October, 2024 in Precious Metals, by Everett Millman

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 OCTOBER?

Following a September in which gold rose 5.2% and silver rallied 7.9%, the precious metals moved steadily higher yet again in October. Metals prices have risen in 11 of the last 13 months.

While gold fluctuated up and down for the first two weeks of the month, spot silver started off strong with four consecutive trading sessions in positive territory. This lifted the argent metal just shy of $32 per troy ounce. Silver then spent the following week giving back all of its gains.

Meanwhile, the gold market really started heating up at mid-month. From Oct. 15th through Oct. 18th, spot gold made successive new all-time highs. Friday the 18th was also one of the best trading days for silver in recent memory. Prices surged over $2, a single-day increase of 6.4%, to breach the $33/oz level.

The third week of October brought a fresh round of volatility to the metals markets, which we should all have come to expect after a flurry of big gains. Yet neither silver nor gold ultimately ceded much ground. Investors were not spooked in the week leading up to Halloween, either: Gold once again broke into new all-time high territory above $2,800/oz and silver held near $34/oz, its highest price point in 12 years.

The final day of the month saw the metals slump sharply lower, dampening their impressive run. Silver sank over $1 into the red and gold tumbled about $40 lower. Over the month silver still rose $1.65 (+5.3%) to $32.65/oz and gold gained $115 (+4.4%) to $2,745/oz.

FACTORS AFFECTING GOLD AND SILVER THIS MONTH

For this long-time analyst of precious metals, there’s something surreal about the price action over the last few weeks. The closest analog I can remember is the fervor that took place from 2010–2013 in the wake of the last financial crisis, except without nearly as much attention or fanfare this time around.

Of course, there are several compelling reasons why gold and silver have been rallying; we’ve discussed those factors extensively within the lines of this very column. Yet it nearly beggars belief that this is happening in spite of key outside markets behaving in a way that’s usually adverse to the metals.

For example, the gold price and Treasury bond yields normally move in opposite directions, as the two asset classes directly compete for safe-haven investment flows. Even as gold keeps hitting record highs, the 10-year T-bond has jumped from 3.6% in mid-September to about 4.3% at the time of writing (indicating that investors are selling their government bonds). Similarly, the strength of the U.S. dollar and the price of gold tend to exhibit an inverse relationship. Nonetheless, both have followed the same path higher over the past month. In reality, this demonstrates that foreign currencies such as the euro and Japanese yen are losing ground on the USD even as the greenback in turn loses purchasing power to hard assets like gold.

It’s also worth pointing out that the S&P 500 index is up roughly 24% so far in 2024. The broader stock market has almost never been up that much in a calendar year in which it was being outperformed by gold. The only years with such a dynamic are 2009 and 1933, dates which ought to stand out for obvious reasons.

Still, let’s consider the near-term drivers behind the rally for gold and silver. The durable trend of central banks loading up on gold bullion is at the top of the list. The fact that Israel finally retaliated against Iran and Hezbollah with strikes within the Islamic Republic is also impacting gold as part of a “fear trade.” Both of these ongoing developments dovetail with the suggestion made by, among others, the French newspaper Le Monde that gold’s rise is a reflection of waning confidence in the U.S.-led international order. The October meeting of the BRICS alliance—albeit a relatively uneventful affair—coming just ahead of the G20 summit in Brazil is another signal of this shift.

A final seasonal development is helping push the metals higher, as well. The five-day Diwali Festival is currently taking place across India. The annual festival is seen by celebrants as an especially auspicious time to purchase gold and silver.

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).

Iraq’s central bank added 3 tons of gold to reserves in June and an additional 1 ton in July. It has bought 10 tons of gold year-to-date.

The central bank of Jordan sold 3 tons of gold in August. Its gold reserves stand at 69 tons in total.

The Hungarian National Bank bought 15.5 tons of gold during August.

The National Bank of Poland announced it has 420 tons of gold reserves, up 22 tons from previous reports.

The Reserve Bank of India purchased 5 tons of gold in September. It was the 9th straight month its gold reserves have risen. RBI has also repatriated 102 tons of its monetary gold back from the Bank of England, bringing the percentage of its reserves held domestically up to 60%.

Singapore’s Monetary Authority sold 1 ton of gold in September, lowering its gold stockpile to 228 tons.

Azerbaijan’s state fund has purchased gold for three straight quarters, with 12 tons being added during Q3.

So far this year, central banks have collectively bought 694 tons of gold on a net basis.

ON THE RETAIL FRONT

During the final week of October, the reporting system for monthly production figures listed on the United States Mint website stopped working. Thus the data below is incomplete but represents the latest update prior to this technical issue.

October sales of the American Silver Eagle last stood at 850,000 one-ounce coins. September’s figures were revised higher to 2,446,000. This brings the year-to-date silver sales to about 21 million ounces.

All sizes of the American Gold Eagle combined for 25,500 oz sold. An additional 10,000 oz of Gold Buffaloes were produced during the month. Overall gold sales by the mint this year have reached nearly 360,000 oz.

The big numismatic product that debuted this month was the Flowing Hair silver medal, which commemorates the first silver dollar design in American history. In just its first week of sales, the silver medal reached two-thirds of its mintage limit of 75,000 coins. Of those 75,000 there are also 1,794 of the medals bearing a special privy mark that reads “230” in honor of the design’s first year of minting in 1794. These were distributed randomly to buyers.

In terms of silver collectibles, so far this year the U.S. Mint has sold 148,919 silver proof sets; 312,745 proof commemorative silver dollars; and 389,471 proof Silver Eagles.

MARKET BUZZ

Hong Kong wants to leverage its role in the global gold trade to become an even bigger international hub for precious metals.

Russia officially plans to include silver in its State Fund for the first time ever.

Iranians are paying up to 30% premium for their state-issued gold coins.

In Nepal, people are lining up at dawn to buy gold coins and silver coins.

Mining regulators in Tanzania have ordered the country’s gold dealers to hold back 20% of their inventory for the central bank.

Chinese customs may start taxing imports of gold ore and gold concentrate.

The global silver supply is in a deficit for the fourth straight year. The silver mining supply peaked in 2016 and future production growth is expected to be modest, gradually depleting available above-ground stocks of the metal.

Many big banks and mainstream news outlets are starting to talk about precious metals favorably:

  • Analysts at Standard Chartered expect more upside risk for gold
  • Even CNBC and The Economist are reporting on the gold rally
  • Citi raised its forecast for silver over the next 12 months to $38–$40
  • Bank of America says gold is the last true safe haven asset

A survey of experts by the London Bullion Market Association (LBMA) shows silver prices rising to $45/oz.

In addition to Costco adding platinum bars to its inventory, now giant retailer Walmart is also selling gold and silver bullion on its website.

Author of the In Gold We Trust report, Ronnie Stoeferle, outlines reasons why gold’s rally is not nearly over yet.

Scientists in Spain estimate that the world will run out of gold by 2050.

Silver is poised to benefit greatly from strong military demand.

The government of Laos is in the process of setting up its own bullion bank.

Both Japan and Vietnam have become net importers of gold.

Consumption of gold bars and gold coins this year in China rose to 282.7 tons through September, an increase of 27.1% compared to the same period in 2023.

Global gold demand exceeded $100 billion (1,313 tons) during the third quarter, a record for Q3.

LOOKING AHEAD TO NEXT MONTH

The beginning of November could see some fireworks in financial markets. The U.S. presidential election, the next meeting of the Federal Reserve, and a busy week of quarterly earnings reports from major companies will all fall within a few days of each other. Expect some measure of disorderly price action.

Despite my oft-repeated caution that big gains for the precious metals are likely to be followed by a correction in the short-term, there is still great cause for optimism if we zoom out a bit. On an inflation-adjusted basis, gold has still not surpassed its high from January 1980, which would exceed $3,400 per ounce in terms of today’s dollars. For silver, prices would need to reach about $190/oz to match its 1980 high when inflation is accounted for. Simply put, there is “more room to run” for both metals.

We have a pair of treasure stories, as a bonus:

Hoard of Norman coins found in the U.K. sets new mark for the country’s most valuable treasure discovery.

Treasure hunt organized in the woods of Massachusetts yields a gold statuette worth $25,000. – Everett Millman of Gainesville Coins.