Summary
- The Federal Reserve kept interest rates unchanged and expects inflation to come down to 2%.
- The unemployment rate is considered "low" but has ticked up slightly.
- Gold prices hit record highs as investors anticipate future rate cuts and economic easing.
- The US deployed warships to support Israel amid tensions with Iran.
- US debt surpassed $35 trillion.
- Economist David Rosenberg predicts gold could reach $3,000 per ounce by 2025.
- A weak US dollar could lead to five-figure gold and three-figure silver prices in the 2030s.
- Silver supply struggles to meet rising demand, potentially driving prices higher.
- Chinese demand for gold is strong due to rising prices and declining domestic interest rates.
- Silver premiums in China are down but remain elevated, while silver prices in the US are still considered relatively cheap.
All financial market eyes were on Jerome Powell of the fiat Federal Reserve this week as they left interest rates unchanged for 8th straight meeting. The Fed reiterated no rate cuts until confident inflation is moving to 2% stating while inflation has lightened but remains "somewhat elevated"
They claim they remain attentive to risks on both side of dual mandate as the underreported unemployment rate has moved up but remains relatively "low"
The gold market in particular seems to be sniffing out coming rate cuts and further fiat financial easing to come as the spot gold price achieved its highest monthly close on record in fiat US dollar terms.
Gold futures broke the $2,500 oz threshold which was also a historic first this week for gold.
Meanwhile the USA has deployed 12 warships to support Israel as fear of Iranian response to recent assassinations of Hamas and Hezbollah military leaders.
US hard debt passed the $35 trillion level this week.
Economist David Rosenberg was on Bloomberg Canada this week making the points that gold running toward $3,000 oz is likely ahead later this year into 2025.
To David's final point about a coming structural bear market in the fiat US dollar. We have not seen one since the 2001-2011 US dollar bear market where gold and silver respectively had ten year bull market runs.
If we are indeed heading into an era where an increasingly weaker US dollar is used to support and build out future US exporting capacity and infrastructure build outs. The pop in spot gold prices over the last few years is only a foreshadowing further price climbs to come.
If the fiat US dollar suffers another ten year bear market as it did to start this century, and we simply juxtapose percentage gain performance moves from the then spot prices onto now moving ahead.
The projections call for five figure gold and three figure silver by the troy ounce early on next decade in the 2030s.
You can see the large gains enjoyed by silver bulls in that last fiat US dollar secular bear market from 2001 into 2011 on the left hand of this rate cut vs silver spot price chart here.
We're likely gearing up for another major move in silver with world market physical supply demand fundamentals more bullish now than back in the early 2000s.
New line mined silver supplies are not meeting increasing demand and there is no end in sight for this ongoing silver deficit phenomenon.
I am filming this early Friday August 2nd 2024 as I will be traveling this evening.
Trading for both silver and gold has been overall positive on the week.
The spot silver price is closing in on $29 oz and the spot gold price is currently trading over $2,450 oz.
The spot gold silver ratio has remained flat at 85.
China Daily reported "Investment in gold bars and coins surged to 80 tons last quarter, up 68 percent year-on-year, marking the strongest second-quarter performance since 2013. Rising gold prices and investor demand for wealth preservation boosted total investment in gold bars and coins in the first half to 190 tons, a significant 65 percent increase from the first half of the previous year."
They also report that unsecured gold exchange-traded fund inflows in the second quarter added about $2 billion or 25 metric tons of gold holdings, setting a record high. In the first half of this year, Chinese gold ETFs continued to attract inflows, with holdings and assets under management surging 50 percent and 77 percent respectively, largely driven by rising prices of the yellow metal.
With domestic interest rates declining and potential pressure on local assets, there is a likelihood of increased demand for safe-haven investments among Chinese investors.
A mixed picture on Chinese gold and silver exchange demand at the moment. Local premiums on the Shanghai Gold Exchange have recently dipped to 2022 level lows.
Open interest on the Shanghai Futures Exchange for silver have dropped signaling some froth has been wrung out the Chinese market while open interest for silver on the SGE has climbed with recent spot price weakness.
Local premiums paid for silver in China are down but still elevated at over $3.00 oz above spot to acquire industrial 1,000 oz silver bars in China at the moment.
Luckily for USA based silver bullion buyers and investors, you can still get investment grade silver bullion products on sale as low as 99¢ oz over spot at SDBullion.com while supplies last.
Take advantage while silver is still relatively cheap versus escalating gold prices for now.
That is going to be all for this week's SD Bullion Market Update.
As always to you out there.
Take great care of yourselves and those you love.
