Nearly 30,000 of you have enjoyed our interview with David Hunter, recorded just last Thursday. His ‘conservative’ prediction that gold will reach $3,000 by the end of 2024 seems increasingly likely as the yellow metal continues to hold above $2,500. (If you missed it you can catch up here.)
Last week’s speech by Federal Reserve Chairman Jerome Powell was a watershed moment, in which he promised rate cuts and confirmed the FOMC would be getting in line and joining the quantitative tightening movement. In response to the speech gold surged 1% and the US dollar extended losses. Now the question is how big a rate cut we will see in September. If US data continues to be soft then we can expect a bigger rate cut, and likely a strong reaction from gold.
Interestingly, despite the hype around gold, silver was the best performing asset for last week, up 3.5%. According to Bloomberg, India has nearly doubled its silver imports to meet solar demand. Renewable energy is an area we have repeatedly pointed to when discussing the silver price dynamic. Green energy solutions such as solar panels are and will continue to be a major source of silver demand. Of course silver supply is already in deficit, so it will be interesting to see if this is the start of an exciting period for the silver price.
Speaking of shortages, a Bank of America report has some interesting stats on gold supply. It explains that over the past few decades, the number of new gold deposit discoveries has significantly decreased. During the 1990s, an average of 18 gold discoveries were made each year. However, this figure dropped to 12 per year in the 2000s and plummeted to just four annually in the 2010s. From 2020 to 2023, despite increased spending on exploration, only five major discoveries have been recorded.
Of course, we write this on the final Thursday of August. Next time we write will be in September. It feels like all summer the markets have been looking towards the month of September, with analysts writing and adding their prophesies about what will come on the back of whatever the FOMC decides. Now seems as good a time as any to remind readers that the gold price is not just based on a single monetary policy decision. It comes because of layers and layers of decisions and events that create a picture that drives people and institutions to want to own gold. Currently the price of gold is five times the inflation-adjusted price the UK started to sell some of its gold reserves in 1999, this price didn’t just happen because of interest rate announcements. It came because the likes of the FOMC or Bank of England, and governments have done appallingly at managing the very things they are supposed to be experts in.
Before we go, the David Hunter video was so successful that we have taken five of his forecasts and condensed them down. This video is a great bitesize summary of some of the contrarians expectations in the coming months, for the likes of the S&P500 and of course, precious metals prices. Watch it here.
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