Which has done better this year… the S&P 500 or gold?
(Forget Bitcoin for now. It has outperformed both… by a long way.)
The answer is gold.
But only just. All thanks to a terrific rally since mid-February.
The big question now is, how much further can it go?
We’ll give our take (and that of a real gold expert) below. But first…
Market Data
The S&P 500 closed up 0.1% to end the day at 5,211.49… the NASDAQ gained 0.2% to close at 16,277.46.
In commodities, West Texas Intermediate crude oil trades at $85.58, up 52 cents…
Gold is $2,317 per troy ounce, up $21 from yesterday…
And bitcoin is $65,704, down $400 since yesterday.
And now, back to our story…
$187 for Silver?!
As we write (early this morning), gold is a hair under $2,300 per troy ounce.
And silver (on which we’ll have further comments later) is trading above $26 per troy ounce.
They are, respectively, up 11.2% and 10.7% since the start of the year. The S&P 500 is up 9.1% – not including dividends.
After seemingly taking forever to get to and rise above $2,000 many investors rightly ask if gold will soon get to $2,500… or what about $3,000 or more?
To answer that, we turn to colleague, Chris Weber. Here’s what he told his subscribers this week:
Sometimes, nothing is happening in the markets. Other times, like now, there is almost too much going on. Gold is now on a historic tear upward. Don’t be surprised if we see it at $2,500 before 2024 is out.
Its rise is quiet and is being “camouflaged,” hidden by much more public attention given to bitcoin and stocks. And yet its rise will be looked back upon as being the more historic.
Everyone I talk to, I ask what percentage of their liquid net worth they have in gold, not miners, not silvers, just actual gold. The average is around 2%, and these are people who read my letter. No one is talking about it. These are the perfect conditions.
Ever since this current bull market began in 2001, I don’t remember consecutive days of gold rising by $20 to $40. On the last day of 2024’s first quarter, spot gold jumped by $38.80, and futures by $42.10.
This latest jump in gold began in mid-February. It’s up 12.42% since then and seems to be accelerating. I awoke on Thursday to see spot gold vault over $2,200 for the first time ever. It ended the day at $2,233.
In the last hour of trading, it jumped by 0.59%. That was the last hour for the next three days until Monday. If gold rose by this same each hour of the normal day, we’d see it up by 14% a day, or 70% a week.
Of course, no one expects this… it’s just something to consider.
I haven’t felt like this since at least the early days of this bull market, from 2001 to around 2004. But if I examine myself honestly, I haven’t seen anything like this since the early 1970s, from 1971 to 1974, when gold soared from $35 to $200.
That was a rise of just under 500%. Those were special days. Gold had been held back and controlled for nearly 40 years and had a lot of room to jump…
Few remember those days. But what is in the process of happening now is exhilarating. It’s all the more exhilarating since so few are aware of what is going on.
Now, $2,500 would be nice… almost another 10% from where we are today.
Could it happen? Sure it could. And as Chris would tell you himself, he’s got a pretty good track record for these longish-term forecasts… although arguably, this would be a shorter-term long-term forecast… if you get our drift.
But what about silver?
For that, Chris has a forecast of… $187. That would be around a 620% increase from where it is today.
In the shorter term, Chris is still waiting for it to pop above $30… and then $50. After that, who knows? It last reached $50 back in 2011.
And there’s a fair chance it will get there again. Especially if gold continues to rise. And right now, we don’t see much of a reason why gold shouldn’t keep going up.
In the olden days – you know, when the gold standard was around – gold and silver generally traded at a specific ratio. We won’t go into all the details of that, but historically, you could buy one ounce of gold for the equivalent of 16 ounces of silver.
In other words, if gold was $100 per ounce, silver would be $6.25, and so on.
Well, today, with gold around $2,300, if we used the old 16:1 ratio, that should put silver at around $143. That alone would be a 452% increase over today’s price.
Of course, back then, there were true monetary reasons for the ratio that arguably don’t apply today. But regardless of that, the higher the gold price goes, it’s only natural to think that many investors will start to pay more interest in the cheaper precious metal (silver).
When they do, we would expect to see increased demand and a higher price. Does that mean $143 or even $187? Hold your horses… let’s not get too carried away.
We like Chris’ smaller target of $30 first. Like many silver investors, we’ve held onto it for quite some time… so we’re in no hurry.
Which is a good job. Waiting for the silver price to move can test anyone’s patience.
More Markets
Today’s top gaining ETFs…
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iShares MSCI Peru ETF (EPU) +2.9%
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iShares MSCI Chile ETF (ECH) +2.4%
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U.S. Global GO GOLD and Precious Metal Miners ETF (GOAU) +2.3%
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VanEck Gold Miners ETF (GDX) +2.2%
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Global X MSCI Colombia ETF (GXG) +2.1%
Today’s biggest losing ETFs…
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Fidelity MSCI Consumer Staples Index ETF (FSTA) -1.2%
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iShares US Consumer Staples ETF (IYK) -1.1%
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Invesco S&P SmallCap Consumer Staples ETF (PSCC) -1.1%
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First Trust Consumer Staples AlphaDEX Fund (FXG) -1%
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Global X MSCI China Consumer Discretionary ETF (CHIQ) -1%
Cheers,
Kris Sayce
Editor, The Daily Cut