Can Gold Parlay Its Record Year Into 2024? Or Will Silver Catch Up?
Two types of bugs flourished in 2023: bed bugs and gold bugs. However, while one was busy causing mayhem in the bed, the other was busy stocking up gold bars underneath it.
Last month, gold prices surged to a record high — driven by several factors, including:
- Uncertainty from the Israel-Hamas conflict.
- Expectations of falling interest rates in 2024.
- Central banks going on a gold-buying spree.
Gold did what it does best: The precious metal is known as a safe haven that helps shield investors during periods of uncertainty. And last year, there was no shortage of dangers — including banks blowing up, geopolitical conflicts, and the never-ending fear of a recession.
Central banks also acquired more gold than expected, with China, Poland, and Singapore leading the way — providing strong support for the asset’s price.
Can gold shine in 2024?
Looking further into the year, uncertainty looms with major elections in the US, EU, and India — as well as the Israel-Hamas conflict continuing into its fourth month.
- The World Gold Council anticipates central banks to “get close or exceed” last year’s gold purchases (FT).
- Saxo Bank’s Ole Hansen told Reuters that “further price gains in 2024, driven by a trifecta of momentum chasing hedge funds, central banks continuing to buy physical gold at a firm pace, and not least renewed demand from ETF investors.”
While several factors helped push gold prices to record highs, rising interest rates were not one of them. Higher rates can make interest-bearing assets (i.e., treasuries) look more attractive relative to gold, but gold prices stood firm. And with expectations of rate drops this year, investor demand could pick up again. [Read the Gold Guide]
Some fund managers prefer this metal instead
Play both sides. Gold and silver prices often move in the same direction — but silver can be more volatile and, at times, diverge. This year, some institutions have gone for silver:
- Interactive Investor’s Head of Investment called out silver for being “more undervalued than gold, potentially providing an opportunity for fundamental investors” (FT).
- Ned Naylor-Leyland, manager of the Jupiter Gold and Silver fund, told FT that relative to gold, silver prices are lower today than during the pandemic.
Used in manufacturing: While gold is primarily used as a store of value and in jewelry — silver is also a critical component in solar panel manufacturing and AI servers and switches.
- Global asset manager Sprott expects “silver demand to keep growing” with rising solar usage to help demand “dramatically” outpace supply.
- Research firm Metals Focus expects the shipping growth of AI servers and switches to increase by double digits over the coming years (Reuters) — fueling further demand for precious metals. [Read the Silver Guide]
And capping off the year, Costco sold over $100M in physical gold bars in a single quarter, often selling out in hours. But there’s an easier way to invest in gold besides physically holding it.
How can investors diversify into precious metals? Read the 2024 Gold & Silver Kit Guide.
Bonus: Investors can receive up to $10K in free silver thanks to forgotten 50-year-old legislation often ignored by investment advisors, gold bugs, and silver hounds.
It exploits a “glitch” in the
matrix IRS tax code that helps protect your retirement — while paying zero taxes or penalties to do it.