October 2024 - Week 4 Edition

Pro-Gold and Now Silver “Expert” Bandwagon Sending Metals Prices Higher

Last year at this time, the London Bullion Market Association (LBMA) met in Barcelona, Spain from October 15 to 17 and, while there, they held their annual survey of professional bullion market experts projecting the price of the precious metals over the next months. Their median prediction was that gold would rise to $2,000 by this month in 2024. At the time of the poll, gold was trading at $1,921 per ounce, which was over $100 per ounce higher than its price just before Hamas attacked on Israel a few days earlier, on October 7th. So, they were dismissing gold’s recent surge at the time and predicting that gold would only rise 4.4% over the next 12 months. In the same poll, with silver trading at $22.60, these supposed experts predicted a 12-month rise in silver to just $23.65, up 4.6%.

Instead of an average 4.5% rise in silver and gold in 12 months, gold is up 43% and silver is up 54%.

Are these really the best “experts” in the world?  Sorry!  I would nominate perhaps Steve Forbes. At about the same time – in mid-October 2023 – my staff and I met Steve Forbes, editor-in-chief of Forbes and a former Republican presidential hopeful in the 1990s, to collaborate on what we thought the price of gold would be in 2024. We predicted at least $2,500 gold in 2024 and Forbes said, “much more if the wrong team wins” the 2024 election. I also added that we’d likely see $30 or higher silver in 2024.

Now that gold is over $2,700 and silver is nearing $35, the London Bullion Market Association just finished its annual mid-October conference, this time held in Miami, and they are much more bullish in their annual poll.  They see gold rising another 11% from the mid-October level (of $2,650 during their poll) to $2,941. However, their big shocker was their median prediction of a 40% or more rise in silver, from $31.45 (in mid-October, during their Miami meeting) to $45 within 12 months. Gee, LBMA, thanks for the not-so-timely advice in 2023, when we needed it! Your ultra-conservative view on precious metals pricing cost many investors a lot of money. Hopefully, our clients listened to Forbes and I and bought before the rise.

Other institutions are joining the bandwagon now, favoring gold and silver, once they are already soaring. A Bank of America analyst said this past Thursday gold could reach $3,000 in 2025 as the “ultimate safe haven.” As for silver, RBC (the former Royal Bank of Canada) said silver should surpass $40 if it returns to its 10-year average price ratio to gold’s price of 65-to-1. For instance, with gold at $2,750, a 65:1 ratio would put silver at $42.30. If gold reaches $3,000, a 65-1 ratio would put silver at $46. Also, demand for gold-backed exchange-traded funds (ETFs) attracted $1.4 billion in net inflows in September, according to the World Gold Council (WGC).

As usual, these major institutions and the London Bullion experts only got on the gold and silver bandwagon long after the largest moves put the biggest profits in the hands of early buyers.

In addition, global central banks added another 483.3 metric tons of gold to their coffers in the first half of 2024. That’s the most of any first half of any year in history, surpassing last year’s record high. The usual central “developing” banks did most of the buying but what is becoming even more interesting is that some banks which have not previously shown interest in buying gold are now showing interest in gold. Mexico, Mongolia and the Czech Republic are now all jumping on the gold train. Each has recently praised the value of increasing their gold holdings, according to Bloomberg.

This week, as the big BRIC nations (originally standing for Brazil, Russia, India and China but now spreading to 10 or more nations) meet between October 22 to 24, there is a lot of talk about these huge “developing” nations creating a new common currency to compete the U.S. dollar. To be clear, what these nations are REALLY doing is buying a lot more GOLD to compete with the U.S. dollar.

Nobody wants any BRIC-like paper money, unless they can back that new currency with GOLD! 

What Caused This Big Surge in Gold and Silver – Starting in October 2023?

What did Steve Forbes and I see last October that the London Bullion experts missed? 

On the surface, our biggest concern was chronic inflation and rising federal deficit spending but we were also concerned with the escalating “hot spots” around the world, including the war of attrition in Ukraine and the new war, just launched at the time in Israel at that time. There was and still is a danger of China expanding its zone of influence, including a potential invasion of Taiwan at any time.

In the light of gold’s role as a crisis hedge, in addition to an inflation and currency hedge, let’s examine the timing of gold’s biggest move, which began just after Hamas invaded Israel.

Gold was flat when inflation was soaring the most rapidly, from 2021 to 2023. In fact, gold was still mired at $1,816 per ounce on October 5, 2023, just 36 hours before the surprise raid on Israel, which resulted in hundreds of brutal deaths, followed by the now-year-long retaliation by Israel.  Since that day, gold is up over 50% during a time of moderating inflation and silver is up over 65%, rising from $20.85 on October 5, 2023, to nearly $35 per ounce earlier this week.

Gold’s is clearly rising as a “crisis hedge” more than an inflation hedge now but silver is not historically as much of a crisis hedge. Neither is it a central bank foreign exchange component, like gold is, so many investors are mystified by the latest rise of silver. Part of the gain is based on the assumption that the U.S. economy and industrial use of silver might become stronger with a Trump victory in the upcoming election. Looking back, most of silver’s rise is due to the historic fact that when gold launches a major bull market, silver tends to trade like “gold on steroids,” making a larger percentage move vs. gold due to its lower price entry point.

I have repeatedly urged you for the past year to call your friendly account representative to continue adding gold, silver and rare coins to your portfolios and collections. It’s not too late as I see gold moving beyond $3,000 an ounce in 2025 and silver moving higher than $40 per ounce. Additionally, I see our 20/20 strategic rare coin program continuing to rise, in many cases even faster than gold in 2025, which would be consistent with its past performance.

Gold and Silver Aren’t Backing Down

Gold hit $2,762 on the futures market and $2,749 on the spot market on Tuesday, October 22, up 33% for the year, while silver hit $35.07 on the futures market and $34.92 on the spot market, up over 46% for the year. That means silver is up more than any other investment sector, including some “hot stock” sectors.  Silver is up over $4 per ounce (over 10%) in the past week with no identifiable cause other than “following gold’s lead.”

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