(Money Metals News Service) Gold prices have once again shattered records, reaching $2,900 per ounce for the first time in history, as demand for the yellow metal continues to surge worldwide.
According to Mike Maharrey, host of the Money Metals Midweek Memo podcast, 2024 has already seen 40 record-high gold prices, underscoring the growing importance of gold as a hedge against economic instability and currency devaluation.
Super Bowl and the Price of Silver
While many tuned in to the Super Bowl, Maharrey skipped the game but found a precious metals-related tidbit worth mentioning. The iconic Lombardi Trophy contains approximately 93.5 troy ounces of silver.
At Monday morning’s silver price following the game, the trophy’s melt value stood at $2,990, a significant increase from $2,111 at last year’s Super Bowl—highlighting silver’s upward trajectory despite its perceived underperformance in 2023.
The Demise of the Penny: A Lesson in Inflation
President Trump recently announced an order to halt the minting of the U.S. penny, further demonstrating the effects of inflation on currency. The purchasing power of the dollar has eroded so much that the cost to produce a penny far exceeds its face value.
According to Maharrey, prices have risen 73% since 1970, making the once-ubiquitous penny almost irrelevant in everyday transactions.
Central Banks Driving Record Gold Demand
Total global gold demand in 2024 reached a record-breaking 4,974 tons, surpassing the previous year by 1%. This spike, valued at $382 billion, was largely driven by central banks, which added over 1,000 tons of gold to their reserves for the third consecutive year.
For context, between 2010 and 2021, central banks increased their gold holdings by an average of 473 tons per year. The latest 1,044.6-ton increase is more than double that figure, marking the 15th consecutive year of expanding reserves.
- The National Bank of Poland led the charge, adding 90 tons to its reserves.
- Turkey and India ranked second and third, respectively.
- China, despite reporting no purchases for six months, was the fourth-largest gold buyer, later disclosing that it had secretly purchased 100 tons in just October and November.
Maharrey suggests that these aggressive gold purchases stem from a growing distrust of the U.S. dollar, particularly after the U.S. and its allies froze Russia out of the SWIFT financial system following the Ukraine invasion. Countries worldwide appear to be preparing for a financial system less dependent on the dollar.
Investment Gold Demand Hits Four-Year High
Investment in gold surged 25% year-over-year, reaching 179.5 tons—a four-year high. The majority of this demand came from Asian markets, where physical gold purchases remain a cultural and financial mainstay.
- Bar sales rose 10%, while coin sales fell 31%, reflecting a shift toward larger gold investments.
- Indian gold bar and coin demand surged 29%, partly due to a tax cut in July.
- Chinese gold investment demand climbed 20%, hitting its highest level in a decade.
- Conversely, in the U.S. and Europe, demand slumped by 33%, signaling Western investors’ tepid interest in gold, despite its record-setting performance.
Maharrey finds this discrepancy striking. While gold reached 40 record highs in 2024, Western investors have remained largely on the sidelines. If demand from the West returns alongside strong Eastern demand, gold prices could see another significant surge.
Jewelry Demand Drops, but Spending Increases
Global jewelry demand declined 11% in volume terms to 1,877 tons, primarily due to soaring gold prices. However, total spending on gold jewelry rose 9% to $44 billion, indicating that consumers are buying less but paying more.
- Chinese jewelry demand plummeted 24%, ceding the top jewelry market spot to India for the second time in three years.
- Indian demand fell by just 2%, bolstered by strong third-quarter purchases, coinciding with the government’s gold tax reduction.
- In the U.S., jewelry demand hit a five-year low, yet total spending reached a record $10 billion due to higher gold prices.
Notably, in markets like India and China, gold jewelry is viewed not only as a fashion item but also as a form of financial security, given its high-purity 24-karat content.
Technology and Industrial Demand See Growth
While a smaller segment of the market, technology-related gold demand rose 7% to 326.7 tons, with computing and AI-related industries driving growth. The surge in AI technology has increased the demand for precious metals in electronic components, benefiting both gold and silver.
What’s Next for Gold?
Maharrey predicts that central bank gold buying will remain strong, particularly among countries seeking to minimize their exposure to the U.S. dollar.
While Western investors have yet to fully engage in this gold bull market, early signs in January 2025 indicate that European ETFs saw their first net gold inflows in months—potentially signaling a shift in sentiment.
With the U.S. national debt surpassing $36 trillion, and interest payments exceeding $1 trillion per year, concerns over fiscal sustainability are growing. Maharrey argues that Western investors will eventually wake up to gold’s importance in wealth preservation, especially as economic pressures mount.
Final Thoughts: Time to Buy?
Despite gold’s strong performance, Maharrey believes it’s still a good time to enter the market. He emphasizes that waiting for a correction might not be wise, given the macroeconomic factors at play.
For those concerned about affordability, Money Metals Exchange offers a monthly installment plan, allowing investors to gradually build their precious metals portfolio at a discounted rate. You can also call directly: 1-800-800-1865.
As the global financial landscape continues to shift, gold remains a trusted hedge against uncertainty, currency devaluation, and economic turbulence. If 2024’s record-breaking trends are any indication, the yellow metal may still have plenty of room to run.
