Listen Carefully! They Just Declared War on Your Gold & Silver Investments - Simon Marcotte

Listen Carefully! They Just Declared War on Your Gold & Silver Investments - Simon Marcotte

As of May 2024, the gold market continues to exhibit some volatility. While prices haven't reached the record highs seen in 2011, they remain significantly higher compared to the pre-2008 period. The long-term trend suggests gold retains its appeal as a valuable asset during economic instability.
From a technical viewpoint, Simon Marcotte emphasizes the need for urgent action to control deficit acceleration and mitigate currency devaluation. Despite the sizable debt, he underscores the context of surging household wealth, surpassing the national debt. Regarding the trajectory of the gold price, Marcotte's prediction emphasizes the pivotal role of central bank actions, specifically their movement towards diversifying reserves into gold. In recent years, the purchasing of gold by central banks has increased as some countries seek to diversify their reserves into safe assets. These sanctions imposed on foreign investments, similar to those enacted by the US and Europe against Russian resources, have prompted a reassessment of currency reserves strategies, affecting gold demand.
In Simon Marcotte's estimation, the recent robust performance of gold may merely signify the dawn of an extended bull run. Envisioning a future scenario, the analyst anticipates that gold will gain substantial momentum as real interest rates begin their descent, a trend he attributes to credit contraction and heightened spending imperatives. At the same time, Marcotte states that equity prices and valuations will adjust accordingly. Gold rallied as traders reacted to the US. The inflation report indicated that the Inflation Rate declined from 3.5% in March to 3.4% in April. Traders were worried that the Inflation Rate may increase. U.S. dollar and Treasury yields moved lower after the release of inflation data, providing significant support to precious metals markets.
Furthermore, Marcotte underscores the prevailing buoyancy in the gold market, attributing it to heightened central bank acquisitions and escalating Asian demand, notably spurred by apprehensions surrounding the weakening yen.
Regarding the current scenario, Simon Marcotte drew parallels with past instances, such as the undervaluation of oil stocks in the late 90s. Despite the robust performance of gold, he expressed surprise at the undervaluation of gold equities. Marcotte anticipates that once real interest rates start to decline, gold equities will eventually catch up in valuation. Historically, gold equities have tended to deliver 2-5x leverage during gold bull markets, as demonstrated in recent upcycles, notably in 2018-2020 and 2015-2016. As the new cycle gains pace, we note that gold equities are recovering from extreme lows relative to gold and broad markets and remain far from their historic highs.
Marcotte suggests that there are too many junior mining companies and emphasizes the importance of consolidating deposits to create standalone projects. Furthermore, he predicts this strategy will attract attention from larger companies seeking significant acquisitions to replenish reserves.

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