Welcome to SurvivalBlog’s Precious Metals Month in Review, where we take a look at “the month that was” in precious metals. Each month, we cover gold’s performance and silver’s performance and examine the factors that affected the metal prices.
WHAT DID GOLD AND SILVER DO IN JUNE?
The precious metals began the month near the bottom of the price range they have been trading in since late April. The first week of June saw some significant gains, particularly for silver, which surged 4.1% on June 6th to $31.15 per troy ounce.
Silver’s 11-year high around $32/oz appeared within reach. This came on the heels of a blistering 16% rally for the argent metal over the course of May, its best month since November 2022.
However, following a surprisingly strong jobs report released the next day, gold and silver suffered a major sell-off on June 7th. Gold tumbled 3.75% lower to $2,285/oz while silver plunged 6.75% lower, losing over $2 in a single trading session.
The gold price managed to swiftly recover above $2,300, which held as a key support level throughout June. Meanwhile, silver was engaged in a tug-of-war between the bulls and bears that resulted in a string of volatile price movements. After slumping to a one-month low of $28.90/oz on June 13th, spot silver briefly broke back above the $30 per ounce mark the next week.
Ultimately the wheels fell off of the precious metals rally on Friday, June 21st. Gold fell sharply for the second time in the month, testing the waters below $2,300/oz before rebounding to $2,325. Likewise silver ended the month right back where it started around $29.50/oz.
FACTORS AFFECTING GOLD AND SILVER THIS MONTH
Under normal conditions, the summer months tend to be the doldrums for the precious metals market. In the absence of a banking crisis, stock market crash, or escalation of geopolitical tensions, we shouldn’t be surprised to see the metals trend lower for a few months as we enter the third quarter of 2024.
Although there isn’t a perfect correlation between stock market declines and rising gold and silver prices, there’s no doubt that the continued resilience of risk assets in the West has somewhat dampened demand for safe havens like precious metals. Nonetheless, the ratio between the Dow Jones Industrial Average and the gold price suggests that the yellow metal is poised to outperform U.S. equities over the next five years. This is especially likely given that only a handful of stocks (the so-called “Magnificent 7”) are carrying the broader markets right now.
The metals markets will also undoubtedly react to ongoing macro developments overseas. The Chinese economy remains on shaky ground, and Beijing increasingly has its eyes set on a conflict with Taiwan. Both North Korea and South Korea have made waves about stepping into the war in Ukraine: South Korean officials intimated the country may be willing to provide weapons to the Ukrainian side while North Korean dictator Kim Jong Un committed to sending troops to aid the Russian side. Paired with the persistence of the war between Israel and Hamas, the worldwide need for gold as a bulwark against worst-case-scenario outcomes has perhaps never been higher in the 21st century.
The uncertain path of monetary policy amid these various powder kegs will likewise stay on silver and gold’s radar, albeit somewhat in the background. Halfway through the calendar year, expectations about what central banks will do with interest rates—and possible stimulus measures—are still greatly varied. Some members of the Federal Reserve see zero rate cuts coming in 2024, while the consensus of market watchers is for as many as three rate cuts this year. This yawning gap virtually ensures that financial markets will experience high volatility going forward.
Considering that the Bank of Canada and European Central Bank have already begun lowering interest rates while the Fed has not yet, the possibility is growing that a policy error could throw the Western financial system into fresh turmoil. Not to mention that policymakers still haven’t succeeded in bringing inflation rates below their somewhat arbitrary 2% target. Even before the dust settles on this looming crisis of global governments’ own creation, demand for precious metals should continue to be robust.
CENTRAL BANK GOLD PURCHASES
The Reserve Bank of India bought approximately 4 tons of gold in May, and it has also been issuing sovereign gold bonds.
The Turkish central bank purchased 6 tons of gold in May, its 12th consecutive month of adding to its gold reserves.
For the first time in 18 months, the People’s Bank of China reported no gold purchases during May. There is widespread speculation that the PBoC did so on a “shadow” basis, given that gold imports into China remain very high.
Kazakhstan’s central bank was a net seller of 11 tons of gold, its first sales since December. It has still been a net buyer of gold year-to-date.
The Czech National Bank publicly said it plans to add 60 tons of gold to its reserves over the next several years.
A survey conducted by the World Gold Council indicates that 29% of central banks around the world will buy more gold in the next 12 months, the highest proportion since the survey began in 2018. Additionally, 81% of respondents expected global gold reserves to rise over that period.
ON THE RETAIL FRONT
The United States Mint reported sales of 1.7 million ounces of its American Silver Eagle coin during June. This total matches the baseline of each of the previous monthly figures thus far in 2024.
Year-to-date the mint has sold 14.25 million Silver Eagles, on pace to surpass last year’s aggregate sales of over 25 million ounces. It’s worth noting that the U.S. Mint sold an average of more than 3 million ounces of silver per month from August to November in 2023, so hitting the threshold of 30 million oz is not out of the question. Over the last eight years, this annual total has only been surpassed once (in 2020).
In terms of gold coins, the mint sold 33,000 total ounces across all sizes of its American Gold Eagle coins. This represented the highest monthly total since January. It also reported 18,000 ounces of Gold Buffalo coins sold.
Initial sales of the collectible proof versions of the U.S. Mint’s gold and silver coin offerings had a strong showing in June, as well.
MARKET BUZZ
Even the ultra-liberals at National Public Radio (NPR) have started to notice China’s voracious gold-buying.
China is also driving physical consumption of silver due to industrial demand. The number of new solar panel installations in the country is on track to set a new record high this year.
Despite silver inventories in Shanghai rising during June, global stockpiles of the metal have fallen 26% since 2021. The global supply deficit in the silver market will widen further this year, according to The Silver Institute.
The New Jersey Assembly is moving forward with legislation to eliminate sales tax on gold and silver bullion. This continues the trend of sound money laws being passed by individual states across the U.S.—7 so far this year, and 46 states out of 50.
Polish citizens are stacking gold coins and gold bars amid high inflation and war near Poland’s eastern border.
Hundreds of silver coins from a 1715 shipwreck off the Florida coast have been recovered by treasure hunters.
Several Wall Street banks have been raising their price forecasts for the precious metals:
JPMorgan analysts raised their 2025 price target for silver to $34 per ounce.
Both Bank of America and CitiGroup increased their gold price projections to $3,000 per oz over the next 12–18 months.
Saudi Arabia has joined the other BRICS nations in exploring a cross-border central bank digital currency (CBDC) called mBridge as an alternative to the Swift payment system. The BRICS countries are simultaneously exploring using gold as a settlement currency.
LOOKING AHEAD TO NEXT MONTH
Again, the typical seasonal pattern for silver and gold is to drift lower this summer. It would be perfectly normal for the metals markets to take a breather in July—presenting an opportunity for cost-conscious investors to buy at lower prices. Such opportunities have proven increasingly scarce over the past two years.
The Federal Reserve Open Market Committee (FOMC) holds its next policy meeting on July 30th and 31st. Even if rates remain unchanged, the precious metals will benefit if the FOMC members and Fed Chair Jerome Powell signal a more dovish tone.
Of course, 2024 is an election year in the United States, but upcoming elections in France and the U.K. may have major implications before we get to the November contest in the U.S.. In both cases, the political establishment in Europe is rolling the dice that opposition coalitions will not be organized enough to unseat current French president Emmanuel Macron and British Prime Minister Rishi Sunak despite both administrations being deeply unpopular in their respective countries.
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