Gold Just Hit $2700...But SILVER Has Outpaced This Year

Summary

In this discussion, Alan Hibbard, a precious metals and alternative money specialist from GoldSilver.com, shares insights on the current market trends. He highlights the volatility in equities, gold, silver, and Bitcoin, noting that while equity markets are at all-time highs, many investors are shifting to gold, silver, and Bitcoin for protection. Hibbard emphasizes the long-term bullish trends in gold and silver, driven by central bank buying and industrial demand. He also discusses Bitcoin's volatility, predicting more interest from larger investors. Overall, the conversation centers on diversifying investments amid economic uncertainty.

Takeaways

• 📈 The equity market is at or near all-time highs, and there is a risk-on sentiment, but many investors are shifting to risk-off assets like gold, silver, and Bitcoin.
• 🪙 Central banks have been steadily buying gold since 2015, marking a shift from 35 years of being net sellers, which reflects a multigenerational trend in gold investments.
• 💰 Despite fluctuating interest rates, gold prices have been consistently rising over the last nine years, signaling a different market dynamic.
• 📉 Gold has already risen over 30% this year, driven by both central bank buying and retail investors, indicating strong demand for the precious metal.
• 🔮 Gold is attractive not only as a hedge but also for price appreciation, with expectations that it will outperform other assets like equities in the coming years.
• 🥈 Silver is currently at an 11-year high and has outperformed gold in 2024, with a 34% increase versus gold's 30% rise.
• 🏭 The demand for silver, driven by its industrial applications in sectors like electric vehicles and consumer electronics, has outpaced supply, contributing to the price increase.
• 📊 Copper has also seen a recovery after a summer slump, supported by industrial demand, with stimulus measures from China potentially affecting prices.
• 💻 Bitcoin has had a volatile year, but it is still up 48% year-to-date. It is increasingly seen as a digital form of gold and is expected to attract larger investments over time.
• 🗳️ The upcoming U.S. election may introduce additional volatility to Bitcoin, as both candidates appear supportive, potentially influencing its future price.

Q & A

What is the current state of the equity market, according to Allan Hiard?

The equity market is at or near all-time highs, with a 'risk on' mode. However, Allan Hiard emphasizes that many investors are turning to 'risk off' modes by investing in gold, silver, and Bitcoin due to volatility and uncertainty.

How does Allan Hiard describe the difference between current investors?

Allan describes two types of investors: those in 'risk on' mode, continuing to invest in equities, and those in 'risk off' mode, seeking to buy physical assets like gold, silver, and Bitcoin to hedge against market volatility.

What makes the current gold market different from historical patterns?

The current gold market differs because central banks have been net buyers since 2015, a shift after 35 years of being net sellers. This ongoing buying, despite changes in interest rates, has created a stable bull market in gold.

Why does Allan believe gold remains attractive despite recent gains?

Allan believes gold remains attractive both as a hedge and for price appreciation. He mentions the Dow-gold ratio, which suggests gold could outperform equities over the coming years, making it appealing even after its recent rally.

What is the significance of silver in the current market?

Silver has outperformed gold this year, up 34% compared to gold's 30%. Despite being at 11-year highs, it is still below its all-time high of around $50 per ounce. Silver's industrial demand, especially in electronics and renewable energy, continues to drive its price.

How does industrial demand impact silver prices?

Industrial demand for silver, particularly in electric vehicles, consumer electronics, and photovoltaics, has created a structural deficit, with demand outpacing supply. This is a major factor driving silver prices upward.

What role does Bitcoin play in the market, according to Allan?

Allan views Bitcoin as 'digital gold' and emphasizes that it represents sound money. Although volatile, Bitcoin has gained 48% this year. Investors are gradually realizing its value as a stable store of wealth, similar to gold.

What potential factors could influence Bitcoin's future price movements?

Allan mentions that the upcoming election may add volatility to Bitcoin. Both political candidates are somewhat supportive of Bitcoin, which could lead to more bullish sentiment and potentially increase its price.

How does the performance of copper compare to silver in the current market?

Copper, like silver, has seen strong performance in recent weeks after a summer slide. Allan suggests that both metals are benefitting from stimulus efforts, particularly in China, although the US economy is showing robust 3% GDP growth.

What long-term trends does Allan foresee in the precious metals market?

Allan predicts that both gold and silver will continue to rise, driven by central bank purchases, industrial demand, and economic uncertainty. He expects silver to remain particularly attractive due to its industrial uses and the ongoing supply deficit.

Outlines

00:00

🎙️ Interview with Alan Hiard: Market Overview

In this segment, Alan Hiard, a precious metals and alternative money specialist at GoldSilver.com, joins the show to discuss the current state of equity markets and other assets like gold, silver, and Bitcoin. While equity markets are at or near all-time highs, Alan emphasizes the importance of gold and silver, noting that a large group of investors are moving towards risk-off assets. He highlights the volatility and uncertainty in the market, leading many to seek physical assets for safety. He acknowledges that this shift may be cautious, but time will reveal its validity.

05:00

📈 Central Bank Gold Buying and Retail Investor Trends

Alan discusses the long-term trend of central bank gold buying, which started in 2015 after decades of net selling. Despite various interest rate movements by the Federal Reserve, gold has consistently risen over the last nine years. This trend is now being joined by retail investors, many of whom are new to gold, as seen with retailers like Costco selling gold. With gold up over 30% this year, Alan sees this as a significant shift, both from institutional and retail buyers, indicating continued support for gold prices moving forward.

💡 Gold: Hedge or Investment Opportunity?

Alan explains the dual role of gold as both a hedge and an attractive investment for price appreciation. Currently, gold is serving both functions due to its relative undervaluation compared to equities. He cites the Dow-gold ratio, which suggests that gold is poised to outperform the Dow in the coming years, potentially by a factor of 2:1 or 4:1. Alan believes this dynamic makes gold a highly appealing option for investors looking for both protection and growth potential.

🥈 Silver's Quiet Rise and Industrial Demand

Alan turns the discussion to silver, which is at an 11-year high and has outperformed gold this year, rising 34%. Despite its gains, silver is still below its all-time high of around $50 per ounce. Silver’s rally has been driven by industrial demand from sectors like electric vehicles, consumer electronics, and photovoltaics. This demand has consistently outstripped supply, creating a structural deficit that is likely to continue driving up prices. Alan expects silver to maintain its upward trajectory as long as economic growth remains strong.

🚀 Bitcoin: Digital Gold and Investor Sentiment

Alan shifts focus to Bitcoin, noting its recent volatility but also its strong 48% gain this year. Despite a series of lower highs since its peak in March, Bitcoin’s long-term appeal as 'digital gold' remains strong. While some investors are driven by FOMO (fear of missing out), Alan emphasizes that the real story of Bitcoin is its role as a form of sound money. As more investors recognize this, he expects larger capital inflows into Bitcoin, which could lead to further price appreciation.

🗳️ Election and Bitcoin Volatility

As the conversation concludes, Alan touches on the potential impact of the upcoming election on Bitcoin. Both major political candidates have shown some level of support for Bitcoin, suggesting that the asset could experience more volatility leading into the election. He anticipates that the new administration, regardless of the outcome, may be more favorable to Bitcoin than previous ones, adding to the market's current optimism. Alan ends the discussion by reaffirming Bitcoin's strong performance and the potential for future gains.

Keywords

💡Equity markets

Equity markets refer to financial markets where shares of companies are bought and sold. In the script, equity markets are described as being at or near all-time highs, reflecting a risk-on environment where investors are optimistic about future economic performance. The discussion contrasts equities with other asset classes like gold, indicating their appeal to different types of investors.

💡Gold

Gold is a precious metal and a traditional safe-haven investment, especially in times of economic uncertainty. The guest emphasizes gold’s increasing attractiveness as both a hedge and an asset with strong potential for price appreciation, noting that central banks have been buying gold for nearly a decade. Gold's resilience despite fluctuating interest rates also makes it a key focus of the discussion.

💡Silver

Silver, another precious metal, is highlighted for its strong performance, having outperformed gold in the current year. The guest explains that silver has both industrial and monetary uses, and its price is being driven by a supply-demand imbalance in industries such as electronics and electric vehicles. The script points out that silver is at an 11-year high but still below its all-time peak.

💡Central bank gold buying

This refers to the purchasing of gold by central banks, which have shifted from being net sellers to net buyers over the last nine years. The guest explains that this shift is a multigenerational change, signaling central banks' desire to diversify reserves and hedge against global economic uncertainties. This trend is part of the broader conversation about gold’s appeal.

💡Interest rates

Interest rates, managed by central banks like the Federal Reserve, influence economic activity by affecting borrowing costs. In the script, interest rates are mentioned in relation to gold’s performance, with the guest noting that gold has continued to rise regardless of whether rates were increasing or decreasing, making it an attractive investment even in varying economic conditions.

💡Bitcoin

Bitcoin is a decentralized digital currency, often compared to 'digital gold.' The guest discusses Bitcoin’s volatility and potential as a form of 'sound money,' indicating that while its price is subject to fluctuations, its long-term value proposition is similar to that of gold. Investors are still determining its role, with some seeing it as a speculative asset and others as a hedge against inflation.

💡Dow-gold ratio

The Dow-gold ratio compares the value of the Dow Jones Industrial Average to the price of gold, indicating the relative performance of stocks versus gold. In the script, the guest suggests that the current ratio is around 15, which implies that stocks have been outperforming gold. However, the guest predicts that gold will outperform stocks in the coming years, suggesting a potential correction in this ratio.

💡Supply-demand imbalance

This concept refers to a situation where the demand for a commodity exceeds its available supply, driving prices higher. The guest explains that silver has been experiencing such an imbalance, particularly due to high demand from industries like electric vehicles and consumer electronics. This imbalance is a key factor in silver's recent price rally.

💡Risk-on/risk-off

Risk-on refers to a market environment where investors are willing to take on more risk, typically favoring equities and other high-yield assets. Risk-off, on the other hand, describes a preference for safer investments like gold or bonds. The script describes the current market as having both risk-on and risk-off dynamics, with some investors seeking safety in assets like gold, silver, and Bitcoin.

💡Industrial metals

Industrial metals, such as silver and copper, are materials primarily used in manufacturing and technology sectors. In the script, silver is discussed not only as a monetary metal but also as an industrial metal with growing demand in industries like electronics and electric vehicles. The guest notes that silver’s price movements are influenced by both its industrial uses and its status as an investment asset.

Highlights

Equity markets are at or near all-time highs, with a mix of 'risk on' and 'risk off' modes among investors.

Gold, silver, and Bitcoin are attracting investors looking to protect against volatility and uncertainty.

Central banks have been net buyers of gold since 2015, marking a multigenerational shift in demand for gold.

Gold has experienced a 30% increase this year, with central bank buying and retail interest driving the market.

Gold remains attractive both as a hedge and for price appreciation, especially compared to equities.

The Dow-to-gold ratio is at 15, suggesting gold could outperform equities in the coming years.

Silver has outperformed gold this year, rising 34% compared to gold's 30% increase, and is on pace to rise 49%.

Silver’s price increase is driven by industrial demand, especially in electronics, electric vehicles, and photovoltaics.

There is a structural deficit in silver, with demand outpacing supply for the past several years.

Copper has also seen a strong performance, benefiting from global stimulus and industrial demand.

Bitcoin remains volatile, but has gained 48% year-to-date, with growing interest from institutional investors.

Bitcoin is increasingly seen as 'digital gold,' with potential for long-term price growth as more investors understand its role as sound money.

The upcoming election may bring additional volatility to Bitcoin, but both major candidates are seen as supportive of cryptocurrency.

Gold and silver continue to be valuable assets for both protection and potential appreciation, especially as central banks and retail investors show increased interest.

The interview ends with a positive outlook for gold, silver, and Bitcoin, emphasizing their role in uncertain markets.

Transcripts

now it's time to bring in our next guest

though that's going to be Alan hiard

precious metals alternative money

specialist at goldsilver.com welcome

back to the uh show Allan hey Tom thanks

for having me all right so we got Equity

markets at or near all-time highs we've

got risk on mode and gold we've got oil

falling that's probably helping equities

here a little bit what's your take here

on the equity Market in general Allan uh

as it Compares uh with other asset

classes here in the

market well equities I mean equity are

always everyone's First Choice um but

really what I'm paying more attention to

is gold and what everyone's paying less

attention to is silver so I mean I think

uh markets are absolutely crazy right

now um there is a lot of risk on as you

mentioned but there are a huge cohort of

investors that are turning to risk off

mode buying things like gold silver and

Bitcoin trying to take custody of

physical assets to protect themselves

from all the volatility and uncertainty

that we're seeing so it's really sort of

a tale of two different types of

investors and we don't know it's going

to play out uh maybe maybe the abundance

of caution is um is uh unnecessary but

you know we'll see in due time yeah you

you bring a good point here Allan and I

kind of wanted to uh dig dive a little

bit deeper on this gold move that we've

seen to record highs pulling back just a

little bit today but it seems like you

know Central Bank Buy's been pretty

robust across the globe but then now

you've got investors and you know

historically when I see the gold bugs

start hooting and hollering they get

punished uh from that type of move but

it seems maybe a little bit different

this time

Allan yeah I think it is a little bit

different so as you mentioned we've seen

the Central Bank gold buying since about

2015 so it's been 9 years and that's

coming on the heel of 35 years of

central banks being net sellers so these

are multigenerational shifts that are

taking place here and that bull market

and gold that's been going on the last

nine years has been happening despite

interest rate moves so we had the FED

take us off zero in

2015 uh you know bring us back down to

zero during the co recession and so on

so up down sideways no matter what

interest rates have been doing gold has

been going up so things are absolutely a

little bit different here and as you

mentioned retail investors are now

getting in we saw that you know at the

early part of this year uh Q4 of last

year with the Costco and the Walmarts

and so forth you know selling gold um to

to a lot of investors who have never

bought it before so there is a big shift

here a lot of people are turning to gold

and it's up already over 30% this year

so it it it's a great year for gold and

silver yeah and you've got that uh that

added boost to the FED cutting interest

rates at that at this point lending some

support to gold now would you advise

maybe you know investors at this point

to hey you know there's still upside in

gold at these levels even though you

know we've had this magnificent

rally yeah I would you know so there's

really two main ways to look at the

attractiveness of gold sometimes it's as

a hedge which is really downside

protection the other times it's actually

most attractive for Upward appreciation

compared to other asset classes so

sometimes it's one sometimes it's the

other we're in a case now where it's

actually both and you can tell that if

you look at the valuation of gold

compared to other assets like equities

if you look at the Dow gold ratio for

example we're up around 15 right now

which suggests that the Dow has been

performing better than gold lately but

in order for that to return to its long

run average gold is going to have to

outperform the Dow and so I would expect

that to happen over the next few years

maybe by a factor of 2:1 possibly 4: one

to bring that ratio back in line with

its long-term average so yes not only is

gold attractive as a hedge against so

many different things in this case it's

actually super attractive for Price

appreciation so it definitely is a good

idea all right uh let's pivot over to

you mentioned silver earlier uh that's

at 11year highs here uh as we speak so

we're getting a little bit of push back

into that a little bit more industrial

then you got copper that's done pretty

well over the last several weeks uh

after a big uh big slide in the summer

you see those as silver and uh maybe

copper some outliers here you know you

got stimulus over in China it's said

everybody's saying the economies are

weakening but not here in the US I mean

you got GDP growth at 3% are those good

areas yeah so I mean I'm a big fan of

silver and as you mentioned it's at an

11-year High but it's still off its

alltime it's still off its all-time high

so around $50 an ounce maybe 52

depending which source you look at and

so it's been a sort of uh quiet rally in

silver but silver has actually

outperformed gold this year it's up 34%

to Gold's 30 so silver is having a

fantastic year it's on Pace to do

49% which is kind of Staggering uh and

it still is extremely attractive and the

story with silver is really one of an

industrial metal less so a monitor metal

and we've actually had a structural

deficit in silver so all that silver

that's demanded by different Industries

like electronic Vehicles consumer

electronics photo voltaics I mean you

name it everything electronic uses

silver and the demand for all that

silver for the last three or four years

has been too large to keep up with

Supply so we've actually had demand

outstripping Supply and that's the main

driver of these price moves so I'm

expecting that to continue as long as

the economy keeps booming uh the price

of silver is going to keep going up so

that's what I'm expecting now let's

pivot we can't leave out Bitcoin here

Allan because uh that se a nice move to

the upside we're just above just near

about 66,000 here but since those

all-time highs in mid-march we've seen

lower highs in this so the trend's still

lower is this a breakout mode here for

Bitcoin yeah it's super hard to tell so

Bitcoin is obviously extremely volatile

and uh yeah after those March highs

we've seen a lot of chop happiness

moving slightly downward but on balance

Bitcoin is up 48% on the year and a a

lot of investors still haven't figured

out what Bitcoin is some of them just

flock to it for fomo you know they just

want to be a part of the Bitcoin story

and if it pumps again they want to say

they were in it they want to you know

experience those gains but I mean really

the story with Bitcoin is sound money

like that's the most important thing to

understand it is like digital gold and

the more investors start to realize that

the more they're going to move into it

and that includes investors of all sizes

so once Bitcoin starts to stabilize a

little bit as it has done over time and

as it will continue to do we'll see

bigger and bigger investors moving in

with larger and larger portions of their

Capital So eventually the price relative

to the dollar is going to go up just

like it does for gold yeah uh and you s

you sit here and wonder about the

election that's coming up because both

candidates at this point kind of

supportive maybe trying to get some

votes on one side maybe not on the other

so maybe some additional volatility here

into the election for Bitcoin also but

that has definitely been lending some

support uh as uh the new Administration

uh will probably be a little bit more

bullish than previous uh all right great

uh discussion here Allan have a great

day thank you thanks Tom you too all

right H that's Alan Hibbard precious

metals alternative money specialist at

goldsilver.com breaking down the

precious metals and bit Bitcoin