Gold topped $2,600, in part, because of the Federal Reserve interest rate cut on Wednesday, September 18. It bounced around $2,600 before holding about $2,600 on Friday. Partly because of lower rates, but also due to a rise in central bank and ETF buying, many institutional analysts have come out in gold’s favor. One is Bank of America’s analyst Jason Fairclough, who was impressed this week that gold began trading above $2,600 per ounce even before the Fed began cutting rates, justifying the Bank’s expectation that gold will reach $3,000 in 2025.
Bank of America doesn’t see stocks rising as the Fed cuts rates. In fact, they see a selloff in the S&P 500 sooner rather than later, so Bank of America instructed investors to “do what central banks are doing ... buy gold,” just like we have been advising here for years. They also pointed out (as we did recently) that, “Gold is now the second-largest reserve asset (16.1% vs. 15.6% for the Euro) among all central bank reserves.”
The rise in silver came as more of a surprise. Some say it stemmed from a new report by the Silver Academy that sang the praises of Samsung’s new solid-state batteries that could replace the more costly lithium-ion batteries in electric vehicles (EVs) over time. The report estimates that the annual silver demand could increase by up to 25,400 metric tons if a significant portion of these vehicles adopt this technology. This number would slightly eclipse current annual global silver production of about 25,000 metric tons, thereby causing a huge new demand, driving up the price of silver.
I wouldn’t jump on this bandwagon quite yet, for two reasons – first, price and supply dynamics, then EV demand: First, I must underline the fact that this technology is currently hypothetical and likely will take years to develop. I have seen many such reports over the decades, raising the hopes of silver investors. We need to take time to analyze the feasibility of this technology and how its use would change the various price levels of competing minerals in the real world
Second, with so many EVs sitting around unsold in so many car dealerships today, demand for EVs may have peaked. As a result of lower demand, the big car companies are canceling their EV production, so any demand for these new mega-batteries may be lower than projected. Fewer than one in 10 new car sales are now EVs and Michigan Rep. John James has sponsored a bill to block or ban the Biden mandate for producing a rising market share of EVs.
This new battery might work out if EV demand suddenly revives and the technology works and is cost-competitive but those two possible impediments might take a year or two to analyze.
This week I was fortunate to talk with a prominent republican governor. He and I both agree that Vice President Harris has her issues but Trump does too, when he gets off-message and doesn’t stick to his talking points. Those are the economy, inflation, crime, peace around the world and immigration issues.
Basically, are you better or worse off than you were four years ago? Some of our customers said they would vote on the cost of gasoline alone over the past four years, with Washington still over $5 a gallon when I visited a month ago. At the same time, in Texas, which is devoid of many of the democratic regulations along the West Coast, gasoline was below $3 a gallon.
Going back to November 2020, two days before the presidential election between Joe Biden and Donald Trump, the price of gasoline in Baytown, Texas, was $1.74 per gallon at the Shell station on Interstate 10. Two days after Biden took office, the price of gasoline at the Chevron station, located on the 610 Loop near the NRG Stadium in Houston, has risen to $2.05 per gallon. A year into his presidency, on January 20, 2022, the gasoline price for regular unleaded at the Exxon station in Lumberton, Texas, was $2.85 per gallon.
If Harris wins, I predict even higher gas prices in the future, and I am just as confident of that as I was in October 2023, with my prediction of gold rising above $2,500 an ounce.
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Mike Fuljenz, president of Universal Coin and Bullion, taught classes on grading and counterfeit coin detection for over 20 years. He has also assisted the Texas Attorney General with drafting consumer alerts on coins and on counterfeits. He has lectured and conducted training for law enforcement with the Numismatic Crime Information Center. He has been a member of the National Anti-Counterfeiting Task Force, as well as assisting the Federal Trade Commission with their consumer alerts on coins.