Summary
- Bank analysts are predicting gold prices to reach $3,000 per ounce, with gold recently hitting an all-time high of $2,800 in October 2024 despite a strengthening US dollar.
- Central banks have been consistently purchasing record amounts of gold, approximately 1,000 metric tonnes annually for the past three years, while western ETF shareholders have been net sellers.
- Gold has appreciated nearly 70% since 2020, while bonds have underperformed, suggesting a secular bear market in bonds is underway.
- The US stock market shows concerning signs, with the highest top-10 stock concentration since 1929, alongside rising consumer credit card defaults and commercial mortgage delinquencies surpassing 2008 GFC levels.
- The incoming Trump Administration's threats of new tariffs and potential Chinese yuan devaluation beyond 7.3 yuan to USD could cause significant global market disruption.
- Chinese gold buying has reached record levels, driven by fears of upcoming yuan devaluation, with higher gold and silver prices already evident in Chinese markets.
- The gold-silver ratio peaked above 91 at the start of 2025, with silver prices approaching $30 per ounce and gold exceeding $2,650.
- Industrial silver demand continues breaking records across various sectors including solar, mobile phones, and automotive applications, with particularly strong demand from China.
- Silver recycling has decreased to around 170 million ounces annually, down from 250 million ounces during the 2011 price peak, while global demand has increased by over 200 million ounces yearly.
- Street-level dealers are increasingly refining old silver coins, including Canadian 80% and US 90% silver coins, into pure .999 fine silver to meet growing industrial and investment demand.
Internationally, bank analysts are still banging the table for $3,000 oz gold.
Have a listen as he runs through medium term minutia for his call.
What the interviewer is referring to is the false thinking that in order for spot gold to perform well, you need to see a falling fiat US Dollar in relative purchasing power to other competing major fiat currencies.
This was not really the case recently with spot gold reaching its latest all time nominal spot price high near $2,800 oz late in October 2024, that in the face of a rising US dollar index at the time.
We'll speak to this false dichotomy with a longer term chart in a moment. Onward with the clip.
Throughout this full fiat currency era we have run through timeframes in which the fiat US dollar index has surged to dramatically high levels in the 1986 Plaza Accord era, only to ramp down with a secular bear market in gold that continued for some 15 years following.
Yes there was another major secular fiat US dollar bear market to start the 2000s to the 2010 top basically gold running 4X from around $250 to $1000 oz.
But we have also witnessed spot gold do another near 4X multiple in spot price from the GFC 2008 low near 700 oz with safe haven fiat US dollar index spikes at the time, and basically an overall upward trajectory for the fiat US dollar relative to other competing fiat US dollar currencies ever since.
Basically spot gold price four folded throughout both relative US dollar weakness and strength eras.
You have probably heard the expression, the US dollar is the prettiest horse at the fiat currency glue factory.
John Exter, the former Federal Reserve Governor's 1968 inverse pyramid expressed just that view. In a crisis the fiat US dollar in physical cash notes is the safest haven second only to gold bullion owned outright. It appears another crisis is brewing.
Central banks have been increasingly moving out of underperforming bonds and into buying new gold bullion reserves at record pace the last three years running. Buying about 1,000 metric tonnes or just over 32 million ounces of gold per each of the past three years.
This while western unsecured gold ETF shareholders have basically been net sellers in a rising spot gold spot environment.
Spot gold is up nearly 70% since the decade began, yet bonds have lost purchasing power signaling their secular bear market underway.
Delusional US stock bulls are now more than ever in recorded polling, expecting stock prices to rise over the coming year.
This bullishness coincides with TOP 10 stock market concentration and mainly tech driven domination since the late 2010s until now beginning 2025.
The last time the top 10 stocks accounted for this much of the US S&P 500, was just before the Great Depression in 1929.
Of course, this bubble could go on, but underlying issues are spiking. US consumer credit card defaults are rising akin to what we saw after the 2008 GFC.
Delinquency rates on Office Commercial Mortgage Backed Securities are now higher than the fallout following the 2008 GFC as well.
Yet even with bonds performing terribly, the overvalued US stock market has kept the typical 60/40 stock to bond portfolio buoyant moving sideways the last few years.
With the new Trump Administration threatening new tariffs against all sorts of trading counter-parties to come. It is hard to imagine this year will be a smooth one in global financial markets.
The fiat Chinese yuan is back again buttressing up against 7.3 yuan to $1 USD. A level that if highly tariffed will likely break to the upside, and similar to their -3% devaluation of the yuan in 2015, could again cause chaos in global financial markets.
Judging by the Chinese 10 yr bond crashing off a cliff to close last year 2024, big moves in markets are being signaled for those who bother to look around the other side of the world.
Record Chinese gold buying has been mainly driven by this, a real fear of coming fiat yuan devaluations upcoming. The spot gold and silver price in China is showing this fact already.
On the other side of this break we are going to take a deeper gander at the silver market, particularly where it has been since Covid 2020, where it is at the moment on the retail side, and what is will be refining through as the inevitable climb back towards the seemingly ancient nominal price high of $50 oz is again coming around the bend.
Make sure you enter our new 500 oz silver giveaway sweepstakes for 2025, the link to the new contest is below.
The winner of the 500 oz silver bullion coin giveaway for 2024 will be announced the week of January 13th upcoming. You will find the winner's name published on our official sweepstakes URL, next to winners from 2023, 2022, and 2021.
I will be traveling late this Friday evening when this update goes live, thus I am creating this week's Bullion Market Update one day in advance.
Both spot silver and gold are slightly up since the end of trading last week the 27th of December 2024.
The spot silver price is threatening a run back towards $30 oz while spot gold has cleared the $2,650 oz mark here on Thursday Jan 2, 2025.
The spot gold silver ratio climbed intra-week peaking over 91 just before the first day of the new year.
Technically speaking for all the lower 70s spot GSR shot callers, you want to see 91 hold and not get broken to the upside.
Industrial silver usage continues breaking records in terms of troy ounces used in myriad inputs from solar, to cell phones, to cars, and hundreds of other industrial uses for silver to continue improving the quality of our modern day lives.
A healthy bid for silver higher in China than the Western world continues reflecting the fact that they need physical silver to continue pumping out consumer items like world leading car and solar panel production.
Yet for brick and mortar street level dealers in the United States of America, we are seeing signs that items which were once circulating money are now often being refined back into pure forms to help better meet ongoing .999 fine demand from industrial silver users and silver bullion investors alike globally.
It is not only old 80% junk silver Canadian coins that get refined.
In the late 2010s, the silver bullion market was so slow that we heard of large amounts of old US 90% silver coins being sold for scrap at the time as dealers need to find a way to turn some profit in the face of next to no demand at the time.
Pice premium charts for 90% silver coinage since the 2008 GFC basically show that there have been five eras of premium spikes for 90% silver coinage over the last 15 years and it is during those timeframes that 90% silver coins turnover and often end up in new investor hands as opposed to being refined into 1000 oz industrial bars or other silver bullion items.
To his point about silver recycling on the street level being lower than it once was. Just over 170 million oz of silver supply came via annual recycling since the Covid 2020 boost in bullion and precious metals interest.
This is still far from the typical over 250 million oz of silver being recycled back during the 2011 run to $50 oz and spot price points akin to what are being projected by many bank desks for this year 2024.
Of course now in the mid 2020s, global demand for silver is up over 200 million oz or more per year, and recycling does not appear to be able to make up the ongoing annual market deficit shortfalls.
Now looking back further to the first half of this decade in the silver space, specifically the Q1 2021 Silver Squeeze reddit phenomenon.
Chris Marcus of Arcadia Economics in the middle of last month December 2024 had on Rick Rule the former President & Chief Executive Officer of Sprott U.S. to speak about his experience managing close end silver ETF PSLV which say lare capital inflows during the early 2020s.
He will speak to how thin the market was and likely still remains awaiting the next inflow of investment capital flows into the silver sector.
Unfortunately and fortunately Mr. Rule, I have been red pilled regarding relative fiat US dollar strength versus bonafide bullion over the long term. For me silver bullion sub $50 oz remains a long term store of value even if my hair turns silver along the way.
That will be all for our weekly SD Bullion Market Update.
And as always to you out there, take great care of yourselves and those you love.
