2024 Gold Forecasts Make Gold Shine Even More
Early reports from the LMBA Global Precious Metals conference indicate that attendees expect gold to outperform amongst the precious metals, reaching $1,990.30 an ounce by October 2024. The outlook for silver was also pretty bullish. At the time of writing silver is sitting around $23. LBMA conference participants expect to see this climb to $26.80 by this time next year. We suspect much of this bullishness is on account of events in the Middle East. Gold has climbed by over 5% since the violence began. Prior to that it had been at its lowest since March. Next year will be an interesting one in terms of gold drivers, and some market participants may have to pivot themselves somewhat in terms of what to pay attention to. This year (and years prior) all eyes have been on the FOMC decisions, US dollar strength and of course Treasury yields. Next year we expect the gold market to pay less attention to these factors. After all, the FOMC isn’t expected to move much and already gold is barely blinking when US data releases are positive. Instead, more weight will be placed on safe haven demand and physical demand. This isn’t just in relation to war but also in economies where citizens have a natural affiliation to gold investment and perhaps aren’t performing as well elsewhere. We’re of course thinking about China, in particular. The Shanghai Premium is something we have discussed recently, this is a good indication of a divergence happening in the gold market. Silver is, of course, also a safe haven and we expect it will do well on the back of this, just like gold. But we are especially excited about it because of its industrial properties. The global transition to green energy is providing solid support for silver prices. For a long time, there have been concerns about supply-shortages. Unlike the PGM metals, there is no option for substitution. So, there could be a real stock issue if more silver supply is not found. It is estimated that another 2 or 3 mines will need to open in order to satisfy projected solar demand. Failing this, above ground stocks will need to be used. In both cases the current price does not make either option especially attractive, so watch this space to see climbs in the silver price. LBMA participants are not the only ones getting ready to stock up on gold. JP Morgan’s Chief Market Strategist Marko Kolanovic is also set to. In the bank’s Global Markets Strategy report, Kolanovic explained that the continued escalation of geopolitical dangers and the overvaluation of equity markets in the United States and elsewhere made this an opportune moment for investors to boost their gold exposure. The investment bank will be maintaining a “defensive allocation in our model portfolio…We additionally increase our allocation within commodities to gold, both as a geopolitical hedge, and given an expected retracement in real bond yields.” This would no doubt delight the organisation’s founder who purportedly said before Congress in 1912, “Gold is money. Everything else is credit.” If you’re interested to know how bullish Kalanovic is on gold, JP Morgan is projecting spot gold prices to reach $2,175 by Q4 2024. Article courtesy of Gold Core
Silver Demand in Three Key Sectors Expected to Nearly Double in the Next Decade
Silver demand for industrial applications, jewelry production and silverware fabrication is expected to nearly double over the next 10 years. According to a report by Oxford Economics commissioned by the Silver Institute, the demand in these three sectors is forecast to increase by 42% between 2023 and 2033. Industrial, jewelry and silverware production account for about three-quarters of total silver demand. According to the report, industrial demand for silver will increase by 46%. This reflects a projected rapid 56% growth in the output of the electronics industry. Manufacturers of electronics and electrical applications are the major purchasers of industrial silver. In 2022, these industries consumed 371.5 million ounces of silver, 67% of the industrial offtake. According to the Silver Institute, the use of silver in solar energy and electric vehicles will help lead this category forward. According to a research paper by scientists at the University of New South Wales, solar manufacturers will likely require over 20% of the current annual silver supply by 2027, and by 2050, solar panel production will use approximately 85–98% of the current global silver reserves. The evolving demand for silver in brazing alloys will also help drive industrial demand. These processes made up 9% of global industrial demand in 2022. Demand for silver in jewelry is projected to increase by 34% over the next decade. India will continue to lead the world in silver jewelry production, but the report forecasts that it will lose some of its dominance to China. Silverware fabricators’ output is forecast to increase by 30% over the next decade. About 43% of the growth in output is expected to occur in India. Silver demand set records in every category in 2022. Meanwhile, supply was flat with mine output dropping by 0.6% to 822.4 million ounces. Record global silver demand and a lack of supply upside contributed to last year’s 237.7 million ounce market deficit. It was the second consecutive annual deficit in a row. The Silver Institute called it “possibly the most significant deficit on record.” It also noted that “the combined shortfalls of the previous two years comfortably offset the cumulative surpluses of the last 11 years.” The price of silver does not reflect the current supply and demand dynamics. In fact, silver is significantly undervalued right now. One analyst called the current price in the $22 an ounce range “inexcusably low.” It’s important to keep in mind that while silver is an industrial metal, more fundamentally, it is money. Despite being more volatile in the short term, silver tends to track with gold over time. If you are inclined to think the Federal Reserve will lose the inflation fight, you should be bullish on both gold and silver. At some point, investors will have to reckon with the shrinking supply of silver coupled with rising demand, along with the Fed’s inability to bring inflation back to its 2% target. When that happens, the price of silver will likely take off. Given the supply and demand dynamics, the skewed silver-gold ratio and the likelihood that the Fed will not beat price inflation, $22 to $23 silver looks like a great buying opportunity. Article courtesy of Schiff Gold
Billionaires are Buying Gold – Are You?
In 1973, Jim Rogers teamed up with George Soros to create the Quantum Fund. From 1973 to 1980, the portfolio gained 4,200% while the S&P advanced about 47%, instantly making the Quantum Fund one of the most successful of all time. For over 50 years, folks have listened to Soros and Rogers for any kind of advice on how to invest. Today, Jim Rogers turned heads because he just recommended investing in gold and silver rather than stocks, bonds, or real estate. In a recent interview on The Julia La Roche Show, Rogers said commodities like gold, silver, and rice tend to appreciate during inflationary times, meaning they’re “usually a good place to ride it out and even perhaps make a lot of money.” Rogers points out that gold has historically done well during periods of high prices and geopolitical conflicts. However, he thinks silver is an even better option right now because it’s currently undervalued. He also mentions concerns about the US dollar’s future as the world’s reserve currency, especially given international tensions and the overuse of sanctions by the US. Rogers warns that inflation is likely to get worse. Despite a recent slowdown in price growth, it’s still above the Federal Reserve’s target. This is partly due to massive amounts of money – or should we say currency – being printed worldwide. Jim Rogers isn’t the only billionaire investor who’s bullish on gold. Ray Dalio, of Bridgewater Associates, has recommended having a well-diversified portfolio with 5-10% of wealth in gold. He’s been quoted saying, “If you don’t own gold, you know neither history nor economics.” Earlier this year, billionaire John Paulson highlighted the trend of de-dollarisation and noted that gold is attracting new investors due to persistent inflation fears and new geopolitical tensions. Article courtesy of Brandon S, GoldSilver
