This Gold Market Anomaly Could Spark a Major Rally

Published: 01-11-2025, 09:00 am | Updated: 01-10-2025, 04:54 pm

Gold’s impressive 27% rally in 2024 came with a surprising twist: gold ETFs were seeing outflows, bucking a historical trend.

Typically, every major gold bull market of the past two decades has been accompanied by substantial ETF inflows — averaging about 30 tons per month during the rallies of 2005-2007, 2009-2012, and 2019-2020.

State Street Global Advisors sees this market anomaly as a potential springboard. They predict that if ETF outflows since late 2020 reverse course to even moderate inflows in 2025, the resulting demand shock could push gold to new heights.

“An ETF re-stocking cycle could be very bullish and help justify our case for gold to reach $3,100/oz.”

And gold isn’t the only precious metal showing signs of a major move ahead…

Triple-Digit Silver Isn’t Just Possible – It’s Inevitable

The signs are unmistakable: a growing supply deficit, unprecedented industrial demand, and mounting safe-haven interest are all converging on the silver market.

But what does this mean for investors?

In this episode of “The Gold & Silver Show”, Mike Maloney joins Alan Hibbard to reveal why silver’s current price drastically understates its potential:

“Silver is incredibly undervalued and has huge potential in front of it… and then, when you add that supply deficit to these factors, and then the potential for some sort of crisis with a rush to safe haven assets, that’s when you realize just how undervalued silver is…” — Mike Maloney

Don’t miss their detailed analysis of market ratios, production challenges, and investment strategies for what might be silver’s defining moment.

See Why Silver is Deeply Undervalued

Treasury Yields Jump After Strong Jobs Report

Treasury yields surged after December’s surprisingly robust jobs data shifted rate cut expectations. The 30-year yield topped 5% for the first time in over a year, while traders pushed their timeline for the first Fed rate cut from June to September.

Since the Fed’s cutting cycle began, yields have climbed about 100 basis points, suggesting financial conditions may not be as tight as previously thought.

Gold Shows Strength Despite Traditional Headwinds

Gold is breaking its usual pattern in early 2024, climbing to four-week highs despite a stronger dollar and rising Treasury yields. This unusual behavior, which has pushed gold futures to $2,690.80 per ounce, signals growing concerns about U.S. fiscal stability.

Several market experts suggest this shift reflects mounting unease about U.S. debt levels and deficits, driving investors toward gold as the ultimate safe haven.

Fed Takes Conservative Stance on 2025 Rate Cuts

The Federal Reserve is pumping the brakes on rate cut expectations for 2025. Several Fed officials have recently spoken up, and their message is clear: while rate cuts are still likely this year, they’re in no rush to make them.

• • Fed Governor Chris Waller, speaking in Paris, remains confident about inflation’s downward trend but notes that proposed tariffs on Mexico, Canada, and China could create some upward pressure on prices. The Fed has now scaled back its projected rate cuts from four to two for 2025.

• • Meanwhile, Philadelphia Fed President Patrick Harker describes what he sees as “very unsettled times.” While the economy shows strong fundamentals and inflation has improved, we’re still above the Fed’s 2% target. He’s particularly concerned about financial stress among lower-income workers.

• • Boston Fed President Susan Collins is also calling for patience, despite inflation’s significant drop from 2022 peaks. Other officials, including Lisa Cook and Adriana Kugler, echo this careful approach, emphasizing the need to balance inflation control with a stable job market.

In short, while 2025 will likely bring lower rates, the path there will be more gradual than many expected. This economic uncertainty, combined with persistent inflation above target, is precisely why many investors are turning to precious metals as a time-tested hedge against market volatility.

If you’re considering adding precious metals to your portfolio strategy, our team is ready to help you make informed decisions that align with your investment goals.

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