in Trump’s four years (1.9% per year) but it rose 19.4% since Biden took office. Sorry Biden, inflation “Trumped” you. 

Gold and Silver Making More Gains 

Gold began its most recent rise last Tuesday (+$17) after a hotter-than-expected Producer Price Index was released. Gold rose another $35 after the Consumer Price Index was released the next day. Gold rose $32 on Friday on Biden’s high China tariffs, then another $21 on Monday, after the death of Iran’s President Ebrahim Raisi, plus the country’s foreign minister and other top officials. Also, a Chinese oil tanker was also hit by a Houthi missile in the Red Sea. This combination of rising inflation and rising global tensions sent gold up $100 (+4.3%) in a week. Silver rose $4 (+14%), from $28.20 to $32.20 in the futures market in the same week.

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