Investors who were heading for the hills and predicting precious metals prices would plummet to pre-pandemic levels are starting to walk back their dire predictions. Gold and silver prices have stabilized following the post-election dip and now appear poised to resume their climb.
Meanwhile, the stock market experienced a 10-day losing streak in December, capped by Wednesday’s 1,100+ point crash.
The central bank reduced its overnight borrowing rate by a quarter point to a target range of 4.25% to 4.5%, as expected. However, the Fed indicated Wednesday afternoon it would only cut rates twice in 2025, fewer than the four cuts given in its last forecast. Fed Chair Jerome Powell said the central bank’s move to cut rates in recent months allows it to “be more cautious as we consider more adjustments to our policy rate.”
Gold has spent all of December above $2,500 per ounce despite some bears saying it could drop below $2,000 before Christmas. Silver has been even stronger, staying at or near the $30 mark since September.
“This is exactly what we hoped to see for our clients,” said Jonathan Rose, CEO of Genesis Gold Group. “We anticipated three things: a Trump victory, a quick dip, then a return to a state of stability after the rate cut that makes precious metals the ideal hedge, especially for retirement accounts.”
Analysts see the coming trade wars, particularly with China, as driving forces behind de-dollarization. BMO expects China to continue to be a player in the gold market in response to President Trump’s tariffs.
“We do not see global financial systems as being fully prepared for this, and hence gold is once more being pulled back into the monetary system,” the analysts said.
It could prove prudent to consider physical precious metals to back retirement accounts such as IRAs or 401(K)s. Genesis Gold Group specializes in these. Their free Wealth Protection Kit details how a tax-free rollover or transfer into a Genesis Gold IRA is becoming more popular since the election.
UBS also expects the demand for gold in investor portfolios to rise next year.
“While US President-elect Donald Trump’s policy agenda has been well broadcasted, uncertainty remains on what will be implemented from fiscal, trade, and geopolitical standpoints, especially given his transactional approach,” they said. “With the Russia-Ukraine war still ongoing, and the situation in the Middle East no less complicated, we think investor demand for hedges should rise further, boosting inflows to gold exchange-traded funds.”
And lower interest rates from central banks also support the case for holding gold in 2025, especially after the mid-December cut of 25 basis points.
“This should reduce the opportunity cost of holding the metal, which is non-interest-bearing,” they wrote. “A weaker US dollar in the medium term, due to lower rates and concerns over the US government debt trajectory, should also support gold prices. Since gold is denominated in US dollars, a weakening of the US currency makes the metal cheaper for non-dollar investors, bolstering demand.”
These factors have led UBS to maintain their bullish outlook for gold prices over the next 12 months, with the Swiss banking giant now forecasting the yellow metal to reach $2,900 per ounce by the end of 2025.
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It’s becoming increasingly clear that fiat currencies across the globe, including the U.S. Dollar, are under attack. Paper money is losing its value, translating into insane inflation and less value in our life’s savings.
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