This $7.6 trillion equity manager says gold could hit $3100 this year
“Miners may be among the few equities not priced to perfection.”
This $7.6 trillion manager says gold could hit $US3100 this year
Alex GluyasJan 8, 2025 – 3.00pm
“We don’t see this changing and expect the secular demand trends underpinning gold’s price and its status as a safe haven to continue enhancing gold’s appeal as a core portfolio asset, even if capital markets strike a risk-on tone in 2025,” State Street’s chief gold strategist George Milling-Stanley said.
While State Street’s base case is for gold to trade between $US2600 an ounce and $US2900 an ounce this year, it assigned a 30 per cent probability to its bullish scenario where the precious metal hits $US3100 an ounce.
State Street joins the chorus of Wall Street banks that are betting on another stellar year for the precious metal.
Bank of America, JPMorgan and Citi forecast bullion will reach $US3000 an ounce by the end of this year, and UBS forecasts $US2900 an ounce. While Goldman Sachs pushed out its projection this week, the broker still sees prices hitting $US3000 an ounce by mid-2026.
The bullish forecasts assume gold will jump more than 13 per cent this year from the current spot price of $US2649.38 an ounce.
A stronger US dollar has weighed on gold prices since the US election on November 5, but strategists underline the prospect of sweeping tariffs under Mr Trump which could exacerbate trade tensions and stunt global growth.
Gold received a further boost this week on news that China’s central bank expanded its gold reserves for a second month in December to 73.29 million fine troy ounces, from 72.96 million in the previous month.
The People’s Bank of China resumed adding to its gold reserves in November following a six-month pause when prices hovered at record levels.
Local gold miners revealed this week that they ramped up output in the December quarter to capitalise on the boom in prices.
Gold Road Resources delivered record gold production from the Gruyere mine in Western Australia, Ramelius Resources boosted its output by 36 per cent compared to the September quarter, and Regis Resources lifted its production by nearly 10 per cent in the December quarter.
Golden opportunity
But analysts are frustrated that gold stocks continue to lag the price of the precious metal; the spot price surged 27 per cent in 2024 but the New York Stock Exchange Arca Gold Miners Index climbed just 11 per cent.
VanEck believes the disconnect can be explained by a trend that has developed where the leverage of gold stocks to the metal’s price is weaker when gold prices are rising compared to when they are falling.
Indeed, gold prices fell 0.9 per cent from the end of 2023 to the end of February last year, while gold stocks sank 15.3 per cent. In contrast, from the end of February to October 22, gold was up 34.5 per cent, while the stocks surged 67.7 per cent. And from October 22 to the end of November, prices fell 3.9 per cent, but the shares of gold miners dropped by 14.8 per cent.
“We have been anecdotally making this observation, frustrated by the overly punitive impact this continues to have on the already oversold gold shares,” VanEck strategists said.
“We think this dichotomy represents a value opportunity for gold miners as they have been potentially oversold when the price of gold falls and under-bought when the gold price has been appreciating.
“They may be among the few equities not priced to perfection.”
I see it as a game of snakes and ladders with Gold vs the miners. Gold keeps finding the ladders and climbing higher, where the miners are more than likely to find a slide.
Gold keeps advancing levels and the miners are still stuck at the bottom of the board.
A few months ago my basket of Juniors was up 15% to 30% in the green, and now they are all down 25% in the red.
I have never seen such a weak correlation to metal pricing on the upside and overt pull to the downside when the metals are weak in my 20 years of playing with the miners. Same for copper miners. Copper holding over $4 and $FCX is below $40?
If I hear or see one more post asking, why are investors so down, cause the GDX is up 23% over the past 12 months, they should be elated. I don't own the GDX. I own everything but the GDX. My bad I guess.
If the markets break to the bad, and take the miners with it, I do not know what I will do. I am a man on the ledge.
(this is a rant. I will be ok.)
Tks Professor Vinny 👍🏻