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| Money Metals News Alert | September 23, 2024 – Gold ended last week's trading on strong footing, and the gold price remains firm this morning near all-time highs at $2,640. Silver fell slightly to $31 this morning.
The U.S. stock market has been relatively steady in the wake of last week's interest rate cut by the Fed.
Retail demand for physical precious metals remains relatively subdued, and that explains why premiums on coins, bars, and rounds are still at multi-year lows. | | |
 | Gold : Silver Ratio (as of Friday's closing prices) – 83.9 to 1 | | |
| Gold Is Ideally Positioned for the Fed Pivot | | | |
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We've been arguing gold is positioned as the "all-weather" hedge against whatever may happen with the Fed pivot and more.
That's been proven accurate. When stocks are down, the dollar is stronger, and yields are rising... gold has been soaring.
Here's what it all means and what you need to do about it.
As we all know, the long-awaited Fed pivot was launched last Wednesday with an aggressive half-point cut.
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One might think that the markets would have celebrated that deep cut, and indeed, all the risk assets soared immediately afterward as the black-box algorithms interpreted the major move.
But all the markets ended the day lower as investors — real humans — began to ponder what prompted the Fed to make its first cut so large.
What did Powell & Co. know that we don't?
|  | Fed Chair Jerome Powell surrendered to inflation last week. | | | | |
Added to this was the "buy the rumor, sell the news" phenomenon that I'd been warning you about. Traders who had bet heavily on the inevitable Fed pivot were naturally exiting the trade now that it was a fait accompli.
But all those worries and factors were temporarily brushed aside late last week, as everything bounced back with a vengeance. The Dow gained 1.25%, and the Nasdaq rose over 2.5%.
Gold jumped nearly $27, and silver soared over 70 cents.
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| The One Investment to Rule Them All | | |
In my Golden Opportunities email newsletters, I've been making the point that gold is perfectly set up for whatever may happen post-Pivot.
If we get a no-landing or a soft-landing scenario in the U.S. economy, the Fed's shift to easier money will drive real rates lower, with stocks, bonds, and metals all doing well.
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But if we get a hard landing into a recession, stocks and bonds will nose dive, but (outside of a brief, liquidity vacuum type of sell-off) gold will soar as the Fed is forced to cut more aggressively.
It's the perfect investment, and that's why it's increasingly attracting portfolio allocations from around the world.
That's the point I made to a MarketWatch reporter recently, who quoted me in their top article for the day:
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"It's no surprise to hear that expectations for interest-rate cuts by the Federal Reserve were behind gold's latest rally to record highs, as recession worries boost the precious metal's appeal."
But gold also may prove its worth as an "all-weather hedge against whatever happens next" even if the central bank makes an unexpected move.
There has been "some risk from the 'buy the rumor, sell the news' phenomenon" when the Fed actually cuts rates or as the decision day is very near," Brien Lundin, editor of Gold Newsletter, told MarketWatch.
However, global portfolios are increasingly adding gold allocations because the metal "stands to do well if the Fed cuts gradually or it's forced to lower rates more urgently in a recession."
Gold rallied Thursday even when stocks were down, and the dollar was up and rose even more as stocks recovered and the Dollar Index fell, said Lundin.
"The lesson, in my view, is that gold has established itself as the all-weather hedge against whatever happens next," he said. | These points are being proven out.
Gold has not only reached the key $2,600 level on a spot basis, it's barreled right through it and is putting it well behind.
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| Again: A Generational Opportunity... | | |
Last week, I told you that this was a "generational opportunity" — something akin to the gold bull market of the early 2000s that created fortunes for those who rode it from the bottom.
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But there are key differences today, as gold is already at all-time highs, yet the mining stocks are still near long-term lows.
Moreover, today's massive debt loads make higher interest rates... anything higher than the rate of inflation... impossible to endure over the long term.
So, we will have negative real rates going forward and, therefore, a bullish environment for gold, silver, and mining stocks for years to come.
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To get Brien Lundin's ongoing commentary on the markets at no charge, click here to subscribe to his free Golden Opportunities newsletter.
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| This week's Market Update was authored by Money Metals Contributor Brien Lundin. | | |
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| This copyrighted material may not be republished without express permission. Offer only available through email promotion. Offer does not apply to previous orders and may not be combined with any other offer or program. Special shipping rates or other restrictions may apply to international orders. The information presented here is for general educational purposes only. Money Metals Exchange and its staff do not act as personal investment advisors. Nor do we advocate the purchase or sale of any regulated security listed on any exchange for any specific individual. While our track record is excellent, investment markets have inherent risks and there can be no assurance of future profits. You are responsible for your investment decisions, and they should be made in consultation with your own advisors. By purchasing from Money Metals, you understand our company is not responsible for any losses caused by your investment decisions, nor do we have any claim to any market gains you may enjoy. Money Metals Exchange is not a regulated trading "exchange" as defined by the CFTC and the SEC. | | |
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