March 2024 in Precious Metals, by Steven Cochran

Welcome to SurvivalBlog’s Precious Metals Month in Review, presented by Gainesville Coins. Each month we take a look at “the month that was” in precious metals. We cover gold’s performance and the factors that affected gold prices.

What Did Gold Do in March?

Boy, did anyone see this coming? I actually lost count of how many record highs gold hit this month. Gold futures and spot gold both started the month with new all-time highs. $2,095 an ounce for futures, $2,083 for spot.

Futures ended the month $143 higher at $2,238 an ounce, and spot gold gained $150 after finishing at $2,233.

Factors Affecting Gold This Month

STATIC INFLATION
Most economic reports show that inflation isn’t getting higher or lower overall. While this means that the Fed is in no hurry to cut interest rates, there is no need at all for a rate hike.

MELLOW FED
Fed officials say that while they see no immediate need to cut interest rates, they still expect to cut rates three times this year. If we take a June rate cut as a given, a logical course of action would be for the Fed to cut rates every other meeting for the rest of the year. That would be in September and December, dodging the political minefield of a November rate cut.

FOREIGN INSTABILITY
We have wars in Ukraine and Israel, global supply chain disruptions caused by rocket attacks in the Red Sea from pro-Iranian rebels in Yemen, and  China teetering on the verge of economic collapse. Toss in superheated inflation in nearly every nation that isn’t in the G7, and gold becomes an attractive safe haven for much of the world.

Central Banks

All the major banks stood pat on interest rates this month, with the notable exception of Japan. The Bank of Japan finally lifted interest rates from negative territory to 0%. They also said that they would stop buying ETFs and REITs on the open market as part of QE.

The expected domestic market boost from these measures was snuffed out when BoJ officials said that they would continue to buy sovereign bonds at the same level.

In Europe, the ECB said that cutting rates too soon would be a worse mistake than cutting them too late. The French central bank said it had had to tap into its reserves set aside for risks to plug a 12 billion euro loss ($13 billion) incurred from rising interest rates.

Central Bank Gold Purchases

This month’s Changes in Central Bank Gold Reserves report covers January. As far as central banks in the gold market are concerned, it was a quiet start to the year. There were only five buyers and one seller of note.

Turkey led the pack on the buy side with a purchase of 11.7 metric tons, followed by China with a reported 10 mt. India at 8.7 t, Kazakhstan returning to the buyers column with 6.2 mt, and the Czech Republic with 1.7 mt were the others. Russia was the only seller listed, at 3.1 mt.

Gold ETFs

Global gold ETFs saw their ninth month of net outflows in February.  Lower gold prices, stubborn inflation and the Fed pushing back against rate cut expectations all played a part.

North American gold ETFs were once again the big loser in February, shedding 36.8 mt.
European gold ETFs saw 14.7 mt of outflows for the month.
Asian gold ETFs were the only region to see inflows, proving that the world’s gold continues to move to China.

The “Other” category of nations saw half a metric ton of outflows from gold ETFs.

(“Other” are Australia, South Africa, Turkey, Saudi Arabia, and UAE)

On The Retail Front

I really don’t know what to make of this month’s bullion sales figures from the US Mint. I have a hard time believing that only 12,000 oz of American Gold Eagles and 5,000 one-ounce Gold Buffaloes were sold while gold prices hit all-time highs multiple times.

I could almost believe that the Mint just stopped making gold coins because prices were rising nearly every day, but they’re only reporting 850,000 Silver Eagles sold in March. I think someone just isn’t transferring bullion sales figures onto the website. We’ll revisit this next month.

Market Buzz

Citibank is risking its credibility among its fellow Big Banks on Wall Street by declaring itself a gold bull at the start of the month. They said there was a 25% chance of gold hitting $2,300 back when prices were trending in the mid-$2,100s.
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Dennis Gartman calls the present gold rally an impressive breakout of real consequence.

Currency devaluation and rampant inflation are inflaming gold demand in Turkey, where gold has always been a big part of life. The Turkish State Mint is running double shifts seven days a week making legal tender gold coins and still cant keep up with demand.
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Egyptians panicked and bought any gold they could after the government hiked interest rates by 6% to 27.25% on March 6th, crashing the Egyptian pound to a record low. Gold demand in Egypt has more than doubled since last year, with inflation at 30%.
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Gold imports have risen 86% in India, even though prices in rupees were hitting record highs long before the March rally.
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Biden’s plan to seize frozen Russian assets in the US and send the money to Ukraine has China and unaligned nations rushing to convert dollars and other assets to physical gold, which carries no counterparty risk.

Looking Ahead To Next Month

Boy, gold ignored the old proverb about March “coming in like a lion, and out like a lamb.” because prices are still stalking new all-time highs like they were antelopes. April does see gold demand ease a bit, thanks in part to the IRS. That said, if anyone had told me on January 1st that I would see spot gold closing over $2,200 by the end of March, I’d have told them to lay off the spiked punch.

The question now is whether the huge run-up in prices this month has exhausted demand or priced too many retail investors out of the market. I can’t how we will avoid a lot of short-term profit-taking as the new quarter gets underway, perhaps to restock in July when prices are usually near the lows for the year.

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This month’s treasure story is about two Norwegian boys back in 1964 who decided to crawl under their town’s old church to look for treasure. And they found some! Fourteen medieval silver coins that they hid at home as their personal treasure.

This month, one of the brothers brought the coins to authorities, where it was discovered that they were made sometime between 1200 and 1300 AD. Since the boys found all the coins in one corner, archaeologists think that a burial mound was once located where the church now stands.

– Steven Cochran of of Gainesville Coins.

Proviso: This column is intended for educational purposes only. It is not intended as investment advice. Past performance does not guarantee future results.