Should I buy gold stocks now, that keep hitting new highs? Why gold could rally 60% to a new high and hit $3,944
Should I buy gold stocks now, that keep hitting new highs? Why gold could rally 60% to a new high and hit $3,944
Well, well, the gold price hit a new record. It's up 25% in a year and once it punches through $2500, it will probably keep rising as central banks keep buying more gold.
Why are banks buying gold? Central banks around the world are reducing the amount of US dollars they hold and they're buying more gold with that money because the US dollar will probably continue to depreciate, while gold will likely keep hitting new highs after the Fed cuts interest rates. We saw this happen the last three times the Fed cut rates. And it's happening again.
Investment banks and ETFs have been buying more physical gold too, with ETFs buying gold holdings for five straight days. So it seems the tables are about to seriously turn and push gold higher.
State Street Gold Shares ETF $SPDR Gold ETF (GLD.US)$, the biggest gold ETF, now holds $66.6 billion of physical gold. Although gold ETF holdings are rising, they are still down 4% this year. This shows that gold is still undervalued. The fact that ETF buying is up for five straight days is positive. It’s all because this week, we heard from the Fed Reserve Chairman Jerome Powell and two other Fed speakers who said inflation is heading toward the Fed's 2% goal, which paves the way for a near-term rate cut.
Investment banks are also buying shares in gold companies, with Deutsche Bank buying 1.97 million shares in Barrick Gold $Barrick Gold (GOLD.US)$ yesterday, taking its stake to 3.2 million shares. But that's nothing compared to BlackRock's holding of 139 million shares.
Also consider every time the Fed Reserve has cut interest rates, embarking on a rate-cutting cycle, gold has rallied to a new record all-time high. You are probably sick of me highlighting this, but I don't care. You need to hear this:
- When the Fed cut rates in November 2002, gold then rallied 90% to a new high in about four years.
- When the Fed cut rates, embarking on a rate-cutting cycle in the GFC from September 2007, gold rallied up 172% to a new record all-time high in five years.
- Recently, in 2019, after COVID struck the world, the Fed started cutting rates in August 2019, and gold rallied 60% in a year.
So if history repeats itself, and the Fed cuts rates, and gold rallies 60% to a new high, the gold price could go from $2,465 to $3,944.
Gold price targets
Metals Focus predicts the gold price would set a new record this year. Citigroup sees the gold price in 2025 being $2,700-3,000 per ounce.
While US Bank thinks the gold price could hit $3,000 per ounce in the next 12 to 18 months.
Investments to watch
- Newmont Gold $Newmont Corp (NEM.AU)$ - world’s biggest gold company - forward revenue growth is expected to rise 49% this year and 8% next year (consensus). NEM is listed on NYSE and ASX. NEM took over Newcrest Mining
- Barrick Gold $SPDR Gold ETF (GLD.US)$ - 2nd biggest gold company - forward revenue growth is expected to rise 16% this year and 13% next year (consensus).
- Evolution Mining $Evolution Mining Ltd (EVN.AU)$ - forward revenue growth is expected to rise 49% this year and 8% next year (consensus).
Here is a look at the ETF precious metal holdings
Here is a look at what the biggest gold miners ETF, $VanEck Gold Miners ETF (GDX.AU)$ at what it bought yesterday. Notice Newmont $Newmont Corp (NEM.AU)$ and Barrick $Barrick Gold (GOLD.US)$ .
Here is a look at who is buying and selling Barrick Gold $Barrick Gold (GOLD.US)$ . The biggest transaction of late was a buy of 1.9 million shares by Deutsche Bank
This was published and emailed to my distribution list Friday July 19 2024 and published on X
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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151453268 witso : wow jess you like the shiny stuff too, your posts are always on point and timely . American interest rate direction and the gold price are closely tied particularly as you said about the state of
dollar. There are so many factors providing a tail wind for gold some obvious like the oil price some not so obvious but definitely in play like China, Russia and the Saudi,s toying with a new currency to do business with and buying bulk gold possibly to bankroll it off . Their has to be a great recipe for gold and your insight is definitely part of it
103370157 : at the moment, both newmont and barrick are lagging....
Jessica Amir OP 151453268 witso : I appreciate this and you. Thank you
Danelewis : no I would think wait till there low