from Birch Gold Group:
This week, Your News to Know rounds up the latest top stories involving precious metals and the overall economy. Stories include: JP Morgan is very bullish on gold and silver, gold in the context of the main economic themes of 2024, and something mysterious is going on with Russia’s gold reserves…
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JP Morgan’s analysts issue rare recommendation for gold and silver
JP Morgan’s latest coverage on gold and silver almost reads like an advertisement, with the bank’s various analysts presenting their own reasons why they expect to see a breakout year for both gold and silver. Natasha Kaneva, Head of Global Commodities Strategy, set the stage by seeing gold through the prism of commodities:
Across commodities, for the second consecutive year, the only structural bullish call we hold is for gold and silver.
It’s a quote that stands out, for sure, as little over a year has passed since we discussed gold having yet to benefit from a commodity supercycle. Back then, gold and silver stood last on the long list of commodities posting outperformances. Now, as others have noted, raw materials were last year’s worst performers in a generally good year.
Is it testament that gold and silver were never “just” commodities and shouldn’t have been categorized so simply? Or, more precisely, that the gold and silver market are far more nuanced than, say, crude oil or lumber? We believe so. Calls for a correction back then haven’t been absent, and while one has materialized, gold and silver went in the opposite direction. Even platinum continues to rise.
Despite gold’s performance over the past weeks, having posted another all-time high, JP Morgan’s analysts believe that the metal is yet to run properly. This, they say, could start to take off around summer, coinciding with expectations of rate cuts.
Gregory Shearer, Head of Base and Precious Metals Strategy, said that timing an entry might be the biggest challenge when it comes to gaining gold exposure over the next year and half. This is partly to do with the volatility gold has already exhibited and the general difficulty of figuring out when resistance levels will be breached.
But it’s also because of the lofty price forecast that JP Morgan has unveiled: the bank says gold is set to average $2,175 in Q4 2024 and move to a quarterly average peak of $2,300 by H2 2025. If the forecast is accurate, we could be facing two historic years for the price of gold with limited headwinds. But since gold posts a new all-time high every year lately, isn’t that a given?
Considering the broad economic trends of 2024, how will gold perform?
My colleague Phillip Patrick discussed this question recently on Real America’s Voice, check it out!
Sprott’s dive into outlook features ten points of interest, with gold and silver each occupying one on the list. Discussed are themes like ongoing deglobalization, namely in trade and energy, a focus on commodities and the push for green energy.
Silver’s investment case immediately stands out as interesting as Sprott notes that the breakout silver seems to be needing could come from unexpected sources. As the analysis noted, 80% of silver is still mined as a byproduct of excavating for industrial metals. Weakness in demand from just a single notable consumer of metals like zinc and copper, such as China, could cause a surprise supply glut given the metal’s very lackluster production picture.
The Silver Institute projected that silver’s deficit could double over the coming years in an as-is scenario, one that revolves around ongoing investments in green energy. Whether silver breaks out with a slow and steady pace or lives up to its volatility when the action starts unfolding remains to be seen.
Sprott rightly notes that massive gold demand from the official sector has solidified the metal as something to go to in times of uncertainty or turbulence. Global central banks face a lot of it, with a bid for too-lazy-to-print CBDCs on one side and already flailing currencies on another. Their stockpiling of gold bullion can be interpreted in several ways, none too flattering for the fiat they issue.
Russia has served as an experiment of sorts, a question on whether a large gold hoard can give a nation sovereignty, if not outright impunity in the face of sanctions. The answers are mixed, but we know Russia hasn’t yet imploded Venezuela style due to being cut off from SWIFT, and that this is largely due to having over a quarter of their reserves in gold bullion. Many pundits have taken note that the sanctions are likely to pre-empt nations towards protectionism. And if the outcome of the sanctions is any indicator, they’ll be all the more inclined to buy gold.
