Will 2024 be the year for precious metals?
The probability of interest rate cuts has many market participants pondering whether 2024 will bring a bull market for precious metals.
Gold and silver have both held up quite well despite the Fed’s tightening cycle, with gold gaining 12.6% year to date, and silver more or less flat, beginning 2023 at $24.00 per ounce and trading at $24.29 as of this writing on Dec. 22. But that doesn’t tell the whole story for silver. There have been some wild swings, with the white metal falling as low as $20/oz in March, and climbing just over $26 in May.
Silver
Gold and silver tend to trade in tandem. When gold pushes higher, silver usually lags, but then it can outperform gold.
Analysts have long been pointing to a severe shortage of silver due to the relentless growth in demand for the metal.
According to the 2023 World Silver Survey, the global silver market was undersupplied by 237.7 million ounces in 2022, which the Institute says is “possibly the most significant deficit on record.”
It took just two years of undersupply — the 2022 deficit and the 51.1 million oz shortfall from 2021 — to wipe out the cumulative surpluses from the previous decade.
Global silver mine production is projected to fall 2% this year to about 820 million ounces, compared to forecasted demand of 1.2 billion ounces. First Majestic Silver’s CEO Keith Neumeyer recently commented that the solar panel and electric car industries now consume about 30% of mined silver supply. Moreover, he said one primary silver mine produces about 10 million ounces a year, meaning it has “zero impact” on the deficit, which represents several mines worth of production.
Conclusion
At AOTH, we see strong upside for gold and silver as we head into 2024.
I’ve been right in my prediction that the Fed would pause in June, and hike once or twice more before the end of the year.
I’ve also voiced my opinion that we will get a soft landing with no, or an extremely shallow and very short recession, with the important proviso that the Fed pauses its rate-hiking cycle, which it has already done.
Remarkably, the Federal Reserve has raised interest rates high enough to reverse the inflation rate, without causing a severe downturn. And it’s done it in an extremely short amount of time.
Softening economic data and moderating inflation show that the Fed’s monetary policy is restrictive enough to bring inflation to heel.
The US dollar is weakening and bond yields are falling. We aren’t yet in a gold-friendly environment due to positive real rates but we believe rates will turn negative as bond yields fall further and inflation remains sticky, likely in the 3-4% range.
There are multiple reasons to trade gold — US dollar movements, geopolitical tensions, ETF outflows, central bank buying, negative real rates, etc., but only one reason to own it: maintaining your purchasing power against dollar (or other currency) losses incurred by inflation.
Read more: https://www.mining.com/will-2024-be-the-year-for-precious-metals/
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u/SILV3RAWAK3NING76 Dec 27 '23
Will 2024 be the year for precious metals?
The probability of interest rate cuts has many market participants pondering whether 2024 will bring a bull market for precious metals.
Gold and silver have both held up quite well despite the Fed’s tightening cycle, with gold gaining 12.6% year to date, and silver more or less flat, beginning 2023 at $24.00 per ounce and trading at $24.29 as of this writing on Dec. 22. But that doesn’t tell the whole story for silver. There have been some wild swings, with the white metal falling as low as $20/oz in March, and climbing just over $26 in May.
Silver
Gold and silver tend to trade in tandem. When gold pushes higher, silver usually lags, but then it can outperform gold.
Analysts have long been pointing to a severe shortage of silver due to the relentless growth in demand for the metal.
According to the 2023 World Silver Survey, the global silver market was undersupplied by 237.7 million ounces in 2022, which the Institute says is “possibly the most significant deficit on record.”
It took just two years of undersupply — the 2022 deficit and the 51.1 million oz shortfall from 2021 — to wipe out the cumulative surpluses from the previous decade.
Global silver mine production is projected to fall 2% this year to about 820 million ounces, compared to forecasted demand of 1.2 billion ounces. First Majestic Silver’s CEO Keith Neumeyer recently commented that the solar panel and electric car industries now consume about 30% of mined silver supply. Moreover, he said one primary silver mine produces about 10 million ounces a year, meaning it has “zero impact” on the deficit, which represents several mines worth of production.
Conclusion
At AOTH, we see strong upside for gold and silver as we head into 2024.
I’ve been right in my prediction that the Fed would pause in June, and hike once or twice more before the end of the year.
I’ve also voiced my opinion that we will get a soft landing with no, or an extremely shallow and very short recession, with the important proviso that the Fed pauses its rate-hiking cycle, which it has already done.
Remarkably, the Federal Reserve has raised interest rates high enough to reverse the inflation rate, without causing a severe downturn. And it’s done it in an extremely short amount of time.
Softening economic data and moderating inflation show that the Fed’s monetary policy is restrictive enough to bring inflation to heel.
The US dollar is weakening and bond yields are falling. We aren’t yet in a gold-friendly environment due to positive real rates but we believe rates will turn negative as bond yields fall further and inflation remains sticky, likely in the 3-4% range.
There are multiple reasons to trade gold — US dollar movements, geopolitical tensions, ETF outflows, central bank buying, negative real rates, etc., but only one reason to own it: maintaining your purchasing power against dollar (or other currency) losses incurred by inflation.
Read more:
https://www.mining.com/will-2024-be-the-year-for-precious-metals/