Let’s cut right to the chase…It’s the world’s most under-the-radar market move, and that’s a good thing.In 2023, gold didn’t just perform; it dazzled…
Gold’s price hit a record high of nearly $2,150/ounce, later stabilizing around $2,050.This peak, fuelled by factors like Middle East tensions, anticipated U.S. rate cuts, and a weaker dollar, confirms gold’s role as a reliable asset in uncertain markets.Despite its significant rise, coverage remained minimal, mainly highlighted by gold enthusiasts.Looking ahead to 2024, the impact of the global economic climate on gold remains a key focus.
The Spotlight’s Back on the Fed
Right now, most economists are predicting a modest recovery year for 2024, with most countries growing below their historical average GDP growth rates:
The expectation right now is for 2024 to feature a “soft landing” coming out of the high inflation environment of 2023.This could cover anything between the positive but below-average growth depicted above and a mild recession.But take note…Historically, the Fed has not had the best track record of managing a soft landing following a rate hike cycle:
With a soft landing, the impact to gold would be neutral to slightly positive.Reduced economic uncertainty could diminish gold’s appeal as a safe haven, but market confidence and anticipated Fed rate cuts in 2024 might boost its attractiveness.On the other hand, a hard landing (traditionally the case with the Fed) would lead to a recession.In this case, heightened uncertainty and decreased appetite for risk could drive investors to flock to gold. In addition, a hard landing would justify additional Fed rate cuts, fanning the flames for higher gold prices.A hard landing could push gold prices up – potentially to new record highs.And you need to be prepared.If a roaring bull market sends the gold price above $2200 for any period of time, look out.
- That’s why I’ve been buying select precious metals companies – which you can see for yourself – in Katusa’s Resource Opportunities, alongside me and thousands of other investors.
In either case, Fed policy would play a key role in deciding how the situation plays out.For the markets, being at the mercy of the Federal Reserve is a familiar story.
Following Where the Gold is Going
Now, let’s look at trends in gold demand…
Despite gold’s strong performance in 2023, gold bullion ETFs saw significant outflows, exceeding $13 billion through the beginning of December.Most of these outflows came from European funds, which saw an 11% drop in demand over the past 12 months.Asian funds, on the other hand, grew their gold holdings by 14.6% from the beginning of the year…Central Banks were large buyers throughout the first 9 months of the year.
Given the high inflation rate environment that began in the latter half of 2022…
- Central bank gold purchases were the highest they’d been in over a decade last year.
Year-end numbers aren’t out yet, but as of September 2023… central banks’ gold buying was on par with 2022, indicating sustained interest in the metal.
Landing the Biggest Returns
Overall, gold’s price performance in the coming year will largely be determined by the quality of the landing.While a soft landing would require less easing from central banks and leave gold largely flat (albeit with upside potential), a harder landing would see gold going higher.A recession in the U.S. – or even a global recession – isn’t entirely out of the books yet. Even with markets roaring.If that happens, expect to see gold establish new record highs.Even $2,500 wouldn’t be entirely out of the question if things continue to get worse globally.But given how much gold they’ve been loading up on, central banks certainly aren’t taking any chances. In that regard, China, Poland, and Singapore have been leading the way as the top buyers of 2023.Kazakhstan was the only major seller of note – though as we’ve previously noted, they have a “SUR” thing of their own to bet on, which had an incredible 2023 which the Kazakhs expect to continue to go higher.Over the coming months, we’ll be keeping a close eye on inflation, unemployment, and of course, potential Fed rate cuts.In the meantime, we’ll be watching the best companies closely for big moves and volume.And one particular gold company has caught our eye that we might share soon.Not all gold miners are equal – for instance, long-time readers will know that –SWAP Line Nations are to be avoided at all costs.Even in a high gold price environment, not all gold companies will see a strong price performance.The best companies with the highest-quality assets and management teams are the ones that will deliver the biggest returns.Those are the ones I focus on in my newsletter, where I buy major positions with my own money.And days ago, in the January edition of my newsletter…I published on a new company I think is a 50-200% winner in the next 12 months in two realistic base-case scenarios.On the high side, 400% is not out of the question, and we show why.This does not come without high-risk.Understand that you should only invest with any money you’re comfortable going to zero.If you know me, I don’t send out buy alerts often.But this is one stock has incredible potential.Regards,Marin Katusa
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