Gold Hits New High as January Rally Continues!

In This Week's Market Update:

• Gold prices continued their strong start to the year this week, with prices holding near USD $2,700 and AUD $4,400 per troy ounce (oz).

• Silver also remains well bid, currently trading just over USD $31 and AUD $50oz.

• The price strength we are seeing in precious metal markets is being mimicked in risk assets, with equities rallying in the first two weeks of 2025, while Bitcoin has reclaimed the USD $100,000 mark.

• Despite the strength in precious metal markets, and the multitude of factors that give the market such a positive outlook, sentiment remains muted, with investor allocations remaining at the lower end of historical ranges.

• Gold’s performance relative to equities will be one the key dynamics to observe this year, with the relationship between these assets approaching a crucial point.

The One Chart to Watch in 2025

Precious metal markets have carried their strong performance momentum from 2024 into the calendar year thus far, with gold again reclaiming USD $2,700oz, while in local currency terms prices topped AUD $4,400oz earlier this week.

Continued price strength would not be unexpected, given a macroeconomic, geopolitical and monetary environment that suggests we may see a combination of slowing growth, lower interest rates, continued tensions across the globe, and inflation that remains well above target bands.

Despite this, allocations to gold remain modest (at the top of a bull market, this is unlikely to be so), with one factor that is holding back investment into gold being its performance relative to equity markets.

For while gold is often seen as a great hedge or portfolio diversifier during times equity markets are weak, there are periods, like the last 12 months, where both gold and equities rally strongly together.

This is evident in the chart below (sourced courtesy of @Callum_Thomas, the Head of Research and Founder @topdowncharts) which shows the performance of gold vs stocks, with the S&P 500 being used as proxy for stocks.

Note that the chart goes back to the late 1960s, and that where the ratio between the two is falling, like it did almost uninterrupted from the 1980s through to 2000, the stock market is outperforming gold, while a rising ratio (like we see from 2000 to circa 2012) indicates gold outperformance relative to equities.

As you can see, this ratio has been coiling, or trading in a very compressed range, for a period of time, as both stocks and gold have been rising for the past year. As Callum himself notes (his comment is from late last year); “despite the epic bull run in gold, it’s “only” just keeping pace with stocks for now (both are sitting around 26% YTD as I write). And the gold vs stocks relative performance ratio has yet to turn the corner. Probably the main way that this chart would turn up (if it does) would be if stocks roll over into correction/bear market, and gold either holds ground or continues to move higher. Interesting chart because of its implications for asset allocation, but also because of that epic 30-year triangle pattern.”

While no one can be certain, we do expect this ratio to climb in the years ahead, and possibly quite decisively, with a bear market and or period of stagnation in equity markets, combined with continued upside in gold prices likely to drive higher allocations to precious metals in investor portfolios.

Either way, this will be one of the charts and market dynamics to watch this year.

You can access the above chart, as well as some other eye-opening charts and market data points, from Callum’s “The Best Charts of 2024”. It is worth the read.

Inside the Office!

ABC Bullion has seen healthy levels of turnover in the first three weeks of the new year, with all showrooms now open for trade nationwide, while our website continues to offer 24/7 access to the precious metal market.

Sales of our Untamed Landscapes collection, including the 1oz Crocodile and 1oz Kiwi coin, continue to lead the way in the silver coin category, while we continue to see strong interest in our minted tablet range.

We have also been pleased to see continued support for the ABC Bullion Gold Saver, with January typically seeing a spike in demand for this product as clients set up savings plans to start the new year.

If you would like to discuss investing in precious metals, please open an account with ABC Bullion or call the ABC Bullion sales and client services team on 1300 361 261 Monday to Friday 8.30am – 6.00pm (AEST) or Saturday 10.00am – 3.00pm (AEST).

Jordan Eliseo
General Manager
ABC Bullion Australia

Disclaimer: This document has been prepared by Australian Bullion Company (NSW) Pty Limited (ABN 82 002 858 602) (ABC). The information contained in this document or internet related link (collectively, Document) is of a general nature and is provided for information purposes only. It is not intended to constitute advice, nor to influence any person in making a decision in relation to any precious metal or related product. To the extent that any advice is provided in this Document, it is general advice only and has been prepared without taking into account your objectives, financial situation, or needs (your Personal Circumstances). Before acting on any such general advice, we recommend that you obtain professional advice and consider the appropriateness of the advice having regard to your Personal Circumstances. If the advice relates to the acquisition, or possible acquisition of any precious metal or related product, you should obtain independent professional advice before making any decision about whether to acquire it. Although the information and opinions contained in this document are based on sources, we believe to be reliable, to the extent permitted by law, ABC and its associated entities do not warrant, represent or guarantee, expressly or impliedly, that the information contained in this document is accurate, complete, reliable or current. The information is subject to change without notice, and we are under no obligation to update it. Past performance is not a reliable indicator of future performance. If you intend to rely on the information, you should independently verify and assess the accuracy and completeness and obtain professional advice regarding its suitability for your Personal Circumstances. To the extent possible, ABC, its associated entities, and any of its or their officers, employees and agents accepts no liability for any loss or damage relating to any use or reliance on the information in this document. It is intended for the use of ABC clients and may not be distributed or reproduced without consent. © Australian Bullion Company (NSW) Pty Limited 2020.