Market Insights

McAlvany Weekly Commentary

Precious metals slow down their climb, but continue to show strength after the Thanksgiving break in the US. Let’s take a look at where prices stand as of December 4: The price of gold inched up about $12 from the previous week, still hovering around $2650. The price of silver is up 4% or $1.20 from a week earlier, to around $31.50. Platinum up about $17, or a little under 2% from the previous week. Palladium about $8, or just under 1% from last week. Looking at the broader markets, most of the major indices are sitting at new, strong highs leading into the holiday season. The S&P 500 is up 81 points, or 1.3% from the previous week. The only exception is the Down Transportation index. The Dow Transports is down 470 points, 2.5%, from the previous week. They are almost back to the November 2021 all-time highs. Gold Continues Predicted Path As we discussed before, the price of gold dropped 13% during the last Republican president term in 2016. But six months later, it rebounded and caught back up to where it was trending. Now that Trump has been elected again in 2024, we are seeing a similar trend. While gold hasn’t dropped quite as much yet, the price has declined about 9% since election day. Looking back further, that’s about a 50% retracement in this last breakout pattern. And while there’s still a chance that gold will drop further in the short term, we don’t expect the lower prices to last. It’s likely that gold will rebound in 2025 and reach a new all-time high around $3,000 or higher. Trump, Musk and Spending Cuts The new administration has promised to make dramatic changes to help reduce excessive spending that’s contributed to the massive US debt. To that end, Trump is bringing in Elon Musk and Vivek Ramaswamy for a newly-created Department of Government Efficiency (DOGE). These two entrepreneurs are tasked with cutting wasteful spending and finding ways to restructure the bloated bureaucracy. It remains to be seen what they will actually cut. Meanwhile, Trump is also pushing for additional interest rate cuts to get more money back in the hands of the people. He is essentially ignoring the long-term inflation problem with a short-term solution that will make his administration look good. If they really want to get the problem under control, they’ll need to do what no one wants to admit needs to be done — and that’s cutting spending AND raising taxes. When to Buy Gold? Given the geopolitical situation and the US financial situation, it makes sense to begin dollar cost averaging ounces of gold with cash sitting on the sidelines. Gold is not affected by inflation, and it allows investors to preserve the purchasing power of their hard-earned money. Purchased consistently every two weeks, it allows investors to stockpile ounces of gold over time. Build Your Gold “Retirement Annuity” How many ounces do you feel like you need to have set aside when you come to retirement? Do you expect to need a 10-year or a 20-year “gold annuity”? For example, if you know that you’ll need two ounces of gold each month to cover expenses, you can plan how many ounces you will need to accumulate. Now is the time to start stacking ounces of gold. The easiest way to do it is to automate your gold and silver investments through our Vaulted app. Get Guidance from an Expert If you haven’t had a meeting with an advisor at McAlvany Precious Metals to talk through your financial objectives, now is a great time to start. Our advisors have decades of experience investing in gold and other precious metals, and they can help you find the best strategy to meet your unique needs. They are happy to speak with you about your strategy for investing in gold and other precious metals. Reach us at 800-525-9556.