by Craig Hemke, Sprott Money:
Here we go again. Another year over and a new one just begun. It’s a time of gratitude and reflection. It’s a time of assessment and resolution. And it’s also a time of grandiose forecasts of the year to come.
Why Buy Gold in 2025?
The biggest challenge I have in writing these “macrocasts” is getting started. It always seems such a daunting task…and for what gain? Experience has taught me that much of what I’m about to write will be proven wrong over the months ahead anyway, so why make the effort?
TRUTH LIVES on at https://sgtreport.tv/
Here’s why: As I try to explain in the preamble every year, I write these things for me, not you, my dear reader. While I encourage you to read what follows, you should simply take it under advisement with all the rest of the annual forecasts you read at this time of year. Perhaps my guesswork, when combined with other trusted sources, can provide a framework of what to expect in the year ahead? Perhaps. But this is an important piece of work for me personally. Why?
Because I am going to get things wrong, and I need to have a written record of what I was thinking as the year began so that I can go back at the end of the year and attempt to learn from my mistakes. By doing so, maybe the next year’s macrocast will be more accurate. With this in mind, let’s go back and review what I wrote in early January 2024. If you’d like to reread the entire macrocast, here’s a link:
• https://www.tfmetalsreport.com/blog/12437/waiting-jerome-2024-macrocast
The Impact of Central Bank Demand on Gold and Silver
The forecast was titled “Waiting For Jerome” because the big issue as 2024 began was the expectation of fed funds rate cuts scheduled for later in the year. As 2023 ended, the fed funds futures market was pricing in as many as seven rate cuts (175 basis points) in 2024. However, the FOMC’s Summary of Economic Projections from December of 2023 stated that only three rate cuts (75 basis points) should be expected. So, who would be right in the end? The Fed. Rate cuts didn’t begin until September, and by year end, the fed funds rate had been trimmed by 100 basis points.
The rate cutting cycle that started in September goosed the precious metals to their highs of the year. But the rally had been ongoing since March, so it’s safe to say that fed funds rate cuts were NOT the primary driver of precious metals prices in 2024. And there you have it. Error #1 in the 2024 macrocast.
Why 2025 Could Be a Strong Year for Silver
If it wasn’t Fed policy, then what was the primary driver of price in 2024? That’s hard to say, as it was a combination of factors that led to the best annual gain for gold since 2010. For me, though, I believe the most significant factor driving the gold price higher was the consistent and relentless demand for physical gold at the central bank level. 2024 marked the third consecutive year of near-record central bank gold demand, and their persistent bid for metal placed a “physical floor” under the digital derivative gold price, negating all attempts by the Bullion Banks to wash price backward.
