Nugget News May

30 Day Market Moves

Gold Outlook...Gold has been trending lower in recent weeks during this conflict. Strong oil prices and continued hawkish rhetoric from central banks are keeping the metal under pressure. The resulting rise in bond yields and expectations of tighter monetary policy have dampened appetite from dip-buyers at these relatively elevated levels, leaving the near-term bias leaning slightly to the downside.

At the same time, there is a bit of counterbalance. Safe-haven demand remains present amid ongoing tensions in the Middle East, even if its influence has faded somewhat as gold is increasingly treated as a risk-sensitive asset. Nonetheless, the need to hedge against inflation, alongside persistent central bank buying, has helped limit deeper downside moves so far. That said, JP Morgan and Bank of America are projecting Gold to hit over $8000 by year end.

Ongoing conflicts, specifically in the Middle East, provide a floor for prices, even if gold's safe-haven appeal becomes volatile.

Silver Outlook...Bank of America just made one of the boldest silver price calls on Wall Street. Michael Widmer, the bank's head of metals research, projects silver could reach anywhere between $185 and $420 per ounce before the end of 2026.

The math behind both targets starts with the gold-to-silver ratio, currently sitting at roughly 62:1. With gold near $6,500, applying the 2011 ratio low of 32:1 puts silver at $185. Apply the 1980 extreme of 14:1, the level reached during the Hunt Brothers silver squeeze, and the number climbs to $420.

Silver has already shown it can move fast and violently. The metal hit a new high of $159.67 on Jan 29, before crashing almost 50% to $86 within days. It has since recovered to around $100. Widmer sees the dip as a reset, not a reversal.

-Ratio compression is the engine behind Widmer's thesis. Silver tends to lag gold early in a bull market, then explode higher in the later stages.

Debt Bomb!...The U.S. debt has reached yet another ominous milestone. In March, the national debt surged over $39 trillion. Now, the federal debt held by the public-to-GDP ratio has crossed the 100 percent threshold. In other words, the U.S. government owes the world more money than the economy's total annual output.

And it’s actually worse than that. There is additional federal debt not factored into the data that produced this eye-bulging headline. The last time the debt held by the public exceeded GDP (briefly) was when governments effectively shut down the global economy during COVID. Before that, the debt-to-GDP ratio hadn’t exceeded 100 percent since World War II.

-To put this "achievement" into perspective, the average debt-to-GDP ratio has historically hovered around 50 percent.

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*This newsletter does not contain any investment advice.