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Outlook 2024: Gold set to make history

The gold market is poised to make history in 2024. It enters the New Year within striking distance of new all-time highs.

How high will gold go? Much depends on how low interest rates and the U.S. dollar go.

The Federal Reserve ended its rate hiking campaign last fall. It is expected to pivot toward monetary easing later this year.

That should work to the benefit of gold and other hard assets.

Of course, there remains much uncertainty surrounding the economy, inflation, and interest rates. If persistent inflation pressures force central bankers to keep rates elevated, then stock and bond markets could tank – possibly taking down precious metals markets with them at least temporarily.

Market volatility could also ramp up later in the year around the presidential election.

With partisan prosecutors and judges threatening to jail the leading rival to incumbent President Joe Biden, and some state election officials moving to remove former President Donald Trump from the ballot, questions about the legitimacy of the election are already being raised.

Some pundits are warning that something akin to a civil war could break out if the declared winner of the election is perceived to have stolen it.

Regardless of the outcome, larger questions loom about the ability of the political system to deal with the mounting debt crisis. Neither Republicans nor Democrats in positions of power have any realistic plans to get spending under control, balance the budget, or pay down the debt.

It will cost the government more than $1 trillion in 2024 just to make interest payments on the debt.

As the national debt crosses the $34-trillion mark, Social Security and Medicare are rapidly heading toward insolvency and represent trillions more in unfunded liabilities.

Taxes can never be raised high enough to cover these massive obligations. And the political reality is that spending will never be cut and promised benefits will never be taken away either.

An inflection point is nearing. The U.S. government’s credit rating was twice downgraded by ratings agencies in 2023.

Under our fiat monetary system, however, the Treasury Department can always “borrow” more dollars into existence by dumping bonds onto the balance sheet of the Federal Reserve in exchange for cash created out of nothing.

Inflating the currency supply is the way the government will manage to keep paying its bills.

The way to preserve purchasing power amid rampant currency depreciation is to hold physical gold and silver.

Unlike fiat Federal Reserve notes, precious metals are scarce. In fact, they face widening supply deficits in 2024.

Major gold, silver, copper, platinum, and palladium mines are struggling with rising operations costs and degrading reserves.

As mining output hits a ceiling, demand for metals among industries, consumers, and investors continues to grow.

Investment demand is a wild card for gold and silver markets. It surged following the COVID-19 outbreak but softened in 2023 as higher interest rates lured savers into money market funds and rising equity markets diminished the perceived safe-haven appeal of bullion.

That could change in 2024. The prospect of Fed rate cuts, election uncertainty, and a gathering debt storm makes holding physical precious metals mandatory for those who seek to protect their wealth.


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Author

Stefan Gleason

Stefan Gleason

Money Metals Exchange

Stefan Gleason is President of Money Metals Exchange, the national precious metals company named 2015 “Dealer of the Year” in the United States by an independent global ratings group.

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