Blanchard Index
Exclusive Precious Metals Market Outlook and Recommendations
Index updated November 1, 2024
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 Breaks the $2,700 Barrier in October
Space and flight enthusiasts may remember the pivotal moment in 1947 when U.S. Air Force Captain Chuck Yeager was the first test pilot to break the sound barrier in flight.
Gold is breaking memorable records in 2024 as well—recently breaking through the $2,700 an ounce barrier for the first time ever. Heightened geopolitical uncertainty, concerns over rising federal government debt and insatiable central bank demand has pushed gold to a series of new record highs this year.
Gold’s role as currency as an asset to protect, preserve and grow your wealth has lasted for centuries and shows no signs of losing its appeal. In late October, Goldman Sachs was the latest big Wall Street firm to reiterate its forecast for gold to hit $3,000 an ounce.
Let’s take a look at some key drivers for gold and the macroeconomic picture today.
Central Banks Have Been a Power behind Gold’s Gains
In the first half of 2024, central banks bought 483 tonnes of gold, 5% above the previous record set in the first half of 2023, according to World Gold Council data. Drilling down to monthly data—in September—central banks bought 40t of gold.
VIX “Fear Gauge” Reveals Fear Rising
Wall Street traders like to monitor the level of fear in the market by looking at the CBOE Volatility Index, also known as the VIX or the “fear-gauge.” Generally, a rising VIX is associated with increased fear and falling stock prices, and vice versa for a declining VIX. Where is the VIX now? It stands above 22 and has been rising steadily for months, from a 14 level in August.
What does this mean for you? The shift higher suggests investors should prepare for stock market volatility ahead.
U.S. Economy Grew But Less Than Expected In Third Quarter
Gross domestic product rose by 2.8% in the third quarter. That’s below Wall Street forecasts for a 3.1% gain and is down from second quarter 3.0% reading. Last quarter, consumer spending was a major driver of growth. Yet, data reveals that Americans have been relying on savings and credit to help fuel their purchases. The personal savings rate fell in the third quarter to 4.8%, down from a 5.2% level.
Labor Market Weakens
Hurricanes Helene and Milton struck a big blow to the jobs market in October as thousands of people’s lives and homes were severely impacted. Wall Street expected 115,000 new jobs for the economy in October. Instead, only 12,000 new jobs were created last month, the Bureau of Labor Statistics said. That hits job seekers hard and reveals a significant weakening of the labor market. The overall unemployment rate remained unchanged at 4.1% in October.
Personal Consumer Expenditure Reveals Stubborn Inflation
The most recent inflation data shows higher prices are sticking around—especially when you factor in food and gas. The year-over-year core personal consumption expenditure (PCE) rate revealed a 2.7% annual increase in September. What does that mean? The Federal Reserve still can’t declare victory over inflation.
In a new Barron’s Big Money Poll, the resurgence of inflation was the number one risk facing the stock market over the next six months.
Rob Medway, managing general partner with MFLP told Barron’s he sees gold eventually climbing to $5,000 an ounce if inflation fears continue. Short-term, Medway sees runway for gold to hit $3,500 an ounce.
With so many risks on the horizon, it’s no wonder so many investors are turning to the safety and security of gold today. If you have been thinking about increasing your allocation to gold, there’s never been a better time. It’s easy to increase your wealth protection, why not do it today?
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: 84 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.
