Blanchard Index
Exclusive Precious Metals Market Outlook and Recommendations
Index updated December 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
Trump Wins! Investors Buy November Gold Dip
On Tuesday night November 5, Americans across the nation were sitting on the edge of their seats waiting for results on election night. In the wee hours of the morning Wednesday, the AP swiftly called the election for Donald J. Trump after it became clear he won enough of the key battleground states to tip him over the 270 Electoral College votes needed to clinch the victory.
Republicans also gained control of the U.S. Senate and the House of Representatives giving them the power to enact their preferred policies going forward.
Gold Slips after Election
Gold tumbled over $70 on the Wednesday after the election in an initial knee-jerk market reaction to the swift victory. Why? Gold had priced in some expectations that the election results would be drawn out and contested and could even trigger social unrest. Gold fell as the market de-priced those concerns.
Bargain Hunting Investors Quickly Buy Gold Dip
However, the November gold dip was brief and short-lived. This was a “don’t blink” or you might miss it type of dip in gold. During a few short days in mid-November, gold investors aggressively bought gold at the bargain price of under $2,600 an ounce and gold is still up over 25% year to date, beating the performance in the S&P 500.
Fed Cuts Interest Rates for Second Time This Year in November
In early November, the Federal Reserve delivered its second interest rate cut of 2024. The central bankers updated their policy statement saying: “The Committee judges that the risks to achieving its employment and inflation goals are roughly in balance.” The Fed cut its key interest rate by 0.25 percentage points to 4.50-4.75%.
Geopolitical Tensions Ratchet Higher
In November, Russian President Vladimir Putin raised the geopolitical stakes even higher as the Russian war widens. Last month, Putin approved a new nuclear doctrine, which lowers the threshold for Russia to use its nuclear weapons. Russian diplomats are saying the current crisis is similar to the 1962 Cuban Missile Crisis. That’s the last time Russia and the United States came closest to intentional nuclear war. Global conflicts have taken center stage. As these tensions continue to increase, investors will turn more heavily into the safety of precious metals.
U.S. Economy Grew 2.8% in 3Q—Less Than Expected
Gross domestic product increased at a 2.8% annualized rate in the third quarter. That was below the 3.1% estimate Wall Street had been looking for and also below the 3.0% reading in
the second quarter. Consumer spending and federal government spending were the biggest contributors to GDP growth in the third quarter. However, investors should not expect government spending to contribute to GDP growth in the fourth quarter like it did in third quarter. Slowing growth is positive for gold as it increased the likelihood that the Federal Reserve will continue lowering interest rates in the months ahead.
The Bottom Line
Even if you missed the recent price dip, there is still plenty of upside potential from current levels in gold—with many Wall Street firms targeting gold at $3,000 an ounce. As we head into year-end, take a look at your portfolio allocations and consider: is it time to buy more insurance for your wealth?
Gold’s role as currency and asset to protect, preserve and grow your wealth has lasted for centuries and shows no signs of losing its appeal. 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: 86 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.
