by winston » Sun Feb 09, 2025 8:39 am
Gold’s valuation could likely continue to rise as both immediate pressures (tariffs) and long-term fundamentals (scarcity) work in its favor
Several other catalysts support the precious metal’s longer-term outlook…
1. Falling Interest Rates: The gold price almost always rises when interest rates trend lower. Most recently, the gold price rocketed higher from 2001 to 2011, when the Fed was systematically suppressing rates. Then again, the gold price soared during the pandemic when the Fed was holding rates close to zero.
2. Weakening Dollar: Because interest rates are falling, the dollar exchange rate might also drift lower. A weak dollar usually manifests itself as a strong gold price.
3. Rising Geopolitical Tensions: Almost nothing benefits from geopolitical tension or wars other than weapons manufacturers… and gold. Hopefully, the current tensions around the world moderate throughout the year. But the mere possibility of growing instability could support a strong gold price.
4. Central Bank Buying: On a net basis, the world’s central banks have become large, consistent gold buyers. In 2022, they bought more than 1,000 metric tonnes – equal to more than one-quarter of the world’s annual gold production. Central bank buying, by itself, will not trigger a major gold rally. But that buying could help power a rising price trend.
Now, I do not recommend “loading the boat” with precious metals. But I do recommend buying them as a hedge against potential dollar weakness or other unforeseen financial trauma. In other words, I recommend buying scarcity, at least as a hedge.
Source: Smart Money
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