Hello, my friends!

Unsurprisingly, the holiday-shortened week provided us with less economic news than usual, but the updates we did receive were still plenty relevant.

In terms of data, perhaps the biggest story of the week was the Commerce Department’s announcement on Tuesday that gross domestic product (GDP) surged by a much larger-than-expected 4.3% annualized rate in the third quarter. Economists polled by Dow Jones had expected the government’s initial estimate of economic growth last quarter to come in at a less robust 3.2%. In the second quarter, GDP grew by 3.8%.

While increases in exports and government spending helped boost third quarter activity, it was a big jump in consumer spending that accounted for most of the improvement. Roughly 70% of GDP is attributable to spending by consumers, and that spending surged by 3.5% in Q3 after climbing 2.5% in Q2.

Notably, this most recent quarterly GDP reading is the highest in two years. But it’s also the first post-shutdown GDP report and that fact, combined with inflation’s continued persistence as well as signs of weakening consumer confidence (more on that shortly), has some wondering if the economy is really as strong as last quarter’s figure suggests.

“We don’t know if everything is as good as the third-quarter number suggests,” said Barclays economist Jonathan Millar, “but it is sending the message that the economy is hanging in there.”

The Commerce Department’s second estimate of Q3 GDP is scheduled for release on January 22.

Volatile Transportation Sector Weighs on October Durable Goods Orders

Elsewhere this week, the Census Bureau reported on Tuesday that orders for durable goods fell in October by a larger-than-expected 2.2% in October after rising 0.7% in September and 3% in August. Economists did expect orders to decline in October, but by a more modest 1.5%.

However, a closer look at the data points to the possibility that underlying business activity in October was stronger than the headline durable goods number suggests. Excluding the volatility-prone transportation sector, which dropped 6.5% in October on a collapse in orders for both civilian and military aircraft, durable goods orders actually rose 0.2%.

As for the positive activity, much of it was attributable to improvements in computers and electronic products (+1.0%), machinery (+0.8%) and fabricated metal products (+0.5%), while electrical equipment and primary metals saw orders decline by 1.5% and 0.7%, respectively.

Some additional good news from the October report was found in the growth number for core shipments (excludes transportation), which climbed another 0.7% after rising 1.2% in September. Core shipments are seen as a direct reflection of business investment and manufacturing health and serve as a critical input for the calculation of GDP.       

Worried Americans Drag Down Consumer Sentiment Number for Fifth Straight Month

On Tuesday, The Conference Board reported that its widely followed Consumer Confidence Index declined for the fifth straight month in December, sinking nearly four points from November’s reading to land at 89.1. Heading into the week, economists were expecting the index come in at a more resilient 91.7.

“Despite an upward revision in November related to the end of the shutdown, consumer confidence fell again in December and remained well below this year’s January peak,” said Dana M. Peterson, chief economist at The Conference Board.

The Expectations Index…a component metric that gauges consumers’ outlook for the economy six months down the road…stayed relatively steady this month. Notably, however, its reading of 70.7 means this closely watched component metric now has come in below the key threshold of 80 for 11 consecutive months. That’s significant because, according to the board, Expectations Index numbers below 80 signal forthcoming recession.

“Consumers’ write-in responses on factors affecting the economy continued to be led by references to prices and inflation, tariffs and trade, and politics,” Peterson noted. “However, December saw increases in mentions of immigration, war, and topics related to personal finances—including interest rates, taxes and income, banks, and insurance.”

This month’s index reading is one reason some analysts are suspicious of just how comprehensive the economic robustness conveyed by the Q3 GDP figure really is. For his part, ING chief international economist James Knightley declared this week that economic growth remains “concentrated among higher-income households and tech-led investment, while broader consumer confidence remains under pressure.”

Factory Activity Continues to Flounder in Mid-Atlantic Region

Finally this week, a key regional measure of U.S. manufacturing activity showed some improvement this month even as it remained squarely in contraction territory…suggesting that while conditions may be getting better, they have a ways to go before actually looking good.

On Tuesday, the Federal Reserve Bank of Richmond reported that the composite index generated by the results of its Fifth District Survey of Manufacturing Activity increased to a reading of -7 from -15 in November. The the survey assesses factory activity in the Fifth Federal Reserve District, which encompasses the District of Columbia, Maryland, North Carolina, South Carolina, Virginia and most of West Virginia.

Like the overall index, each of the measure’s component indexes improved this month but not enough to lift any of them into positive, or expansion, territory. The shipments index increased a few points to -11 from -14, new orders surged 14 points to -8 from -22, and the employment index increased to -1 from -7.

That’s all for now; have a wonderful weekend!This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

Ed Yardeni, the man in charge at esteemed global investment strategy firm Yardeni Research, isn’t surprised to see that gold topped $4,000 by the end of 2025. Indeed, he expected to see it happen, noting early last year that the many drivers of gold’s ongoing surge, to include “inflation, political uncertainty and global chaos,” remain as dynamic as ever.

At the time, Yardeni said that beyond his expectation of $4,000 gold in 2025, he also projected the yellow metal would reach $5,000 by the end of 2026.

Now, however, the Yale-educated PhD economist is changing his tune. Not because he thinks gold is running out of gas and poised to change direction; rather, because even for as far and as fast as it’s risen so far, he thinks gold will finish much higher than $5,000 by next December.

“When the price of an ounce of gold rose above $3,000 at the start of this year, we projected it would reach $4,000 by the end of this year and $5,000 by the end of next year,” Yardeni recently told clients in a note.

“This evening, the price rose above $4,500. We are raising our year-end 2026 target to $6,000,” Yardeni added.

Yardeni’s Gold Projection Sits Head and Shoulders Above the Others

$6,000 in the next 12 months may seem excessively optimistic, particularly in the context of other projections made by credible observers. For example, Goldman Sachs said it’s now expecting to see gold finish 2026 at $4,900, while J.P. Morgan projects gold to rise to slightly above $5,000 over the same period. Other high-profile institutions such as UBS are also looking for gold to close out 2026 at around $5,000.

But if there was ever a time to be “excessively optimistic” about gold’s prospects, this seems to be it. Longstanding drivers of this extended rally such as central bank demand, heightened geopolitical risk and persistently higher inflation remain very much intact. Moreover, evidence suggests that gold remains significantly underinvested among retail investors, raising the possibility – even the expectation – that a significant rotation into the metal by the broader investment community is looming.

“Excessively Stimulative Monetary and Fiscal Policies” Helping to Sustain Gold’s Seemingly Neverending Surge

Additionally, says Yardeni, these and other gold-favorable factors persist against the backdrop of what may be among the metal’s most potent overall energy sources: the federal government’s seemingly single-minded drive toward outright fiscal unsustainability, now helped along by the central bank’s revitalized accommodative monetary policy posture.

“We suspect that the precious metals prices might be signaling recent concerns about an excessively stimulative combination of monetary and fiscal policies in the U.S. next year,” Yardeni said.

“Even if the Fed stops cutting the federal-funds rate during the first four months of 2026, the Fed is committed to buying about $40 billion per month in Treasury bills through April,” the economist added, referring to a recent operating policy statement issued by the Federal Reserve Bank of New York.

Could gold prices really be headed for $6,000 over the next 12 months? We certainly can’t know for sure right now. But given that each of the drivers that has pushed gold nearly 150% higher over the last three years remains in optimal condition and a potential new driver – broad-based investor demand – looms particularly large right now, the idea that gold could climb another 30% from present levels by next December doesn’t seem at all far-fetched.

This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

Hello, my friends!

On Tuesday, the government reported that nonfarm payrolls grew by 64,000 in November, a relatively muted number but one hailed as something of a rebound given that the economy shed 105,000 jobs in October. The Labor Department released both of the delayed figures on Tuesday as statisticians and data scientists continue the effort of getting back to normal following the record 43-day government shutdown.

As for the official unemployment rate, that rose to 4.6% in November, its highest level in more than four years. Another less-referenced unemployment measure that accounts for discouraged workers as well as those working part time because they can’t find full-time jobs surged to 8.7%…its highest level in over four years, as well.

The sharp decline in October jobs was expected as deferred government layoffs took effect. In fact, government payrolls plummeted by 162,000 in October, which was followed by the loss of another 6,000 jobs last month.

And while shutdown-related data disruptions have made less reliable the government’s most recent economic numbers, there seems to be enough evidence to conclude that the nation’s labor market does, in fact, remain in a considerably weakened state.

“The U.S. economy is in a jobs recession,” said Heather Long, chief economist at Navy Federal Credit Union. “The nation has added a mere 100,000 in the past six months. The bulk of those jobs were in healthcare, an industry that is almost always hiring due to America’s aging population.”  

Shutdown-Delayed Inflation Report Shows Sizable Drop in Price Pressures Last Month

The week’s other big news included the long-awaited return of the consumer price index…another key economic barometer that’s been on hiatus thanks to the shutdown.

On Thursday, the Labor Department reported that the nation’s most popular inflation measure rose less than expected all the way around in November. Monthly CPI climbed 0.2% instead of the 0.3% widely projected by economists, while annual CPI rose 2.7%…considerably less than the consensus expectation of 3.1%.

Core CPI, which excludes frequently volatile food and energy prices, also pleasantly surprised, rising 0.2% on the month and 2.6% year over year. Economists were looking for the monthly and annual core numbers to come in at a faster 0.3% and 3%, respectively.

However, while investors seemed inspired enough by the data to send markets sharply higher that day (the Nasdaq Composite closed up nearly 1.5%), the same economists who were expecting to see greater price pressures last month were quick to caution that all might not be as it appears in the November report.  

A big part of the reason is that because the shutdown-hampered Bureau of Labor Statistics was unable to piece together a CPI report for October, there was no prior-month data to which to compare the November activity. As for the September report, that had headline CPI landing at 3.0%, and numerous analysts say they’re having a hard time believing price pressures relented as much in October as the November report seems to suggest.

“It’s hard to read too much into the November inflation data,” Heather Long, chief economist at Navy Federal Credit Union, wrote. “The shutdown clearly had a big impact on data collection. Inflation did not suddenly improve a lot between September and November. Anyone who has been to the grocery store or paid a utility bill knows this.”

In fact, some say, investors should prepare for the likelihood that December’s inflation report will reflect reaccelerating price increases.

“We believe the data will be noisy for at least another month or two,” economists Sarah House, Michael Pugliese and Nicole Cervi wrote on Thursday. “A bounce back in prices in the December CPI report to be released on January 13 is probably coming.”

Key Metric Indicates U.S. Business Growth Reached Six-Month Low in December

Also this week, S&P Global reported on Tuesday that its Flash U.S. Composite Purchasing Managers Index (PMI) for December grew at the slowest rate in six months, weighed down by higher prices that analysts say are a consequence of the Trump tariff regime.

“Flash” PMIs are advance estimates of the final numbers that come out at the end of each month and are calculated using roughly 85% to 90% of the survey responses.

The index declined 1.2 points this month to land at 53. Readings above 50 imply expansion in the economy, while those below 50 imply contraction.

Signs of weakness in both the manufacturing and services sectors pulled the broader metric in the wrong direction. The Flash U.S. Manufacturing PMI fell 0.4 points to 51.8, which is a five-month low, while Flash U.S. Services PMI dropped 1.2 points to reach its lowest point in six months.

A prime culprit of the declining numbers across the board are rising input costs for which observers blame aggressive tariff policy, primarily.

In a statement, Chris Williamson, chief business economist at S&P Global Market Intelligence, said:

“A key concern is rising costs, with inflation jumping sharply to its highest since November 2022, which fed through to one of the steepest increases in selling charges for the past three years.”

“Higher prices are again being widely blamed on tariffs, with an initial impact on manufacturing now increasingly spilling over to services to broaden the affordability problem,” he added.

Indeed, price inflation in the services sector this month saw its sharpest increase since August 2022.

Sales of Existing Homes Rise for Third Straight Month Amid Broadly Anemic Market

Finally this week, the National Association of Realtors announced on Friday that sales of existing homes rose for the third straight month in November, climbing 0.5% from October to a seasonally adjusted annual rate of 4.13 million.

The continued improvement in sales is not surprising, given the steady decline in once-stubborn mortgage rates from around 6.75% in the summer to roughly 6.2% today.

“The low mortgage rate conditions of this autumn compared to the early part of the year is clearly helping some of the affordability conditions,” said NAR chief economist Lawrence Yun.

Still, the broader picture of the housing market reveals an image that remains all too gloomy. Overall, sales are off roughly 40% from where they were in 2020. And while mortgage rates are declining some, they remain roughly double the 3%-or-so rates to which consumers became accustomed a few years back – and which they remember very clearly.

A reluctance at taking on higher rate mortgages is just one obstacle facing homebuyers. They’re also balking at the historically high prices of houses as well as at the prospect of taking on new obligations during a period of growing economic uncertainty.

“A rebound in the housing market hinges on a solid labor market, income growth, and economic resilience amid the continued affordability crisis, elevated mortgage rates, and consumer discontent,” said Selma Hepp, chief economist at Cotality.

That’s all for now; have a wonderful weekend!

This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

Hello, my friends!

On Wednesday, the Federal Reserve voted to cut interest rates by a quarter percentage point for the third time this year…but also sent clear signals that the path forward on monetary policy is likely to be most uncertain through at least the near term.

For starters, the decision itself was hardly unanimous, with three “no” votes cast against the nine in favor of lowering the target range to 3.5%-3.75%. It’s the first time in more than six years that a policy meeting has seen three dissenting votes cast.  

To be clear, not all the dissenters objected because they were in favor of keeping rates in place at 3.75%-4.00%. One member of the Federal Open Market Committee, Governor Stephen Miran, was in favor of a larger rate reduction by 50 basis points. However, the other dissenters – regional Presidents Jeffrey Schmid of Kansas City and Austan Goolsbee of Chicago – believed it best to pass on a rate cut altogether this time around.

More broadly, it seems clear that policymakers are reluctant to maintain an aggressive rate-cut outlook from here amid persistent uncertainty about inflation, even as concerns about labor-market strength also endure. In their updated its Summary of Economic Projections, committee members implied just one rate cut next year and another in 2027…an outlook that’s hardly suggestive of a return to robustly accommodative monetary policy.

At his post-meeting press conference, Fed Chair Powell underscored the noncommittal posture of policymakers as a whole, saying:

“We’re in the high end of the range of neutral. It’s so happened that we’ve cut three times. We haven’t made any decision about January, but as I said, we think we’re well positioned to wait and see how the economy performs.”

America’s Small Business Owners Remain Upbeat in the Face of Continued Uncertainty

In other news this week, America’s resilient small business owners say they remain relatively upbeat about the near-term future despite the array of risks that continue to swirl just above the economy.

On Tuesday, the National Federation of Independent Business (NFIB) reported that its widely followed Small Business Optimism Index ticked up 0.8 points in November to land at 99.0, ahead of the 98.2 projected by economists polled by the Wall Street Journal. The result also means the metric has managed to stay above its long-term average of 98 for seven consecutive months.

According to the data, higher sales expectations were the principal driver of greater optimism last month. However, the NFIB also noted that a collateral measure, the Uncertainty Index, actually rose three points last month to a reading of 91.

“Although optimism increased, small business owners are still frustrated by the lack of qualified workers,” said NFIB Chief Economist Bill Dunkelberg.

Indeed, 21% of small business owners cited labor quality as their single most important problem, making it the number one challenge faced last month. Unsurprisingly, the second most daunting problem cited by small business owners was inflation.

Job Openings Have Been Climbing…but Hiring Is a Different Story

Also this week, the government issued a key report on labor-market health that had been delayed since August as a direct consequence of the federal government shutdown.

Playing a bit of catch-up, the Labor Department on Tuesday released its Job Openings and Labor Turnover Survey, or JOLTS report, for both September and October.

On the surface, the numbers suggested at least a measure of continued resilience in the jobs market. The data for September reflected a solid increase in openings to 7.66 million from 7.23 million in August, while the October data showed openings ticking up slightly higher from there, to 7.67 million.

Analysts were less than exuberant over the uptick, however, saying the increase simply is a function of the holiday shopping season. As evidence, they noted October’s biggest gains were posted by trade industries.

What’s more, despite the rise, job openings, overall, remain nearly 40% below the highs reached 3½ years ago.

Also, the hiring rate is still concerningly subdued. At a level of 3.2% in October, it remains where it was in August and well below the pre-pandemic average rate of 3.9%.

“Where employers really put their money where their mouth is, is when it comes to hiring,” said Noah Yosif, chief economist at the American Staffing Association. “And unfortunately, we haven’t really seen much of an uptick in hiring.”

Tariffs Credited With Keeping Deficit Growth Somewhat Restrained in November

Finally this week, the Treasury Department reported on Wednesday that the federal government ran a budget deficit of $173 billion in November, substantially less than the $285 billion posted in October and also lower than the $205 billion projected by Reuters-polled economists.

Notably, the November total also is significantly less – 53% less, to be exact – than the $367 billion deficit recorded in November 2024. Import tariffs are credited with bolstering revenues last month, leading to the sizable year-over-year deficit drop. November receipts came in at $336 billion, which is a record for that calendar month.

Still, the first two months of fiscal year 2026 have seen the government rack up a $458 billion total deficit thus far, sharply lower than the $624 billion reported through the same period in fiscal 2025 but still indicative of a country that has grown all too comfortable spending well beyond its means.

On that note, the annual 2026 deficit currently is projected by the Congressional Budget Office to reach $1.7 trillion…slightly less than FY 2025’s $1.78 trillion total but an amount that would rank as the fifth-highest deficit in U.S. history.

That’s all for now; have a wonderful weekend!

This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

Those familiar with gold as an investable asset are aware of its potential to respond favorably to reductions in interest rates. But rate cuts in the face of higher inflation? That’s an even surer bet, emphasized Bank of America recently…a bet that now has been formally placed by the Federal Reserve.

Perhaps the most oft-cited reason for gold’s tendency to strengthen in the face of declining interest rates is that as rates drop, the “opportunity cost” of holding nonyielding assets like precious metals drop with them.

There are other reasons why gold typically rises as rates fall. One reason is that the onset of a tumbling-rate cycle often means the economy is facing a downturn, a circumstance which can enhance gold’s safe-haven appeal. Plus, lower rates may accelerate currency debasement and enhance inflation risks, which also tend to improve gold’s desirability as a store of value.

But however stimulating for gold that declining rates might be, anyway, it seems they have the potential to be even more invigorating when they’re dropping while inflation is still above the central bank’s 2% target. And that historical tendency is especially relevant right now, given the Federal Reserve’s decision earlier this month to resume rate cuts comes amid what not only is a still-ongoing run of elevated inflation now in its fifth year…but comes, as well, at a time when the most recent gauges show price pressures reaccelerating.

It’s a scenario, say analysts at Bank of America, that bodes especially well for gold in the months to come.

Gold Is a Sure Bet When Rates Are Cut While CPI Remains Above 2%, Say Strategists

“The Fed usually takes a balanced approach to its dual policy goal of full employment and price stability. Hence, from a gold perspective, prioritization of the labor market over inflation matters,” explained Michael Widmer and the other metals strategists at Bank of America recently. “Since 2001, gold has pushed higher every time the Fed has cut rates when U.S. CPI (consumer price index) is above 2%.”

“In fact,” Widmer and team clarified, “excluding the period of the global financial crisis, gold has delivered an annual return of approximately 13% during periods of ‘inflationary easing.’”

As for where Bank of America sees gold heading through the near term, the next major price target eyed by strategists is $4,000, a level they expect will be reached during the second quarter of 2026.

It’s important to note, however, that analysts anticipate gold forging higher not only on the strength of a structural return to explicitly accommodative monetary policy, but also on the back of the geopolitical and fiscal uncertainty which has proved to be so supportive of the metal over the last several years. And the reason that’s important is because it underscores – and should underscore for investors – just how comprehensive and multidimensional the set of drivers powering gold higher continues to be. 

This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

Hello, my friends!

Without question, the biggest news of this economic week was the long-awaited and highly anticipated decision by the Federal Open Market Committee (FOMC)…the policymaking arm of the Federal Reserve…to cut interest rates for the first time in nine months.

On Wednesday, the FOMC voted by a margin of 11-1 to reduce the benchmark federal funds rate by a quarter percentage point, which puts the rate’s target range at 4.00% to 4.25%.

The decision effectively serves as confirmation that policymakers as a whole have grown more concerned about the implications of a weakening labor market than a recent inflation spike believed to be induced by aggressive White House tariff policy.

“The Committee is attentive to the risks to both sides of its dual mandate,” the post-meeting statement read “and judges that downside risks to employment have risen.”

Notably, the lone dissenting vote was cast by newly installed Federal Reserve Governor Stephen Miran, who supported cutting rates by a half point.

In addition to making their rate-cut decision, policymakers updated their Summary of Economic Projections at this meeting. The formal outlook now reflects a consensus expectation of two additional quarter-point rate cuts by the end of the year, a projection that Goldman Sachs strategist Simon Dangoor serves as confirmation that “the doves on the committee are now in the driver’s seat.

On that note, traders now say they believe there’s a 92% chance the Fed will again cut rates at its next meeting in October.

Retail Sales Remain Silver Lining Amid Other Signs of Slowdown

Also this week, the government announced that retail sales were strong once again in August, a demonstration of exceptional resilience in the face of other key economic bellwethers which suggested a broad economic downturn may be looming.

Despite the emergence of an even cloudier employment picture last month as well as sinking consumer sentiment and an acceleration of price pressures, it turns out that consumers not only kept cash registers ringing in August, but did so at a pace well in excess of that expected by analysts.

According to the Census Bureau’s report released on Tuesday, retail sales climbed a robust 0.6% last month, much faster than the 0.2% pace projected by economists.

Even with automobiles and related costs stripped out, the data still pointed to a strong month of consumer activity, with sales rising 0.7%.

One especially notable feature of the upbeat results is just how broad the spending activity was in August. Of the 13 retailer categories tracked by the Census Bureau, sales increased in nine of them.

In her commentary on the numbers, Heather Long, chief economist at Navy Federal Credit Union, said, in part:

“Consumers say they are gloomy about the economic outlook, but they are still opening their wallets and spending, even on little splurges for themselves and their families.”

Still, it remains to be seen for how long consumers will keep spending if significant challenges to the economy arise from White House tariff policy and growing labor-market weakness.  

Single-Family Housing Starts Tumble to Lowest Level in Nearly 2½ Years

The following day, Wednesday, the Commerce Department checked in with a less upbeat perspective on the economy, reporting that single-family housing starts fell to their lowest level in nearly 2½ years last month amid persistently high mortgage rates and consumer concerns about the underlying strength of the economy.

Overall, housing starts tanked 8.5% in August to a seasonally adjusted annual rate of 1.307 million units, which is 63,000 fewer than the number economists expected to see. A big contributing factor was the decline in starts of multifamily units, which tumbled 11% on the month to 403,000 units.

But the big news was the drop-off in single-family starts, a metric viewed as more representative of the housing sector’s true condition because it accounts for the vast majority of homebuilding in the U.S. Groundbreaking of single-family units fell 7.0% last month to a seasonally adjusted annual rate of 890,000 units, the lowest since April 2023.

The Commerce Department’s report on building permits…an indicator of future housing demand…was disappointing, as well. Permits fell by 3.7%, to a seasonally adjusted annual rate of 1.312 million, the lowest level in a little more than five years.

Analysts say that even with the resumption of rate cuts, they’re not expecting conditions to improve through the near term while Americans remain broadly pessimistic about the outlook for the economy. As Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics, put it:

“Consumers’ low confidence and heightened concerns about job security represent ongoing headwinds to demand. We expect residential investment to remain a drag on GDP growth at least until mid-2026.”

New York Manufacturing Contracted in September

Finally, it was reported this week that manufacturing activity in New York state declined rather significantly in September…another timely piece of evidence suggesting the economy may indeed be in the throes of a slowdown.

On Monday – two days before the Federal Open Market Committee announced its decision to cut rates by another quarter point – the Federal Reserve Bank of New York announced that its Empire State Manufacturing Survey General Business Conditions Index plunged 20.6 points this month, falling to a reading of minus 8.7 from the 11.9 posted in August.

It’s the first time since June that the index landed below the neutral level of zero that distinguishes contraction from expansion in the context of the metric.

Among the key component measures that helped tank the overall gauge is the New Orders Index, which sank a whopping 35 points to come in at minus 19.6 for the month. Another is the Shipments Index, which fell 30 points to minus 17.3.

In his commentary on the fresh numbers, Richard Deitz, economic research adviser at the New York Fed, made clear he doesn’t see conditions improving markedly anytime soon, saying:

“Optimism about the outlook remained muted and employment levels are expected to be flat over the next six months.”

That’s all for now; have a wonderful weekend!

This post is created and published for general information purposes only. The Gold Strategist blog disclaims responsibility for any liability or loss incurred as a consequence of the use or application, either directly or indirectly, of any information presented herein. Nothing contained in this post – or any other post featured at this blog – should be construed as a solicitation or recommendation to engage in any financial transaction. You should seek the advice of a qualified professional before making any changes to your personal financial profile.

In 2024, it was gold that grabbed the lion’s share of precious metals headlines, reaching 40 new all-time highs and finishing the year as one of the world’s best-performing assets.

This year, it’s silver’s turn. Famous (notorious?) for underperforming its more prestigious counterpart during the first half of metals bull markets, silver is just as well-known for its capacity to sharply outperform gold during the markets’ latter stages when investors’ attention invariably shifts to the far-cheaper and generally underbought alternative.

Whether or not that latent awakening is exactly what we’re seeing play out right now, there’s little question that silver has been not only the better performer so far this year among metals, but one of the best performing assets, overall. Since the beginning of January, silver is up roughly 49%, ahead of gold’s 41% rise and well ahead of the most popular equities indexes. Additionally, now sitting solidly above $40 per ounce, silver currently is residing at its highest price level in more than 14 years.

And according to a recent article in Barron’s, there’s more to come. The esteemed financial journal recently made note of what so far has been a banner year for silver, attributing the white metal’s success to its gold-like desirability as a geopolitical safe-haven as well as its appeal as an industrial metal.

Barron’s Sees Currently High Gold-to-Silver Ratio as Sign the White Metal Is Poised to Keep Climbing

But fortifying their optimism over silver’s near-term fortunes is how cheap the metal presently is relative to gold. Currently, the gold-to-silver ratio – which measures how many ounces of silver it takes to purchase one ounce of gold at any given time – is currently around 85. Barron’s notes the ratio has averaged 63 over the previous half-century and 70 over the more recent last two decades.

“Comparisons with the past suggest silver is undervalued relative to gold now,” Barron’s said, implying the gold-to-silver ratio is poised to drop from current levels. During a metals bull market, the likeliest way for the ratio to decline…for silver to become more valuable relative to gold…would be for the price of silver to begin rising at an accelerated pace in relation to gold.

I, too, think silver is well positioned to keep climbing from here. But while there’s no question that the gold-to-silver ratio remains significantly higher than its historical averages, I don’t believe it’s prudent to interpret that as a reliable “buy” signal or otherwise view the elevated ratio as a sign, in and of itself, that silver is destined to go higher.

Reliability of Gold-to-Silver Ratio Hurt by the Increasingly Tenuous Relationship Between the Metals

The fundamental reason I question the usefulness of the ratio as a reliable “tell” is simply that whatever real relationship gold and silver once had has become tenuous over time. The two obviously share broad characteristics as precious monetary metals, but while gold remains most highly prized as a safe haven and store of value, the majority of silver’s demand now comes from industry, as I noted earlier.

Fundamentals – Rather Than a Suspect Metric – Point to Continued Silver Strength

This is not to say I don’t expect silver to remain especially resilient through the foreseeable future. But in my estimation, that ongoing resilience will be attributable not to a suspect metric reverting to a perceived mean…but, rather, to fundamentals which include silver’s profile as a viable and far cheaper (compared to gold) safe-haven asset amid comprehensive uncertainty; the increasingly critical role silver’s anticipated to play for industry, in general…and the green-energy industry, in particular…as the world’s best conductor of electricity; and a structural silver supply deficit that’s now in its fifth consecutive year. 

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