Market Update February 13 – Dragon Baby Rush

Global geo-political risk remains high, with both Russia and Israel carrying on with their military missions undeterred. Russian President Vladimir Putin recently stated in an interview with Tucker Carlson that Russia has not achieved its objectives in Ukraine and will continue its invasion there. Meanwhile, Israeli leader Benjamin Netanyahu is pressing on, now commanding attacks on the southern city of Rahfa, where as many as one million Palestinians currently reside.

Turning our attention to domestic affairs, Donald Trump and President Biden have been making headlines. While Biden defends his age and ability to lead for another four years, Trump has reverted to his usual tactics, criticizing America's foreign policy. Although the U.S. Presidential elections are still months away, scheduled for November this year, analysts worry that if Trump were to be elected, he could permanently damage relationships with important NATO allies and China, reshaping the global economy and adding to political turbulence. Certainly, a campaign trail to keep an eye on.

American investors are also keeping their eyes on the regional banking situation, fuelled the past two weeks by the struggles of New York Community Bank (NYCB). Although the bank’s share price has recovered in the past two trading sessions after a loss of nearly 60%, analysts fear that the recent headlines may stoke a renewed run on smaller regional banks. This situation resembles what unfolded in early 2023, but this time it is fueled by balance sheets heavily invested in commercial real estate.

The LBMA recently published their 2024 Annual Precious Metals Forecast. They polled 30 leading metal analysts and tabulated their predictions. Gold's average price for 2024 is expected to be USD $2059/oz, about 2% higher than its current trading price and up 6% above the 2023 average actual price, with a predicted range of $1781 low to $2405 high. Silver's 2024 average price is forecasted to be $24.80, roughly 8% higher than current prices and 6% above the actual 2023 price. In summary, these analysts collectively expect a 6% increase for both gold and silver year over year. See chart below for past predictions and actual performances.

Finally, gold jewelry sales in China are expected to rise by 30% this Chinese New Year season as "many people try to get married and have babies in the Year of the Dragon," according to the Chinese Gold and Silver Exchange Society. They are calling it the 'Dragon Baby Rush’, and many jewelers have prepared an additional 30% of dragon-themed gold products, expecting a substantial increase in sales, which will be positive for the global price of gold.

Follow Mark on Twitter @YaxleyYax

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Mark Yaxley, CEO of Strategic Wealth Preservation (SWP), began his journey in precious metals with Kitco Metals in 2006. Co-founding SWP in 2014, he now guides individual and commercial clients towards their investment goals. Renowned for his 'Inside the Vault' YouTube series, Mark has helped millions gain insights into gold and silver bullion ownership.