The world is buying gold at the fastest pace in 60 years.–
This week’s been full of excitement as gold prices flirt with new highs, rate cuts loom on the horizon, the dollar falls lower, and Middle East tensions reach a tentative pause. Although much change is happening on the surface, the economic fundamentals remain unchanged.
Watch this week’s The Gold Spot to hear Scottsdale Bullion & Coin Founder Eric Sepanek and Sr. Precious Metals Advisor Steve Rand explain gold’s current rally, why the economy is still in dicey territory, and why there’s a limited opportunity to buy gold at these prices.
Analyzing the Gold Rally
Gold prices notched a six-month high this week, pulling silver prices along for the ride. Investors are waiting with bated breath to see if gold will surge past the previous technical high of $2,085. Over the past few weeks, spot gold prices have been confidently testing this resistance, giving precious metals a bullish outlook.
Bank of America1 forecasts a new high for gold, expecting prices to reach $2,400 an ounce on the back of relaxed interest rates. Even if the $2,100 hurdle isn’t overcome in the next few days, it’s only a matter of time before gold prices blow past it. A diverse array of economic and geopolitical factors are set up to boost gold’s value.
What’s Impacting Gold Prices?
Gold’s most recent surge is attributable to a combination of economic and geopolitical factors. The temporary ceasefire between Israel and Hamas is renewing hopes for a quick end to the conflict. The dollar is showing signs of fundamental weakness, hovering near a three-month low2. Plus, global demand for gold remains robust. In fact, gold buying just reached a 60-year high.
Some investors are pointing to the Fed’s anticipated rate cuts as a signal that the economy might be entering recovery mode. However, this myopic focus ignores the other economic indicators that are only worsening. In reality, the entire economy has been limping along since the pandemic without getting completely healthy again.
The Economy’s Fundamental Problems
Anyone can point to singular metrics as evidence of a recovering economy, but the fundamental rot isn’t being addressed. Jamie Dimon, the CEO of J.P. Morgan, spelled it out with refreshing clarity by admitting that the US is addicted to debt. The leader of the world’s largest bank explained how the debt problem causes a sugar high in the economy, which is like “heroin” to consumers.
This dire yet sober perspective is precisely what investors need to hear. The economy’s problems run deep, and it’s far from overcoming the fundamental issue of debt. The national debt is on pace to blast through $34 trillion, and consumer debt jumped to $17.29 trillion in Q3 of 2023. Inflation is still wreaking havoc, which beckons the Fed to raise rates again. Countries are losing interest in US treasuries, underscoring the world’s loss of confidence in the dollar.
The Myth of Endless Money
With debt mounting at the national and consumer level, smart investors are asking an imperative question: Where is all this money coming from? In the wake of the disastrous Modern Monetary Theory (MMT), the Biden administration is still set on pumping more money into the economy.
We’re overloading all the systems the government provides.–
It’s perfectly sane to want to tune out of the news cycle, but the economic situation can’t be ignored. This false assumption of an endless money supply inevitably lowers the value of the US dollar. This has corrosive effects on all Americans’ buying power, savings, investments, and retirement accounts.
Don’t Wait to Buy Gold, Buy Gold and Wait
Central banks – the world’s most well-funded, knowledgeable, and experienced investors – have been buying gold at record rates over the past few years. Savvy investors are following suit, recognizing that the tides are turning heavily against the domestic and global economy and putting their wealth at risk.
With 2024 gold price forecasts and predictions expecting gold to surge to new highs, investors have a limited opportunity to stock up at these prices. Don’t be fooled into thinking gold prices can’t go any higher.
Gold prices may seem high, but things can go a lot higher just like…in the past.–
If you’ve been stockpiling gold already, now is an excellent time to dollar cost average gold to lower your cost basis for greater returns.
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