Gold’s Potential to Outperform Base Metals in 2024
According to Mike McGlone, Bloomberg Intelligence’s Senior Commodity Strategist, gold has the potential to outperform base metals in 2024. This prediction is based on the strength that the precious metal has been showing recently, which may lead to its dominance in the coming year amidst fears of economic downturns.
In a recent post on X (formerly Twitter), McGlone highlighted the shifting dynamics between industrial metals and gold. He noted that while base metals weakened last year, gold strengthened. This divergence could accelerate if Federal Reserve policies continue to serve as a reliable indicator.
Historical Patterns and Current State of the Market
McGlone’s observations are based on historical patterns. The ratio of the Bloomberg Industrial Metals Spot Subindex to gold tends to expand with monetary tightening and decline when policies ease. This pattern has been observed since 1991.
Currently, the ratio of base metals to gold is at a low point, barely above the 2020 low. Despite hints of interest rate reductions by the Fed, central bank efforts to stimulate the economy may face delays.
A Potential Global Recession and Gold’s Safe-Haven Appeal
A potential global recession is looming, and central banks may relax policies as a remedy. However, the efficacy of such actions is uncertain and could come with significant lags. McGlone has consistently warned about this, mentioning Bitcoin as a leading indicator.
Despite being bearish about Bitcoin and stocks, McGlone predicts that gold will reach $3,000 per ounce in 2024. He believes that the relative underperformance of industrials against gold indicates broader economic challenges. Gold’s safe-haven appeal may shine amid uncertainty and surpass industrial metals in 2024.
Hot Take: Gold’s Dominance and Economic Challenges
Gold’s potential to outperform base metals in 2024 is gaining traction, according to Mike McGlone, Bloomberg Intelligence’s Senior Commodity Strategist. The precious metal has been showing strength recently, which could lead to its dominance in the coming year amidst concerns about economic downturns.
McGlone’s analysis is based on historical patterns and the current state of the market. The ratio of base metals to gold is currently low, suggesting that gold may have an advantage. Additionally, a potential global recession and uncertain central bank policies further support gold’s safe-haven appeal.
Despite being bearish about Bitcoin and stocks, McGlone predicts that gold will reach $3,000 per ounce in 2024. This prediction aligns with his belief that industrials’ underperformance against gold indicates broader economic challenges. Therefore, gold may shine as a safe-haven asset in 2024, surpassing industrial metals.
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