Summary
- The Federal Reserve cut the Federal Funds rate by 25 basis points this week, triggering market sell-offs despite being labeled a "hawkish cut."
- Additional rate cuts are expected in 2025, with key uncertainties surrounding their frequency, speed, and economic context.
- The Congressional Budget Office predicts U.S. debt interest will consume about 25% of tax revenues by the 2030s, highlighting concerns about currency devaluation and structural inflation.
- President Donald Trump threatened tariffs on the European Union this week, increasing economic tensions.
- Gold and silver have shown strong performance in 2024, with nominal gains in various fiat currencies, despite recent spot price dips.
- The U.S. dollar index (DXY) is experiencing its strongest year-end performance in over two decades, strengthening against the Euro.
- Spot gold closed above $2,620/oz, with a gold-silver ratio nearing 89, while silver dropped below its 200-day moving average, ending at $29.46/oz.
- Reports suggest China continues accumulating gold to hedge against yuan devaluation, with potential increases in official bullion declarations expected.
- India imported 173 metric tonnes of gold in November 2024, possibly setting a national record despite high nominal spot prices.
- Eastern markets, led by China and India, continue to drive global gold demand, setting the stage for a potential worldwide bullion market mania phase in the coming decade.
The fiat Federal Reserve cut their Federal Funds rate another 25 basis points this week.
Nearly all markets sold off, on what was oxymoronically called a 'hawkish cut'.
Often the typical dog and pony show from the fiat Fed during rate cut cycles is to manipulate, wait I mean manage expectations according to their shorter term goals.
There will be more cuts next year in 2025... the key question of course is how many and how fast they will come and under what kind of economic conditions.
The Congressional Budget Office suggests that the interest on our exploding debt level in the USA is going to eat about 1/4th of all incoming tax revenues by the time next decade, the 2030s get under way. The fiat Fed's goal is going to be a continued wide gap between interest rates paid to investors vs the real higher structural price inflation regime we are in along with further fiat US dollar debasement to come.
The easiest way to afford the unaffordable to come is to devalue our fiat currency as time proceeds. Structurally this is the rubber and the unaffordable road that bullion revalues against.
Incoming President Donald Trump banged the keyboard this week, threatening tariffs on the European Union to come.
And while both gold, and silver have performed well in 2024 respectively, both yielding strong nominal gains in virtually any fiat currency still valued under the sun.
Our morning cups of Orange Juice and Coffee are beginning to threaten to go cocoa moon up levered price discovery walls.
Meanwhile, the fiat US dollar DXY has been strengthening especially against its main competitor fiat Euro rival. This is one of the strongest close to the year for relative strength versus its competition likely to finish at a high not reached in over the past two decades.
Yet like tens thousands of you fellow stackers this week, I was buying this week's spot price dip.
On the other side of this short break we are going to dig further into details of where we are in terms of spot price action, and look into how two of the largest eastern physical buyers are surely also buying this week's price dip as well.
The fiat US dollar spot prices for silver and gold sold off on this week's rate cut with a tiny rally back to end the week's trading down overall for each metal.
The silver spot price ended the week at $29.46 oz bid... more on the relevance of that in a minute.
The gold spot price closed above the $2,620 oz bid, and with more relative strength vs silver, the spot gold silver ratio climbed higher to end this week at nearly 89.
This is the gold spot price relative to its 200 day moving average over this full fiat currency era ongoing. Typically in bullion bull markets if you get the opportunity to buy if and when spot prices dip towards their 200 day moving average, you will likely end up happy you did in time.
I say this because this week the more volatile brother of gold, silver fell and traded below its 200 day moving average which is now hovering just above $29.50 oz.
Shot calling headlines were made this week stating China would be declaring more Official gold bullion buying in the face of potential further Trump Tariffs to come.
Goldman Sachs pointed out the obvious for anyone who has been paying attention since the 2008 Global Financial Crisis came and got fiat QE covered over. That China has, "systematically purchased gold on the London OTC market during periods of CNY or fiat Chinese yuan weakness. Highlighting years 2014-16, 2018-2020, and 2022 until present day.
As the fiat Chinese yuan is likely to devalue further relative to the US dollar to come, one could expect China to begin declaring more official gold holdings it likely already has in opaque deep storage stacked the last decade and a half or so.
Admitted data already reflects the trend, China selling dollars, buying, and declaring more official gold bullion seemingly year after year. With the coming Trump 2.0 regime, once should expect this trend to continue onwards and perhaps even quicken.
Turning to India, the world's second largest gold buying market behind the Chinese. In the face of increasing near nominal record spot prices in gold it was reported this week that India imported 173 metric tonnes of gold last month alone.
Big if true, In fact that would be the nation's largest tonnage importation of gold if the numbers indeed pan out.
India's CNBC-18 spoke of the news and a bit of controversy over the number.
Have a look and listen.
This Indian Nov 2024 gold import reporting discrepancy doesn't shake the trend nor the main point I am making here using 21st Century Indian Gold import data by month.
Even in the face of record nominal price highs nearly everywhere in the world and at home in India. They are buying bullion in bulk. We can bet China will be too, they love a spot price dip and are certainly concerned their local currency is going to be devaluing further to come.
I believe given the fundamental situation for bullion in place and to come, the old 1970s western led gold bullion bull on the left hand of this chart will end up being echoed as this decade plays out into next.
This time it will be a worldwide affair with many easterners gaining purchasing power versus typically not too low bullion and high grade jewelry owning westerners.
The runway for a coming mania phase remains ahead.
That will be all for our weekly SD Bullion Market Update.
Merry Christmas and Happy Holidays to all of you out there.
And as always, take great care of yourselves and those you love.
