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| Huge Discounts on Gold & Silver Coins, Bars! CLICK HERE >> | | |
| Money Metals News Alert | January 27, 2025 – Gold and silver prices rallied last week with gold finishing the week near the all-time high set back in October. That mark was set October 30th at $2,787/oz. Silver remains well below its recent high of $34.87.
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Stock prices sold off on Friday and are under pressure again today. The Federal Reserve note dollar lost nearly 2 full points in foreign exchange markets as the DXY index dropped from 109.39 to 107.46. Bond yields were flat for the week.
The FOMC meets this week and Fed officials are expected to hold interest rates steady. President Donald Trump has talked openly about pressuring the FOMC to drop interest rates.
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The current expectations are still for two ¼ point rate cuts in 2025.
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 | Gold : Silver Ratio (as of Friday's closing prices) – 90.4 to 1 | | |
| These 3 Catalysts Could Fuel Precious Metals Markets | | | |
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Longtime bullion investors have been evaluating whether to buy, sell, or hold in recent months. The change in leadership in Washington DC has prompted some searching as to the direction the markets.
Demand for precious metal tends to come in three broad categories; inflation hedging, safe-haven buying, and speculation.
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Gold and silver will generally get a look from investors when investors are looking for ways to protect their savings from the ravages of inflation.
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Given the imperative for ongoing inflation in our debt-based currency system, and the history of all fiat currencies, more inflation in the long run is all but guaranteed.
Inflation remains above the Fed target rate, but the central bank has already begun a new cycle of rate cuts. The consensus among Fed watchers is that the central bank will cut rates twice more this year.
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Lower interest rates are inflationary as reducing the cost of funds stimulates borrowing, which adds to the money supply.
President Trump spoke publicly last week about interest rates being too high. He signaled that he will be pushing Jerome Powell and other Fed bankers for even more rate cuts.
The Federal Reserve bank has always been marketed to the public as an independent institution, simply pursuing its dual mandate for protecting the value of the dollar and fostering full employment. In truth, the Fed never was independent and never will be.
The Fed Chairman is appointed by the president and serves at his pleasure. Trump may very well succeed in getting what he wants from Jerome Powell.
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Meanwhile, Congress has an absolutely abysmal record when it comes to controlling spending.
It is possible this time will be different, but Trump himself has never been a budget hawk.
Last month, he advocated for Congress to finally dispense with the debt ceiling altogether.
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To the extent Trump imposes new tariffs, some price inflation is likely. A 25 percent tariff on imports from Canada and Mexico, for example, is almost certain to drive prices higher on goods imported from those nations..
Higher-than-normal inflation in the year ahead looks like a good bet.
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Forecasting safe-haven demand from investors who worry about crises ranging from wars to troubles in the financial markets is trickier.
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War tensions are falling in the two main international conflict zones – Ukraine and the Middle East.
Here at home, the COVID pandemic, which stimulated a wave of gold and silver buying that began in March of 2020, is now in the rearview mirror.
Many feel health officials exaggerated the risks of COVID and are in no mood to entertain another pandemic scare.
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As a sign of the times, Trump withdrew the U.S. entirely from the WHO last week.
While Americans seem well inoculated against another health panic, other troubles are possible.
The mass deportations promised by the Trump administration are an example of a reform which could come with the cost of at least some social chaos. The round up of millions of illegal immigrants could generate some violence.
The equity markets remain significantly overvalued when looking at the average Price-to-Earnings (PE) ratio. A significant correction in stocks is inevitable, though it is impossible to predict the timing.
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Gold and silver prices have performed well in recent years, but the price action of late hasn't been enough to entice a wave of speculative longs into the markets.
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For the moment prices are range bound. There is currently nothing in the metals markets to compare with the energy in cryptocurrency markets where buying seems to beget more buying.
Gold and silver bugs have long anticipated a short covering squeeze. Whether or not they will get it in the next year or two is completely uncertain – like predicting the next major correction in the stock market.
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That said, inventories are dwindling and the shortage is showing up in premiums for COMEX deliverable bars. The premiums for these bars have generally been stable, despite periodic shortages of retail gold and silver products in the bullion markets.
This provides some basis for wondering if the long-awaited reckoning for shorts is nigh. If speculators find some reason to go heavily long gold and silver, leverage in the future markets could make for some explosive price action.
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| This week's Market Update was authored by Money Metals Director Clint Siegner. | | |
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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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