Blanchard Index
Exclusive Precious Metals Market Outlook and Recommendations
Index updated February 1, 2025
The Blanchard Monthly Index is a roll-up of industry news and economic trends affecting the precious metals market and trading world.
Check back each month for insights and commentary from our leading experts and contributors.
The Blanchard Economic Report
Gold Soars Past $2,800 to Hit New Record High in January
Precious metals investors rushed into gold and silver in January, pushing gold up 6.7% in the first month of 2025, while silver climbed 8.9% over the past four weeks. Concerns about stock market volatility, still-high inflation and worries over what President Trump’s tariffs could mean for the global and American economy spiked investor demand for the safety of precious metals last month.
Gold scaled the $2,800 an ounce level for the first time ever, closing out January at $2,803.50 an ounce. The strong start to the year for gold follows 2024’s nearly 30% gain in the yellow metal.
Physical gold and silver are preferred assets during times of economic and geopolitical turmoil, which has heightened in the past few weeks. Russia’s war against Ukraine rages on, the United States has announced its desire to purchase Greenland as well as its intention to reclaim control of the Panama Canal. Economically, President Trump announced his plans to slap 25% tariffs against both Mexico and Canada starting in early February, as well as a 10% tariff against China. The tariffs are expected to make imported consumer goods more expensive for Americans, which could push inflation even higher and weaken economic growth across North America.
On February 3, Trump announced that tariffs against both Mexico and Canada would be postponed for 30 days. However, we will stay alert about any repercussions as this process moves forward.
Stock Market Slump
The stock market slumped in late January amid news of a Chinese artificial intelligence tool that was produced at a fraction of a cost compared to American firms. The release of the Chinese Deep Seek tool sparked a swift sell-off in the stock market as investors exited technology stocks on concerns over overvaluation.
DeepSeek’s AI tool upended Wall Street because of its low development costs—just over $5 million. By comparison U.S. technology firms have routinely spent over $100 million to develop similar AI tools. The release of DeepSeek’s artificial intelligence tool was likened to the “Sputnik moment” when the Russians first released a satellite into space in 1957. The United States confronted fears that there could be a technological gap between America and the Soviet Union. Today, that comparison is being made between the U.S. and China over artificial intelligence.
In the midst of the rising turmoil and chaos, gold and silver attracted investors as safe port in the storm in January. In other economic news…
Fed Hits Pause Button on Rate Cuts to Start 2025
At its late January meeting, the Federal Reserve held interest rates steady at 4.25-4.50%. Inflation remains above the central bank’s target and there is widespread uncertainty on how the new administration’s policies will impact the economy and financial markets. This uncertainty likely played into the Fed’s decision to stand pat. The January decision to hold rates steady follows three consecutive interest rate cuts in 2024.
Recent economic data reveals that progress on moving inflation back down to the Fed’s 2% target has stalled. Consumer prices increased 2.9% in 2024, an improvement from 4.1% in 2023, but still nearly a full percentage point above the Fed’s target.
What’s more, the Fed signaled at its January meeting that a rate cut is unlikely at their next meeting in March, meaning interest rates will stay higher for longer. This means the stock market is on its own now. There are no near-term interest rate cuts to boost market returns. Fundamentals like valuations will matter more to stock prices in the months ahead.
4Q Gross Domestic Product Growth Slows, Weaker-Than-Expected
The fourth quarter GDP report showed the U.S. economy expanded at a 2.3% pace, but that reading was below the 2.6% consensus forecast and down from 3.1% in the third quarter. For the full year, the U.S. economy grew by 2.8% in 2024, following a 2.9% growth rate in 2023.
The Bottom Line
The stock market is on edge awaiting the impact from President Trump’s plans to raise tariffs, as they are expected to raise consumer prices in the U.S. As the risks pile up in 2025, the time is ripe to increase your wealth protection and up your allocation to physical gold. If the stock market plunges, the portion of your portfolio invested in equities shrinks, while the portion of your portfolio invested in gold grows.
Investors who own up to 10-15% of gold in their portfolios report better long-term returns with lower drawdowns. Take action today to insure you keep more of the wealth you’ve worked hard to earn with an increased allocation to physical gold.
Our Recommendations
The high-end rare coin market remains an attractive buying opportunity for long-term investors. Rare coins offer investors an opportunity for significant price appreciation in the current environment.
The appeal of rare coins to investors is their impressive historical price appreciation, which has outpaced the level of the underlying precious metal.
Buying Rare Coins
For investors able to hold 5–10 years, ultra-rare acquisitions offer the safest store of wealth and the strongest growth potential. Accumulate the highest-quality coins that you can afford. This strategy will pay off handsomely as rarity tends to appreciate the fastest.
Buying Precious Metals
An accumulation strategy is probably the best option for clients wishing to add to holdings.
Trading Precious Metals
Silver continues to offer a better value than gold. Generally, readings above 65 signal that silver is undervalued and is a strong buy signal for the metal.
The gold/silver ratio is a way for investors to measure the relative value of these two metals. The ratio indicates the number of ounces needed to buy one ounce of gold. Investors have long turned to this ratio to identify attractive long-term entry points for precious metals purchases. A high ratio is generally viewed as a signal that silver is undervalued relative to gold. That is what we’re seeing now.
Current Ratio: 89 oz. silver = 1 oz. gold
You may want to consider converting some gold holdings into silver.
Popular silver products: 10 oz. & 100 oz. silver bars, Silver American Eagles in monster boxes.
