Gold (GCZ25) today hit a record high of $4,235.80 an ounce, basis December Comex futures. December silver (SIZ25) futures hit a record peak of $42.495 an ounce on Tuesday, Oct. 14.
Is there still more upside for the two precious metals, or are they at or near their peaks for their major bull runs? Let’s tackle this question with a bull versus bear debate.
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Here and the bullish elements for gold and silver that may extend their record-setting rallies.
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Safe-haven demand. The U.S. government shutdown has created a dearth of U.S. economic data, which has created marketplace uncertainty. And there are no early signs the stalemate between Democrat and Republican lawmakers will come to an end any time soon. There are other geopolitical matters supporting gold and silver, such as elevated U.S.-China trade tensions.
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Lower global interest rates are likely in the coming months. Federal Reserve Chair Jerome Powell on Tuesday reiterated the U.S. central bank is set to cut its main interest rate in late October. The marketplace thinks the Fed will make at least two more quarter-point rate cuts in this rate-cutting cycle. Recent weaker economic data out of China has the Chinese government saying it will ease its monetary policy in the coming weeks and months. Other countries, including Canada, the U.K., and Australia have also lowered interest rates, with the European Central Bank recently holding its rates steady. Lower interest rates mean lower borrowing costs for consumers and businesses, meaning better demand for metals.
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Central banks stocking up on more gold. The de-dollarization moves by many countries — namely Brazil, Russia, India, China, and South Africa — are moving away from holding the U.S. dollar in their reserves and opting to hold more gold.
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Major industrialized countries are stocking up on rare-earth minerals as well as metals. Recent years have seen a move away from “globalism” amid supply chain disruptions, trade wars and increasing nationalism, led by the U.S. and China. This de-coupling has prompted nations to stockpile their own supplies of raw commodities, to the point of hoarding. Gold and silver markets are benefiting from this situation.
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More investors are adding gold and silver to their portfolios. JPMorgan chief Jamie Dimon was asked about owning gold. “I’m not a gold buyer — it costs 4% to own it,” Dimon said Tuesday at Fortune’s Most Powerful Women conference in Washington. “It could easily go to $5,000, $10,000 in environments like this. This is one of the few times in my life it’s semi-rational to have some in your portfolio,” he said.
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Technical charts remain overall bullish for gold and silver, both near term and longer term. Prices remain in uptrends on the daily charts and on the weekly and monthly charts. For the gold and silver bulls, “the trend is their friend.”
