Precious Metals Analysis

The silver market is forecast to record a fifth straight market deficit in 2025, with demand once again outstripping supply. Analysts at the Silver Institute call the projected market deficit “sizeable.” The Silver Institute projects record silver offtake this year, with overall demand coming in at around 1.20 billion ounces.

A well-meaning bill filed in the Arizona Senate seeks to establish a state-sanctioned transactional currency backed 100 percent by gold and silver, along with a state-operated bullion depository. Interestingly, the state would also issue physical gold and silver coins, even as such actions by a state are explicitly barred by the U.S. Constitution.

The gold-silver ratio has surged to over 90-1. This indicates that silver is extremely underpriced from a historical perspective. In other words, silver is on sale. The last time we saw a gold-silver ratio over 90-1 was in the early days of the pandemic lockdowns. In the modern era, the ratio has averaged between 40-1 and 60-1.

We could be setting up for a significant squeeze in the gold and silver markets. We’re seeing signs that tariff concerns are growing, creating an interesting dynamic in the London precious metals market. Owners of gold in London vaults can loan their metal on a short-term basis and last week, lease rates suddenly surged to over 3.5 percent.

Over the last four months, the Federal Reserve has cut interest rates by a full percentage point. It started with a supersize 50 basis point cut in September, followed by quarter-point cuts in November and December. But despite slashing rates, Treasury bond yields have risen sharply. What’s going on in the bond market?

China announced an increase in its official gold reserves in November. It was the first reported increase after a 6-month pause, and it appears it wasn’t a one-off event.
And by the way, the Chinese have a lot more gold than they admit.

For the first December since 2019, gold-backed ETFs globally reported net inflows of gold. Asian funds drove the global increase in ETF gold holdings to close out 2024. On the year, ETF gold holdings dropped modestly by 6.8 tons, but assets under management rose 26 percent to a record high of $271 billion thanks to skyrocketing gold.

Gold was one of the best-performing asset classes in 2024, outgaining the red-hot U.S. stock market. People who follow financial news know that gold had a great year. Despite its typical apathy toward gold, even the mainstream was forced to sit up and take notice. But you may not realize just how well gold did.

How awesome would it be to dig around in your garbage can and find gold? Well, that’s pretty much what the British Royal Mint is doing. No, you won’t find mint employees dumpster diving, but they have developed a process to turn electronic waste into gold and silver jewelry.

Analysts at major Wall Street banks expect the gold bull rally to continue into 2025. And mainstream analysts tend to think the year will remain free from any kind of significant economic chaos or crisis. Gold had a tremendous 2024, setting multiple records and closing the year with a 26.5 percent gain – one of the best-performing assets last year.

Producer prices came in hotter than expected in November. This came on the heels of a CPI report showing price inflation is sticky. With inflation worries mounting, investors sold gold. Wait. People sold an inflation hedge with increasing signs of inflation? Yes. You read that correctly.