Gold Prices Dip, But Analysts Predict a Bull Run
Geopolitical tensions ease, yet precious metal’s value endures.
Gold prices recently experienced a small drop, but the enduring allure of the yellow metal persists. Despite a slight retreat, experts observe sustained interest, fueled by central banks and market expectations, suggesting a promising outlook for gold in the coming months.
Market Dynamics: The Recent Shift
After a continuous climb since mid-2023, gold prices faced a 1.5% decline. The drop, which brought the price below $3,270 per ounce, capped a 3% weekly decrease. This downturn is linked to easing political tensions in the Persian Gulf, which reduced the demand for “safe assets.”
Even with the recent dip, gold has increased 25% this year, according to the quote and is expected to stay high. This surge is fueled by central bank purchases and the anticipation of a decrease in the Federal Reserve’s interest rate.
Historical Perspective and Key Players
The former leader of the “government efficiency department,” Elon Musk, was questioned by former President Donald Trump about the gold reserves at Fort Knox, Texas. The largest deposit of gold in the US holds 54% of the country’s precious metal stocks, both owned and in custody.
Recently, Germany and France’s politicians have sought the “repatriation” of gold held in the US, primarily in Fort Knox and the Federal Reserve of New York. Estimates suggest that these two nations have approximately $245 billion in gold.
The Mises Institute indicates that Germany and Italy are the second-largest gold reserve holders behind the United States. The Argentine President, Javier Milei, considers Friedrich von Hayek, a disciple of Ludwig von Mises, to be one of the greatest economists.
Global Gold Holdings
The top 10 countries with the largest gold reserves are led by the US. They include Germany, Italy, France, Russia, China, Switzerland, India, Japan, and Turkey. Argentina’s gold reserves, according to a recent report from the BCRA, are worth about $7,836.5 million as of June 23. This equates to around 72.4 tons of the precious metal, representing nearly 12% of Turkey’s reserves.
According to a recent World Gold Council survey, 95% of investors, financial sector participants, and bank officials anticipate central banks will increase their gold holdings in the next 12 months. This is the highest percentage reported since 2018.
Ideological Roots and Key Figures
Quinn Slobodian, a history professor at Boston University, connects the renewed fascination with gold to deep-seated ideological undercurrents in a recent book. The book, “Hayek’s bastards,” explores the connections between race, gold, IQ, and far-right capitalism. According to the book, the current gold obsession has doctrinal roots in Hayek.
Peter Boehringer, a German deputy of Alternative for Germany, is seen as the initiator of the “Let’s bring gold to home” movement, with Marine Le Pen from France, Viktor Orban, and Matteo Salvini joining later. Ideologues such as Glenn Beck and Steve Bannon also embody these ideas.
Argentina’s Position and Mining Projects
Argentina benefited from the gold price increase last year, with gold now comprising approximately 80% of the nation’s mining export value. This is despite the decline in local gold production. In contrast, lithium carbonate production and exports are increasing in volume, but prices are significantly below the 2022 peak.
The main gold mines in Argentina are in their final production stages, especially in Santa Cruz. However, there aren’t any large replacements in sight. Claudio Vidal, the province’s governor, is betting on the “massif of the desired,” which is still 80% unexplored.
Several projects are in progress. These include the Hualilán project of the Australian Challenger Gold, which is set to start production this year in San Juan. It has a contract with Eduardo Elsztain’s Casposo. Explorations have found approximately 2.8 million ounces of resources.
The auriferous potential extends to projects such as Lindero, Fortuna Mining, and exploratory campaigns like Latin Metals in the Flora. However, Gualcamayo, a USD 1,000 million project by Aisa group, has not yet formalized a request for adhesion to the incentive regime for large investments (Rigi). The project, which employs about 250 people in San Juan, estimates a production potential of 300,000 ounces per year.
Argentina mainly exports “golden alloy or golden bullion,” not gold bars. Switzerland is its primary destination. The gold reserves, as ordered by volume from the Mises Institute, are kept in Fort Knox, West Point Mint, Denver Mint, and the vaults of Manhattan’s Fed.
