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Not even gold’s record-high $2,400 an ounce is enough to scare buyers away, says Stephen Foster, owner of Fresno Coin Gallery.
As of Monday morning, gold prices had slipped from earlier highs, but speculators see global tensions, institutional investment, and monetary policies driving values upward. Some analysts see $3,000 an ounce by 2025. Foster analyzes that silver has much more room to rise than its pricier cousin.
The appeal of coinage metals right now?
Sellers want to cash in on investments that they’ve seen quick returns on, and buyers look for stability in the face of inflation domestically and turmoil globally.
“Gold is near an all-time high (so) a lot of people are excited about the move,” Foster said. “There’s many people that are selling at the all-time high and there’s also a lot of people that are buying because they’re concerned about the future of the dollar.”
Bank of America Forecasts $3,000 Gold Price
Two years ago, investors were buying gold at $1,600. When gold broke $2,000 an ounce in April 2023, it astounded analysts. Many people brave enough to buy then are now selling, Foster said.
“They’re also kind of pleased with the investment they’ve already made,” Foster said. “And so they’re wanting to sell at $2,300-plus, which is significantly more than where most of them bought. Most of them bought in the $1,600 to $2,000 range.”
Although values have retreated since the $2,400 price seen Friday, that may not be an upper limit. Bank of America projected prices to hit $3,000 in 2025.
The Federal Reserve has held off on lowering interest rates in the face of stubbornly high inflation rates. High interest rates can entice investors with greater returns on stable investments such as treasury bonds.
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Inflation and global tensions in the Middle East have spurred gold’s tear in spite of high interest rates. Gold-buying from central banks around the world could also be propping up prices.
Business Insider estimates the Chinese central bank purchased 200 tons of gold in 2023.
China, Russia, India, and other BRICS countries have been threatening to find alternatives to the U.S. dollar.
Domestic policy could give gold the push it needs to reach new highs.
Despite the record prices, Foster says there hasn’t been as much excitement as when gold hit $2,000 an ounce in 2011. He thinks it would take a $3,000 an ounce price to get that level of excitement again.
If the Fed lowers interest rates later this year or early next year, that could drive gold forward. A $3,000 per ounce price would not surprise Foster.
“I almost feel like gold would have to be $3,000 or $4,000 to really get people excited again,” Foster said. “Like the new normal or the new range. Much higher.”
Silver Prices Have a Lot More Room to Grow: Foster
It’s silver Foster has been watching. On Wednesday, silver appeared ready to break $29 an ounce, according to the Comex exchange. Foster says while that price is still high, it’s only 60% of its historic value.
“Silver is only around 60% of its all-time high , whereas gold is at its all-time high,” Foster said. “And it’s, you know, 15% to 20% above its previous all-time high. So, I actually am a little bit more bullish on silver at this point.”
Silver passed the $50-an-ounce mark in 1979 after oil heirs Herbert and Nelson Bunker Hunt tried to corner the market during the inflation era of the 1970s.
The Hunts at one time were estimated to own one-third of all non-government owned silver. Silver fell from its high of $50.42 in 1980 to less than $11, according to Investopedia.
At that time, gold was at its all-time high of more than $800 an ounce, Foster said. Silver also reached $50 an ounce in 2011.
“Now, gold is almost three times that amount, and silver is about 60% of that amount, so I think silver has more to go up,” Foster said.
Costco Could Be Selling $200 Million a Month in Gold: Wells Fargo
Costco continues to draw in the masses, Foster said. A Wells Fargo analyst earlier this month estimated the retailer’s monthly gold sales as high as $200 million a month. However, Costco’s pricing doesn’t appear to update as quickly as more traditional gold sellers, Foster said.
So as gold prices move up and down, the cost for a 1-ounce bar could be off by quite a bit in either direction. Also different from retailers, Costco allows for credit card purchases of the metal, Foster said.
“The market could change by $100 or $200, and if you haven’t updated, then you might be pretty far off the market,” Foster said.
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Crypto, Gold Share Similar Space
Similar to gold, crypto can be an investor’s safe space away from government-backed currencies. Gold and its virtual competitor, Bitcoin, have been on similar trajectories of late, and not for entirely different reasons, Foster says.
After its collapse to prices as low as $25,000 a Bitcoin, the blockchain currency has since recovered to near-record highs.
Many see it as a safe haven outside the stock market and the U.S. dollar., Foster said.
“It is something that I watch because it’s kind of an alternative to gold and silver, and it’s an alternative to the U.S. dollar,” Foster says. “I can only imagine what gold would be now and what silver would be now if crypto did not exist.”
