Hoogland: Brace yourself for twelve months of strong gains!

The printing presses are more likely to keep running than slow down. According to Jack Hoogland, this means at least another year of strong performance for gold, silver, copper and uranium. 

Last Friday, it was announced that the US labour market lost 23,000 jobs in the previous month, which immediately reduced fears of further interest-rate increases.

This resulted in sharply rising prices for copper and uranium stocks, but especially for gold and silver stocks.

That jobs figure is noteworthy, but the most important trends can be seen in the two lower charts in the tweet below.

The share of the working-age population that is actually employed (left) fell to 61.4%, the lowest level in 50 years.

Average wage growth (right) has also been declining throughout the year and has been below the inflation rate since April.

These are clear signals to the Federal Reserve that interest rates should move down rather than up.

We invest in gold and silver because…

Now that gold and silver appear to have entered a new phase of rising prices, it is a good idea to take another look at the bigger picture.

We invest in gold and silver because politicians spend (far) more money each year than they take in, which amounts to poor financial management.

Central banks then have to print money to help finance the rising national debt and push down the interest burden on that debt.

National debt doubles every ten years

Below we can see just how quickly US national debt is rising.

US national debt more than doubles every ten years.

Ten years ago, it stood at $19.4 trillion, and by the end of the second quarter of this year it had risen to $39.5 trillion.

Rising amount of money in circulation

The consequences of all this money printing can be seen in the chart below, which shows the US money supply in circulation (M2).

This chart clearly shows how sharply M2 rose during Covid, how it subsequently declined when the Fed began fighting inflation in 2022…

…and how the amount of dollars in circulation has been rising again since the end of 2023.

We remain extremely positive until a situation emerges like the one in 2022, namely inflation rising too quickly as a result of an economy running too hot due to overstimulation.

First, interest rates need to come down sharply
The image below shows the indicators we monitor to identify that situation in advance.

For most of these indicators, we are currently seeing the exact opposite of what would be needed to become more cautious.

For those warning lights to turn orange or red, today’s excessively high interest rates first need to fall sharply and then remain low for some time.

As things stand now, we are therefore still at least twelve months away from that situation.

So we are likely to see at least another twelve months of strong performance for gold, silver, copper and uranium stocks! 

Jack Hoogland worked for the US bank Citigroup in Amsterdam, Düsseldorf, Madrid and Brussels as a Financial Analyst, Risk Manager and Finance Director. Jack has followed the financial markets since the late 1980s and, following the financial crisis, increasingly focused on macroeconomics and the financial system. Read more from Jack Hoogland.