July 22, 2024 – Traders sold gold and silver last week. Silver finished back under $30/oz once again. Gold held up better, managing to hold on to $2,400/oz. Prices remain soft this morning.
U.S. equities also sold off, with the S&P 500 down nearly 100 points for the week.
The big news to hit financial markets this week is the shakeup in the presidential race. Joe Biden announced yesterday he was ending his campaign for President. He says he will finish his current term.
Markets will be grappling with the fact that it isn’t immediately clear who will replace Biden on the November ballot. Kamala Harris may have a leg up.
Gold : Silver Ratio (as of Friday’s closing prices) – 82.0 to 1
Biden Out: How Will Gold and Silver Markets Respond?
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Joe Biden announced Sunday that he is ending his presidential campaign, but he intends to finish the current term. This article may be political in nature, but it will have major ramifications for investors, including gold and silver bugs.
The bullion markets have been relatively quiet in recent months. The frenetic buying which kicked off in the spring of 2020 lasted for nearly 3 years, before metals investors paused for a breather. Premiums have since come way down, and dealer inventories are fully replenished.
Bullion investors in the U.S., who tend to skew conservative or libertarian, may be feeling less anxious in recent months.
Donald Trump has been rising in the polls, while Biden has looked more unelectable.
Pessimism about where the country is headed has been a major driver in the markets for physical gold and silver. For many, Trump seems to represent the “right track.” His election in 2016 led to a couple of quiet years, and demand is subdued once again with Trump as the front-runner.
Whomever the Democrats select to replace Biden, the question will be whether they have significantly better prospects to beat Trump in November. If he or she does, expect U.S. investors to buy more gold and silver.
Vice President Kamala Harris looks to be in the pole position, though she was not immediately endorsed by all prominent Democrats. However, the Democratic National Convention won’t begin for nearly a month.
The months just ahead in the bullion markets may look a lot like the past few months, provided Trump can hold onto his current lead in the polls.
The failed assassination attempt may have only strengthened Trump’s odds, and it isn’t clear who Democrats might offer as a solid counter.
It is important to note that this commentary is about potential demand for physical bullion products in the U.S. and how that impacts premiums – not the direction of paper prices. There often isn’t much of a connection, at least in the short term.
Any sustained surge in demand for metal in the U.S. will likely result in higher bid and ask premiums for coins, rounds, and bars.
Potential Market-Moving News This Week
Tuesday, July 23rd – Existing Home Sales. Home sales are expected to fall in the June report. Affordability and higher mortgage rates are a constraint, as is available inventory.
Thursday, July 25th – GDP. Economists are expecting second quarter GDP to come in higher than the first quarter. The consensus is for 1.9% growth versus 1.4% in Q1.
Friday, July 26th – Personal Income & Spending. Income growth is expected to drop from 0.5% in May to 0.4% in June. Spending, on the other hand, is expected to rise slightly – up from 0.2% growth in May to 0.3% last month.
This week’s Market Update was authored by Money Metals Director Clint Siegner.
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