Friday Recap (1/3/2025)
AU: $2639 ($2622 - Last Week Spot)
AG: $29.58 (29.48)
HUI: 284 (280)
DXY: 109 (108)
S&P: 5942 (5866)
10-Yr: 4.6% (4.5%)
Oil: $73 (69)
This was another holiday week with low volume, and prices didn't move much. We did have some excitement, with the dollar jumping to 109 and the silver spot trading with a $28 handle, although closing back above $29. But the S&P 500 is all that matters at the moment, and it closed above 5900 today and ended the year up 23%. If you were overweight the MAG 7, then you were likely up around 30% on the year. With those kind of returns, no one cares about gold miners (yet).
The story this week was the DXY (109) and the 10-Yr (4.6%), which both unexpectedly rose. Those are ugly numbers for Wall St and hard to ignore. Wall St is praying that they both come down next week. Any move higher, and the S&P will get some serious headwind. A move to 110 and 4.7% next week, and the S&P could easily drop 300 pts.
Q1 won't be about gold and silver, but the S&P 500, the DXY, and the 10-Yr. Gold and silver (and the miners) are going to follow those leaders. I think we need to be patient, waiting for the recession to arrive. Unfortunately, I don't think that will happen in Q1. Meanwhile, we can accumulate mining shares, many of which are silly cheap, trading at 50% of their value. When the breakout in miners finally arrives, I expect many of the miners to double quickly as they normalize to a legitimate valuation.
Some of you are probably nervous that if the stock market crashes, then so will the miners. I'm not. The miners are so cheap that they are unlikely to crash. Plus, I don't think gold's strength is an anomaly or a bubble. I think gold is leading because investors are sniffing out looming problems. Gold will likely reach a 2025 cycle low between $2350 and $2450, but that's about it. I doubt $2500 will hold, but it could. Once gold puts in its cycle low, it's going to rip to $3000. At least, that's my expectation. When? Perhaps Q2, but it could be Q3. Ugh! More waiting.
