January 2025 - Week 1 Edition
Gold Won in 2024 and in The First Quarter of the 21st Century
It was a good year for stocks but it was a great year for gold. Gold and silver were flat during December, but they beat stocks then, and especially over the first 25 years of the 21st century.
The New Year started off well, too, with gold up $30-plus while the major stock indexes retreated. I strongly recommend you start the year off right and buy silver and gold by contacting one of our professional representatives.
First, let’s look at the major stock market indexes vs. gold and silver for December and 2024:
You can tell from this table that gold and silver stood out far above other major commodities, like copper and crude oil, as well as platinum and palladium. Gold beat most major stock market indexes, except for the volatile, tech-heavy NASDAQ index, which over-relies on the “Magnificent 7” trillion-dollar stocks overloaded with “artificial intelligence” (AI) plays.
The Dollar Soared in 2024 – Gold Could Soar More in 2025 if the Dollar Falls
The U.S. Dollar Index (DXY) gained over 7% during 2024, rising from 101.33 to 108.49 in the last 12 months. This means gold and other commodities rose by an average of over 7% more in terms of other currencies than they rose in terms of the U.S. dollar. The two biggest currencies in the DXY are the euro and yen, which declined 5.4% and 11.4%, respectively, over the last year.
However, the continuing high deficits in the U.S. budget will eventually weaken the dollar. On Thursday, January 2, 2025, The Wall Street Journal quoted Dominic Schnider, head of global foreign exchange at UBS’ wealth management division, as saying the dollar will “lose steam” in the first quarter and end 2025 down 5% to the euro and 8% to the Japanese yen. Also, Bank of America estimates the dollar is more than 20% overvalued. If the dollar sinks by even 10% in 2025, gold could easily score another 14% gain to $3,000, or in a best-case scenario achieve a 25% gain to $3,300 an ounce.
As we move into 2025, it’s interesting to note that four of the biggest Wall Street investment banks all predict $3,000 gold this year. Bank of America, Citi, Goldman Sachs and JPMorgan Chase – the biggest of the big – all see $3,000 gold, partly based on a decline in the dollar but also due to a resumption of inflation and a continuation of global crises in 2025.
Gold Beats Stocks by 3-to-1 After Inflation So Far This Century
For the past 25 years, the U.S. stock market has beaten China and Europe by a long shot but GOLD beat the two major U.S. market measures (the Dow and S&P 500) by more than 3-fold after inflation, +380% for gold vs. +111 and 95% for the S&P 500 and Dow Jones indexes.
Each week, we bring you a variation of this table in our Metals Report but this time we adjusted the gains for inflation, which makes the comparison between gold and stocks even more stark:
It’s entertaining to project where the U.S. stock market and gold might be in 25 years if they merely gain what they gained over the last 25 years. We have all heard about 24-karat (pure) gold, but time and inflation may add a new meaning to the term “$24k gold” by 2050! Since gold is growing so much faster than stocks, hypothetically based on the past quarter-century, gold could reach $24k before the S&P reaches 24,000.
I may not be around to see $24k gold in 2050 or before but it will be fascinating to watch the race to see which investment reaches that number first. Will it be gold or the S&P 500 stock market index, an index that changes its stock components every year and is “cap weighted” to give extra weight to its biggest winners (like Nvidia in 2024)? Remember, there is no changing gold, it remains simply Element #79 (AU) on the periodic table – pure gold.
Gold began 2025 with a +$33 surge from $2,640 on the February futures contract to $2,673 as of 4:00 pm Thursday, January 2, while the major stock market indexes dropped further after a dismal December in the Dow (-5.3%) and other major indexes. Silver is up 72-cents (+2.5%), double the percentage rise in gold. Silver touched $30 per ounce on the March futures contract.