January 11, 2024

2024: Interest Rates Down, Gold Up

Most investors chose an easy investing path last year. They took advantage of high interest rates and bought Treasurys or parked their cash in savings accounts.

We can’t blame them; almost 5.0% interest rates on virtually riskless bonds were a no-brainer for most. However, that was only a temporary solution.

No such luxury for investors in 2024. They need to be more creative in building their portfolios.

It’s not a simple task, but the Canadian Mining Report is here to help.

Gold has a lot of potential in 2024.

In a moment, we will tell you why we think so.

Also, as a bonus, you’ll know how to potentially multiply gains in gold prices with a group of deeply undervalued stocks.

Inevitable Interest Rate Cuts

The Fed raised the key interest rate from nearly zero to 5.5% in the last couple of years.

It was one of the sharpest hiking campaigns in modern history. It was necessary to cool down the economy from the raging inflation.

Desperate times called for desperate measures…

It’s too early to say whether the Fed won this battle, but inflation indeed came down. After peaking at 9.1% in June 2022, it now stands at 3.1% annually. It’s close enough to the Fed's two-percent target.

Victory or not, it was enough for the central bank to make a clear shift in its policy. At the latest Federal Open Market Committee (FOMC) meeting, Jerome Powell noted a possible interest rate cut in 2024.

It was a sudden change in his tone. Markets quickly decided that the first interest rate cut would come in March 2024.

FedWatch, a tool that measures the probabilities of various FOMC decisions, assigns a 75.6% chance for the first interest rate cut in early 2024. That’s a big change from the 27.4% chance for the interest rate cut before the latest Fed meeting.

In other words, the markets are convinced that the central bank will begin cutting interest rates shortly.

This may be good for the economy, which is still under massive stress from the brutal inflation. But it also means that bond yields will go down.

Soon, investors will begin searching for new assets to put their money in.

This, in turn, will also put pressure on the US dollar. As interest rates in the US decline, its currency will become less attractive to investors.

We already saw signs of that after the latest Fed meeting. The US Dollar Index (DXY) began declining from the recent high and will likely go lower throughout 2024.

What’s Next?

Gold doesn't pay interest, but it’s priced in US dollars.

A weak US dollar means higher prices for all the commodities priced in it. Think of oil, copper, lithium, silver, gold… pretty much all of them.

However, those with industrial uses will be also vulnerable to the global economic conditions. Like oil, which is also going down because weak demand is a stronger force than a declining greenback.

Gold is different…

It’s a monetary metal that isn’t sensitive to its supply-demand dynamics. In fact, it performs better during crises. Investors sell their high-risk positions and relocate funds into gold, a proven safe-haven asset.

We believe it will be one of the best-performing assets this year. The coming interest rate cuts and the weak US dollar will be massive catalysts for gold. If the global economy slows down, it’ll also drive gold higher.

While the US economy seems strong on the surface, it’s not in the best shape. The labor market is showing signs of trouble, along with others.

Germany entered negative growth territory, and so did the UK. Other nations are following the trend.

Against this backdrop, investors’ interest in gold should remain high.

Multiplying Gold Performance

Adding gold to your portfolio will be prudent. However, make sure you keep your portfolio diversified.

Gold is a great way to protect your capital. But if you want something more speculative, there is a subset of stocks that may be helpful.

Canada is a host for hundreds of publicly traded gold mining companies. They are exploring, developing, and producing gold all over the world.

Investors can use these stocks as a proxy for the price of gold. Moreover, these often multiply the gains of the underlying metal. These stocks have a chance to eclipse its performance.

The best news is that any investor can buy these through almost any brokerage.

But don’t take our word for this. Check out this special report highlighting some of the best performance stories. Some junior mining companies have delivered mind-blowing 6,024%, 1,762%, and even 10,987% gains.

You can find it here and download it for free. On top of that, get a copy of the “Start Analyzing Junior Gold Mining Stocks” book here.

Hopefully, these resources will help you in your due diligence process.

And stay tuned for our updates…

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The material in this article should not under any circumstances be construed as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only. Neither Canadian Mining Report (the "Publisher", "we", "us", or "our"), nor any of its principals, directors, officers, employees, or consultants ("Publisher Personnel"), are registered investment advisers or broker-dealers with any agencies in any jurisdictions. Canadian Mining Report ("Canadian Mining Report", "Us", "Our" and/or "We") is a Canadian based media company that typically works with publicly traded companies and provides digital marketing strategies and services.

At most, this communication should serve only as a starting point to do your own research and consult with a licensed professional regarding the companies profiled and discussed. Conduct your own research. We do not provide personalized or individualized investment advice or advice that is tailored to the needs of any particular recipient.

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