The first episode of the Money Metals Midweek Memo for 2025 recapped an extraordinary year for gold and silver. Host Mike Maharrey detailed how these precious metals thrived amidst challenging economic conditions, outperforming most traditional assets.
Gold’s Record-Setting Performance
Gold achieved remarkable gains in 2024, rising 26.5%, its best annual performance since 2010. Along the way, it set 40 new all-time highs, peaking at $2,780 per ounce on October 30. Inflation-adjusted, this price broke the previous record of $2,689 per ounce, set in 1980.
Gold’s gains were especially impressive in comparison to other assets:
- Outperformed U.S. stocks, bonds, global treasuries, and commodities.
- Only Bitcoin surpassed gold, with an 11.5% surge post-election, although Bitcoin is much more speculative and volatile than gold.
The Role of Central Bank Buying
A significant driver of gold’s success was central bank demand, with over 800 tons purchased by November 2024. This marked the third consecutive year of substantial gold accumulation as countries reduced their reliance on the U.S. dollar. Maharrey highlighted the global trend of de-dollarization, spurred by concerns over U.S. sanctions and fiscal instability.
Silver’s Solid Show
Silver, while trailing gold, posted a respectable 20.5% gain in 2024, ending the year at $28.91 per ounce. Despite lagging behind gold’s records, silver outperformed emerging market stocks, bonds, and commodities.
Maharrey emphasized that silver’s potential remains strong:
- Record industrial demand in 2024.
- A projected supply deficit of 182 million ounces, marking the fourth consecutive year of shortfalls.
- A gold-to-silver ratio exceeding 88:1, well above the historical average of 40:1 to 60:1, signaling silver’s relative undervaluation.
Key Factors Behind Precious Metals’ Success
Gold and silver’s stellar performance in 2024 was driven by a combination of economic, geopolitical, and market dynamics. These factors collectively created an environment where investors sought safe-haven assets to preserve wealth and hedge against uncertainties.
Maharrey highlighted several key drivers that explain the precious metals’ impressive gains:
- Monetary Policy: The Federal Reserve’s gradual shift towards monetary easing in late 2024 bolstered gold. Lower interest rates make non-yielding assets like gold more attractive.
- Inflation Hedge: Persistent inflation concerns drove investors toward gold as a store of value. Even amid “sticky” inflation, many investors anticipate the Fed will cut rates further in 2025.
- Geopolitical Tensions: The ongoing war in Ukraine, unrest in the Middle East, and a contentious U.S. election cycle created uncertainty, increasing demand for safe-haven assets like gold.
- De-dollarization: Central banks’ moves to reduce reliance on the dollar reinforced gold’s role as a global reserve asset.
Looking Ahead to 2025
Maharrey predicted that many of the factors supporting gold and silver in 2024 would continue into 2025. Analysts expect gold to gain 7% this year, with some, like JP Morgan, projecting prices as high as $3,000 per ounce. Goldman Sachs is still predicting gold to reach $3,000 per ounce by mid-2026.
However, Maharrey warned that any major economic disruptions—such as a recession, banking crisis, or monetary policy pivot—could propel gold prices much higher. Silver also has significant upside potential, with its historical tendency to outperform gold in the later stages of a bull market.
Originally Published on Money Metals Exchange.