As the gold price keeps breaking records, we formalize our gold pricing framework and flesh out the drivers of our bullish forecast that gold will rise about 10% to 3,000 by December 2025. Welcome to the Morning Markets and Metals with Vince Lancey. Where each morning Vince brings you the financial and precious metals news to get you ready for your day. And now, here’s Vince. Good morning, everyone. Today’s market rundown will be going through a report put out on a 29th by Goldman Sachs that says, quote, central bank demand has reset gold’s price levels.

That’s based on their nowcast analysis coming out of the LBMA, the real time physical demand for gold, which is a confirmation of something that we said a year ago. The gold reset is a process, not an event, and we are in the process. All right, start with the markets. The dollar is down 6 at 104.03. 10-year-olds are 428. Down 1, S&P 500 is 57.74. Down 35, two days in a row. The VIX is 21.38. Up 1, gold is 27.78. Down 8, it was down about 12. Silver continues to get sold. 33.49. Down 27.

Copper, 432. Down almost 2 cents. Gold, silver, up again. WTI, 69.65. The smacks of China. I have to look at that. 69.66. Down 2, natural gas, unchanged. Offered at 240. Bitcoin, 72.3. 11. Down 62. Ethereum, 26.32. Down 23. Palladium, down 23. At 11.21. And platinum, down 10. At 1,002. Grains are mixed. Soy is up a couple cents. At 9.96. Wheat off the screen is 584.7. Down 3 cents. And corn is offered unchanged at 404. Okay, here’s the front page. Here’s the story that we’ll be touching on. I repinned. Don’t be an exit strategy for whales.

You should read those two together if you’re reading them at all. Okay. Goldman raises its 2024 target again. I’m just going to quote a couple statements from the report. As the gold price keeps breaking records, we formalize our gold pricing framework and flesh out the drivers of our bullish forecast. That gold will rise about 10% to 3,000 by December 2025. In the report, they put out a report about a month ago. And in that report, along with other information, they shared their methodology for recommending or not recommending gold. You may recall over the last six months we’ve been saying banks are readjusting how they value gold so that they can actually make clean recommendations.

Because let’s face it, if your model says gold is not a buy if rates are up, then gold keeps going up, you have to look at things. And so they all started in one way or another, including the physical demand, lessening the financial aspect, and including the physical demand. Now, the financial aspect remains intact, which is what Goldman says here, but it’s been reset at a higher level. And in doing that, Goldman’s version, which is, I think, by far, they’ve shared the most with us. Let’s put it that way. Not everything, but they shared the most with us.

They divide the three main cohorts or buyers of gold into three categories. There are financial and monetary authorities who are buying it because of fear, this is like their parentheses phrase, investors who are buying it because of interest rates, and speculators who are buying it for a safe haven. Now, you can look at those reasons for gold to be bought or not bought, and you’d be essentially right. We tend to look at them a little bit differently. Financial and monetary authorities, those are central banks. And central banks are buying it to de-dollarize.

They’re buying it to de-dollarize and are owning it. They’re owning gold. They’re not buying it to sell it. Investors who are driven by interest rates correctly are ETF-driven, and ETFs rent physical gold. You follow? They may say that they’re owning physical gold, but Western investors can be very fickle. And then there’s speculators who are seeking a safe haven. Well, yeah, they are seeking a safe haven. What they are doing is they’re trying to make money, and they recognize that the rest of the world, number one, the people up top under the financial monetary authorities, they’re de-dollarizing.

So that’s what’s going on. Here’s the chart that they use. It doesn’t show up much bigger, but I’ll just read it to you. The bar on the left is pretty obvious what’s going on here. Before freezing Russia central bank assets, this was gold demand through 2022. It’s a monthly average, shy of 20 metric tons. Now, post since the time since February 2022, demand has shot up to over 80 metric tons per month. They believe this number will moderate in the 30 metric ton area, so they think that it’s going to start trickling off, but we’ll see about that.

The report goes on. While the gold price to rates, this is where we take a bow. While the gold price to rates relationship remains intact and changes, the fivefold increase in our now cast of central bank demand in the London OTC market since Russia invaded has reset this relationship in levels. While the gold price to rates relationship remains intact and changes, that means gold is still priced in dollars, gold is still rate dependent, and it will move with those things in the short term, but those things are not dominating it right now because the fivefold increase in central bank demand and other areas, I’m sure, in the London OTC market since Russia invaded Ukraine has reset this relationship in levels.

The correlations aren’t broken. The beta is changing. They’re resetting at a higher level. They’re telling this, I mean, this is a very good statement. They’re telling you that gold is resetting at a higher level. How much higher? We don’t know, but the floor is being raised and the roof has been raised as well, right? But the floor has been raised, so when we get a sell off and you know we will, the floor has been raised, where it’s been raised to, nobody knows, okay? So there you go. The market is structurally higher in demand than pre-freeze levels, and we have that excerpted with much more in the post we just sent out.

Golden raises early 2025 target on 500% increase in physical demand. It’s probably more than that, but that’s what we see in the London math. Okay, that’s it. I can’t make it better than that. News and analysis, gold stocks and election uncertainty, that’s yesterday. Golden triples down, raises gold target. That was our early post last night to let people know this is out there, one of the reasons we rallied yesterday. Michael Every wrote Springtime for Someone But Not Germany, the picture there is a reference to the Mel Brooks producers, and founders, it’s all about US flows now, which is a preview of this Goldman report.

Okay, stocks week yesterday, I’m getting the feeling that we’re at the top. Everybody’s been saying that for 10 years, right? But I’m getting a feeling that the election is going to bring everything lower, you know, maybe not bonds, but a lot of things lower. Anyway, okay, so we’re in the midst of earnings season, etc, etc. Politics and geopolitics, more progress in the Israeli piece, the markets are really discounting, starting to discount peace, right? So gold is lower, oil precipitously lower, and stocks want to go higher. But that’s the point, my comfort, the comment about stocks, stocks should be higher than this.

So anyway, that’s why I say China might be involved in this. The Israeli war is winding down or part of the Israeli war, it’s like a forefront war now, it’s called three major fronts. There’s always a risk that you have one of those phrases where someone says, that’s not going to happen. And then everything goes ballistic. But that’s where we are right now. And they’re actually saying things like, where is that? Israeli officials said Israel and the US have reached preliminary understandings on the principles for a political settlement to end the war in Lebanon.

That’s pretty, you know, that’s pretty significant. And CNN, take it for what it’s worth, cited a senior source official familiar with Iran’s intention who stated that the Israeli attack would be met with a decisive and painful response, while the source did not provide a date said it would likely take place before the US election. I mean, they’re just setting the table. It’s like Carter and Reagan all over again, geopolitically. Meanwhile, North Korea is getting more aggressive and North Korea is basically giving us the finger, right? Data on deck today is core PCE.

I don’t have the data available here right now, but I’ll be looking at it afterwards. That’s at 830. It’s 751 right now. Big number. We could be selling off because of the anxiety about that number. I’m not sure. And there’s the actual post. Goldman raises early 2025 target on 500% increase in physical demand. I just want to bring you back to this. Goldman raises the target. Don’t be an Goldman’s report is good. It doesn’t matter. We’re in bi-season. Okay. Just be aware of that. All right. I’m Vince. I know. I know. I know.

Silver, right? This is going to be hard to appreciate because it’s just so incredulous, but everyone and their mother and their brother and their sister are selling silver when they buy gold now. Not all at the same time. You bought gold six months ago for the election. You still think it could go up. What could you do? You could sell some gold, right? You could buy some puts. You could sell some silver. Why? Well, it’s precious. It reduces my margin requirements and gold is not silver as far as the election and central bank buying is concerned.

Let’s say you just bought gold today and you’re a CTA and you’re long stocks. Well, what would you do? You would sell the economic aspect of precious metals. You would sell silver. You would buy gold as a hedge for your stocks and sell silver, which is also a hedge for your stocks. Forget silver for a minute. It might be easier to understand if it’s copper. Dr. Copper, copper goes down ahead of stocks while you sell copper as a hedge for your stocks, whether you agree with that or not, that’s what people do. Okay. Silver is precious though.

So you could sell silver against your gold. And if you’re a CTA person, those partially all set each other on margin. So instead of tying up $10,000, you’re tying up $7,000. This is how it works. This is how these things work in not all the time, but they work in moments in time. And those moments in time last usually minutes, but they last longer during protracted events that we see coming like go back and look at Brexit, 2016 Brexit, gold spikes, silver than nothing, gold spikes, silver than nothing. And then silver just took off.

It was crazy because eventually you have to cover your shorts when you’re playing that gold silver game. And that’s what happens. I’m not saying what it’s going to happen, but it happens and fits and starts. You can see now, look at this chart. You can see silver rallies, it gets smacked, silver rallies, it gets smacked. You can see, this is not a manipulation comment. If I wanted to buy gold, me, and I had a big balance sheet, and I knew that there was buying in gold at this price, I’m not going to sell it to the buyer here.

I want to entice the buyer to be more patient. The buyer still wants to buy. He’s not going away. I want him to lower his bid and be more patient. I want him to say, it’s not going to happen. And you can do that if silver is weaker. I’m not saying they’re manipulating. I’m saying if silver is weaker than the guy who’s bidding for gold says, silver is weaker, I’ll just be a little bit more patient. I did it all the time, meaning I would put back off my bid in one when the other was weaker, and it becomes a little bit of a snowball effect.

So if I’m a buyer of gold and I’m a central bank and I see silver getting smacked, what am I going to do? I’m going to say, all right, instead of buying a thousand contracts at this price, I’ll buy 500 and you back off. And that’s what’s happening. You may ask yourself, well, if someone’s doing that to get the price of gold lower, are they manipulating? Tactically, yes. But but in truth, they’re taking market risk. See, I don’t have a problem with this because when they used it, they did this all the time.

When they did this, I would laugh and say, I would say, well, they’re going to have to cover it sometime. Right. So, you know, it’s the Roach Motel thing. And if they were selling silver and I wanted to buy gold, I would literally back off my gold bid saying, all right, the big boys are going to stop buying gold. So I’m not going to be the idiot at the table. The market would drop and then I would buy gold and I would probably buy a little silver because I thought they’d buy it as well.

This is this is the game. I mean, this is bluffing a pot. This is not manipulation when you think about it. It’s bluffing. Now, the difference between gold and silver and this is where the market structure cooks us as silver people is gold is a tier one asset and silver is not because silver is not a tier one asset. It’s not being bought by central banks and because it’s not being blessed by central banks, the bullion banks are like, okay, I’m not worried about that. I can always cover my shorts next month, but gold, they want the gold now.

They’re going to want the silver later, but right now they want the gold. That chart says it all. Okay. I’m Vince. Have a great day. Appreciate you tuning in and starting your day with us here. Hope you enjoyed the show and we’ll see you again tomorrow. Please note that this video is not intended as legal licensed financial trading advice and is to be used for informational purposes only. Please contact your financial advisor before making any decisions and thanks for watching. [tr:trw].

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