Silver’s Undervaluation and Gold’s Historic Performance: Precious Metals Update
Disclaimer: The information provided in this article is for informational purposes only and should not be considered as financial advice. It is always recommended to conduct thorough research and consult with a professional financial advisor before making any investment decisions.
By Doug Young – 30 October 2024
Introduction
In the world of precious metals, gold has been making headlines with its recent surge to an all-time high of over $2750 per ounce.
But while gold takes the spotlight, silver remains in the shadows, presenting a great buying opportunity for investors.
In this precious metals update, we delve into the soaring prices of gold, the banks’ low predictions, UBS’s changing price forecasts, silver’s undervaluation, and the historic performance of gold.
Gold’s Soaring Prices and Banks’ Low Predictions
Gold has been on an incredible upward trajectory, surpassing all expectations and setting new records.
Many big banks, including JP Morgan, Citigroup, Goldman Sachs, and UBS, consistently underestimated gold prices for 2024. Their initial predictions fell short as gold outperformed those targets with remarkable speed.
Despite the banks’ low estimates, gold kept defying expectations, leading to constant revisions of price forecasts.
UBS’s Changing Gold Price Forecasts
UBS, one of the prominent banks in the industry, serves as a prime example of the changing dynamics in gold price predictions.
Initially, at the end of 2023, UBS predicted that gold would hit $2,200 per ounce by the end of 2024. However, as gold continued its upward momentum, UBS revised its forecasts multiple times.
First, they increased the forecast to $2,500 per ounce, then to $2,600 per ounce. In a recent update, UBS raised its gold target to $2,750 per ounce by the end of 2024.
The rapidity with which gold surpassed UBS’s targets highlights the extraordinary nature of the current market.
Silver’s Undervaluation and Potential
While gold steals the spotlight, silver remains undervalued, presenting a compelling opportunity for investors.
At the current price of only $34 per ounce, silver is a stark contrast to gold’s soaring prices. The gold-to-silver ratio, currently over 80, emphasizes the significant undervaluation of silver compared to gold.
Historical data spanning more than 5,000 years reveals that silver is extremely undervalued in comparison to its historical relationship with gold. To revert to historical norms, silver would need to outperform gold by a factor of five or six, providing significant room for potential gains.
Gold’s Historic Performance and Potential Returns
Gold’s performance throughout 2024 has been exceptional, with an annual return on pace to potentially reach around 41%.
If gold continues its current trajectory, it could potentially hit $4,000 per ounce before the end of 2025.
Comparing historical annual returns, 2024 stands out as one of the best-performing years since the 1970s. This year’s performance indicates a possible shift in the gold market, reminiscent of the explosive growth witnessed in the past.
Conclusion
As gold continues to make historic strides, silver’s undervaluation presents an enticing opportunity for investors seeking to diversify their portfolios.
While gold steals the limelight, silver’s potential for a significant surge cannot be overlooked.
The changing dynamics in gold price predictions and its remarkable performance in 2024 indicate a market that is ripe with possibilities. Investors are encouraged to stay informed, consider the historical context, and make informed decisions when it comes to investing in precious metals.
Disclaimer: The information provided in this article is for informational purposes only and should not be considered as financial advice. It is always recommended to conduct thorough research and consult with a professional financial advisor before making any investment decisions.