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 JULY?
Silver had another fairly volatile month, much as it has for the better part of 2024. The swings back and forth for prices have become increasingly frequent since the second quarter of the year began.
During July silver futures traded as low as $27.75/oz and as high as $31.43/oz, a significant spread of over 13%. Spot silver opened the month around $29.50/oz and concluded it 55 cents lower at $28.95.
In between, the argent metal rallied to its high point on July 11th. It held above $30/oz for a week before major price corrections for both silver and gold from July 17th–19th. Year-to-date silver is still up an impressive 31.2%.
Gold sank more than $100 over the course of the following week of trading after peaking around $2,480/oz. The gold price had climbed from its low point on July 1st of $2,327/oz and never fell below the $2,360 level even after the sharp sell-off, closing the month 5.2% higher at $2,448/oz.
FACTORS AFFECTING GOLD AND SILVER THIS MONTH
The obvious catalyst that drove gold to new record highs at mid-month was the assassination attempt on President Trump in Butler, PA.
July 13th was a Saturday, so U.S. trading markets didn’t re-open until Monday. Even when gold surged over 2% the next two days, I recall thinking the reaction was more muted than I’d expect—certainly for a crisis of that magnitude.
Once Trump showed up for the Republican National Convention just days later, undeterred by the most alarming act of political violence in America in two generations, markets calmed down quickly. The safe-haven premium on gold evaporated. Silver prices lost 10.9% in less than 10 days. The apparent return to normalcy was swift.
The precious metals markets have for several months mainly been driven by macroeconomic events and international affairs. The global nature of the gold market can never be ignored; but over the next 100 days or so the uncertain implications of the U.S. presidential election will undoubtedly have an influence over prices. Silver and gold have a habit of thriving amid political turmoil. This only intensified after the Democrats successfully pulled off a coup within their own party in the wake of the shooting.
The other major drivers for the metals continue to be monetary policy and wars abroad. Aside from the ongoing war in Gaza, the Houthi rebels in Yemen have increasingly disrupted crucial trade routes in the Red Sea and Gulf of Aden.
There is no meeting of the Federal Reserve Open Market Committee (FOMC) in August. The Fed left interest rates unchanged in July, but has telegraphed its intention to cut rates in September. Historically, gold and especially silver tend to surge higher when rate cuts begin. Elsewhere, policymakers at the People’s Bank of China unexpectedly lowered interest rates in July while the Bank of Japan is still relentlessly intervening in the currency markets to keep the yen from crashing.
Buyers in China and India remain the strongest force behind rising precious metals prices. With gold above $2,400 per ounce, making it rather expensive on an historical basis, these key markets have seen a considerable “substitution effect” with silver: India has experienced record-high imports of silver, and in the middle of July there was a 13% premium on silver sold in Shanghai compared to London.
The bottom line is that gold and silver are in a “stealth” bull market. Prices keep rising in spite of tepid sentiment among investors in the West.
CENTRAL BANK GOLD PURCHASES
Note to readers: Most data about international gold reserves are delayed by a month. They are not typically reported to the International Monetary Fund (IMF) and are instead compiled by private organizations such as the World Gold Council (WGC).
The central bank of Jordan added 3 tons of gold in May after three months of net selling.
Czech Republic increased gold reserves by 2 tons in May.
The central bank of Iraq added almost 3 tons of gold in May.
India added 9 tons to gold reserves last month.
Serbia added 5 tons to its gold reserves in preparation for “hard times.”
Uzbekistan bought 9 tons of gold in June, but is still a slight net seller of gold year-to-date.
The Turkish central bank added 1 ton of gold. Its gold stockpile has gone up by 45 tons so far this year.
The central bank of Qatar bought 3 tons of gold in June.
Kazakhstan sold 6 tons of gold, but its reserves are still 5 tons higher than last year.
Gold export volumes fell month-on-month in most major markets, especially Switzerland. Although foreign demand for Treasury bonds has been robust, any waning of that demand would undoubtedly benefit the precious metals as an alternative reserve asset.
ON THE RETAIL FRONT
Sales totals of silver bullion from American Precious Metals Exchange (APMEX) have steadily fallen throughout the year. July was another low point. For all intents and purposes, APMEX sales volumes are a pretty accurate bellwether of retail demand in North America.
The United States Mint updated its July sales numbers for Silver Eagles, and it was the same total as the month previous at 1.7 million coins sold. Curiously, in 4 of the 7 months this calendar year, that has been the exact number reported. At least they’re consistent?
In addition to the 15.95 million ounces of bullion American Silver Eagles sold so far in 2024, the mint has also sold 353,883 oz of silver in the Proof and Uncirculated versions of the ASE for collectors year-to-date, as well as 150,879 silver proof sets (totaling another 222,244.77 oz of silver).
The mint also reported selling 19,500 oz of Gold Eagle coins and 17,000 oz of Gold Buffaloes. Additionally, the U.S. Mint released its modern replicas of two iconic silver dollar designs, the Peace Dollar and Morgan Dollar, on July 11th. In the first two weeks of sales, about 350,000 of these coins were sold. There is an annual production limit of 275,000 for each (550,000 combined) and it’s worth noting that the price for this year’s coins rose to $91 from $76 per coin last year. They are obviously intended as collectibles.
Across the Pacific, Perth Mint in Western Australia experienced dwindling demand for precious metals. Compared to the first half of 2023, the first six months of the year saw bullion sales fall by a staggering 52.5%.
MARKET BUZZ
The persistent silver supply deficit is forecast to increase in 2024.
The Bank for International Settlements (BIS) says high levels of government debt are unsustainable.
India slashed its import duty on gold and silver from 15% to 6%, the lowest in 11 years.
India is also increasingly relying on the United Arab Emirates (UAE) for its silver imports.
China is looking to onshore the last leg of the silver supply chain.
Canada’s gold exports to China are rising amid trade tensions.
Gold may soon be reclassified as a “high-quality liquid asset” under Basel III financial regulations.
Goldman Sachs maintains its $2,700 price target for gold in 2025.
Nigeria is repatriating its gold reserves from the U.S., joining several European nations that have already done so in recent years.
Uganda joins Nigeria and Zimbabwe in “moving towards gold” as its monetary standard.
LOOKING AHEAD TO NEXT MONTH
There are indications that Russia and Ukraine are ready to come to the negotiating table. This could bring an imminent end to a conflict that has dragged on for two and a half years.
Various issues cropping up at the opening of the Summer Olympics in Paris (from protests to polluted rivers) are laying bare both the cultural and economic deterioration of France—and Europe as a whole.
The first week of August will see a busy schedule of economic data released: the consumer confidence survey, the Case–Shiller home price index, and the ISM manufacturing index will all be published. The employment outlook will get a spate of new data points with the July jobs report from the Bureau of Labor Statistics (BLS), the Job Openings and Labor Turnover report (JOLTs), weekly jobless claims, and the ADP private payroll numbers. More than two dozen of the world’s biggest corporations will be reporting earnings, as well.
As suggested above, the metals markets will likely be driven more by politics and the macro landscape rather than more technical factors such as key outside markets (stocks, bonds, foreign exchange). Of course, we’ll nonetheless be keeping a vigilant eye on possible “Black Swan” developments that could cause greater short-term volatility for gold and silver.
– Everett Millman of Gainesville Coins