This week, I had the privilege of attending the LBMA’s International Precious Metals conference in Barcelona. The event was brimming with lively debates and discussions among various stakeholders in the precious metals industry. A traditional endnote of the conference is the attendees' forecast for the precious metals markets for the upcoming year.
High Expectations for Gold Performance
Initial reports imply a strong belief among attendees that gold will supersede other precious metals in terms of performance, hitting $1,990.30 an ounce by October 2024.
A Bullish Outlook for Silver
The prospect for silver also appears quite optimistic. At present, the price of silver hovers around $23. The LBMA conference participants anticipate this figure to rise to $26.80 by the same period next year.
It is widely believed that the current geopolitical unrest in the Middle East is a significant reason for this bullish sentiment. The price of gold has surged by more than 5% since the onset of the conflict. Before this, it had hit its lowest point since March.
2024: A Pivotal Year for Gold Market Drivers
The upcoming year promises to be a year of change in terms of factors influencing the gold market. Market players might need to reallocate their focus from aspects such as FOMC decisions, the strength of the US dollar, and Treasury yields. There is a growing expectation that the gold market will shift its attention away from these factors. This is largely because the FOMC is not predicted to make significant changes, and gold's response to positive US data releases has been relatively muted.
In contrast, safe haven demand and physical demand are likely to gain more prominence. This shift in focus is not only associated with war scenarios but also with economies where citizens show a natural inclination toward gold investment and where performance in other areas might not be as strong. An example of such a scenario is China. The Shanghai Premium, a topic of recent discussions, is a strong indicator of a split occurring in the gold market.
Silver as a Safe Haven and Industrial Asset
Silver, like gold, is considered a safe haven. It is expected to perform well in the current situation, similar to gold. However, the industrial properties of silver make it particularly intriguing. The worldwide shift towards green energy is providing substantial support for silver prices.
Concerns about supply shortages have been prevalent for quite some time. Unlike PGM metals, there is no option for substitution. Therefore, if more silver supply is not discovered, there could be a real issue with stock availability. It is projected that an additional 2 or 3 mines would need to be established to meet the anticipated solar demand. If this fails, above ground stocks will have to be used. In either case, the current price does not make either option particularly lucrative, so it will be interesting to see if silver prices rise as a result.
Financial Experts Bullish on Gold
LBMA participants are not the only ones advocating for an increase in gold stock. JP Morgan’s Chief Market Strategist, Marko Kolanovic, is also of the same opinion. In the bank’s Global Markets Strategy report, Kolanovic explained that the escalating geopolitical threats and the overvaluation of equity markets in the US and elsewhere provide a perfect opportunity for investors to increase their gold exposure.
This sentiment echoes the words of the organization's founder who reportedly said before Congress in 1912, "Gold is money. Everything else is credit." If one is curious about Kolanovic's stance on gold, JP Morgan predicts spot gold prices to hit $2,175 by Q4 2024.
While it is still early to make definitive predictions, more forecasts will likely emerge in the coming weeks. It is important to remember that these forecasts primarily serve as indicators of the sentiment surrounding gold. They provide insights into why industry professionals and consumers buy gold and how they might respond when faced with unexpected events. As history has shown, the unexpected always happens and that’s when gold truly shines.
Frequently Asked Questions
What are the pros & cons of a Gold IRA?
The main advantage of an Individual Retirement Account (IRA) over a regular savings account is that you don't have to pay taxes on any interest earned. An IRA is a good choice for those who want a way to save some money but don’t want the tax. This type of investment has its downsides.
If you withdraw too many funds from your IRA at once, you may lose all your accumulated assets. The IRS may prohibit you from withdrawing funds from your IRA before you are 59 1/2 years of age. If you do withdraw funds from your IRA you will most likely be required to pay a penalty.
Another problem is the cost of managing your IRA. Most banks charge 0.5% to 2.0% per annum. Others charge management fees that range from $10 to $50 per month.
You can purchase insurance if you want to keep your money out of a bank. A majority of insurance companies require that you possess a minimum amount gold to be eligible for a claim. You may be required by some insurers to purchase insurance that covers losses as high as $500,000.
If you decide to open a gold IRA, it is important to know how much you can use. You may be limited in the amount of gold you can have by some providers. Others let you pick your weight.
It is also up to you to decide whether you want to purchase physical gold or futures. Futures contracts for gold are less expensive than physical gold. Futures contracts allow you to buy gold with more flexibility. They enable you to establish a contract with an expiration date.
You'll also need to decide what kind of insurance coverage you want. The standard policy doesn’t provide theft protection or loss due fire, flood, or earthquake. However, it does cover damage caused by natural disasters. You might consider purchasing additional coverage if your area is at high risk.
Apart from insurance, you should consider the costs of storing your precious metals. Storage costs will not be covered by insurance. Banks charge between $25 and $40 per month for safekeeping.
You must first contact a qualified custodian before you open a gold IRA. A custodian keeps track of your investments and ensures that you comply with federal regulations. Custodians are not allowed to sell your assets. Instead, they must retain them for as long and as you require.
Once you've decided which type of IRA best suits your needs, you'll need to fill out paperwork specifying your goals. Information about your investments such as stocks and bonds, mutual fund, or real property should be included in your plan. You should also specify how much you want to invest each month.
After completing the forms, send them along with a check or a small deposit to your chosen provider. Once the company has received your application, they will review it and send you a confirmation email.
When opening a gold IRA, you should consider using a financial planner. A financial planner is an expert in investing and can help you choose the right type of IRA for you. They can help reduce your expenses by helping you find cheaper alternatives to buying insurance.
What is the best precious-metal to invest?
Answering this question will depend on your willingness to take some risk and the return you seek. Although gold has traditionally been considered a safe investment choice, it may not be the most profitable. For example, if you need a quick profit, gold may not be for you. You should invest in silver if you have the patience and time.
If you don’t want to be rich fast, gold might be the right choice. Silver might be a better investment option if steady returns are desired over a long period of time.
How much tax is gold subject to in an IRA
The fair market value at the time of sale is what determines how much tax you pay on gold sales. Gold is not subject to tax when it's purchased. It's not considered income. If you sell it later, you'll have a taxable gain if the price goes up.
Gold can be used as collateral for loans. Lenders try to maximize the return on loans that you take against your assets. For gold, this means selling it. It's not guaranteed that the lender will do it. They may hold on to it. They may decide to resell it. Either way you will lose potential profit.
You should not lend against your gold if it is intended to be used as collateral. It is better to leave it alone.
Is gold a good investment IRA?
Anyone who is looking to save money can make gold an excellent investment. It is also an excellent way to diversify you portfolio. But gold is not all that it seems.
It has been used throughout the history of currency and remains a popular payment method. It's often referred to as “the world's oldest currency.”
But unlike paper currencies, which governments create, gold is mined out of the earth. This makes it highly valuable as it is hard and rare to produce.
The price of gold fluctuates based on supply and demand. The strength of the economy means people spend more, and so, there is less demand for gold. As a result, the value of gold goes up.
On the flip side, people save cash for emergencies and don't spend it. This means that more gold is produced, which reduces its value.
This is why it makes sense to invest in gold for individuals and companies. You'll reap the benefits of investing in gold when the economy grows.
Your investments will also generate interest, which can help you increase your wealth. If gold's value falls, you don't have to lose any of your investments.
Should You Open a Precious Metal IRA?
Precious metals are not insured. This is the most important fact to know before you open an IRA account. There is no way to recover money that you have invested in precious metals. This includes any loss of investments from theft, fire, flood or other circumstances.
You can protect yourself against such losses by purchasing physical gold and silver coins. These items can be lost because they have real value and have been around for thousands years. These items are worth more today than they were when first produced.
When opening an IRA account, make sure you choose a reputable company offering competitive rates and high-quality products. A third-party custodian is a good option. They will protect your assets while giving you easy access whenever you need them.
Remember that you will not see any returns unless you are retired if you open an Account. Don't forget the future!
What does gold do as an investment?
Supply and demand determine the gold price. It is also affected negatively by interest rates.
Gold prices are volatile due to their limited supply. There is also a risk in owning gold, as you must store it somewhere.
- If you take distributions before hitting 59.5, you'll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- (Basically, if your GDP grows by 2%, you need miners to dig 2% more gold out of the ground every year to keep prices steady.) (smartasset.com)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- If you accidentally make an improper transaction, the IRS will disallow it and count it as a withdrawal, so you would owe income tax on the item's value and, if you are younger than 59 ½, an additional 10% early withdrawal penalty. (forbes.com)
- Gold IRA: Add Some Sparkle To Your Retirement Nest Egg
- Understanding China's Evergrande Crisis – Forbes Advisor
- Saddam Hussein's InvasionHelped Uncage a Bear In 1991 – WSJ
- You want to keep gold in your IRA at home? It's Not Exactly Legal – WSJ
Three ways to invest in gold for retirement
It's important to understand how gold fits in with your retirement plan. There are many ways to invest in gold if you have a 401k account at work. You may also want to consider investing in gold outside of your workplace. A custodial account can be opened by a brokerage firm like Fidelity Investments if you already have an IRA. If precious metals aren't your thing, you may be interested in buying them from a dealer.
These are three easy rules to remember if you invest in gold.
- You can buy gold with your cash – No need to use credit cards or borrow money for investment financing. Instead, cash in your accounts. This will help protect you against inflation and keep your purchasing power high.
- Own Physical Gold Coins – You should buy physical gold coins rather than just owning a paper certificate. The reason is that it's much easier to sell physical gold coins than certificates. Physical gold coins are also free from storage fees.
- Diversify Your Portfolio. Never place all your eggs in the same basket. Also, diversify your wealth and invest in different assets. This helps reduce risk and gives you more flexibility during market volatility.
By: Dave Russell
Title: 2024 Gold Predictions Enhance the Allure of the Precious Metal Even More
Sourced From: news.goldcore.com/2024-gold-forecasts-make-gold-shine-even-more/
Published Date: Thu, 19 Oct 2023 15:36:52 +0000