A gold decline after the recent presidential election was concerning for many Americans who depend on the precious metal to diversify their retirement portfolios — many of whom have made gold IRAs a strategic portion of their savings.
However, analysts at Goldman Sachs believe the “dip” in gold prices has been exaggerated. In fact, they say, it’s time to “go for gold.”[1]
Here’s what’s been happening and why it matters...
Even though gold has shown great resilience from the first of the year through October[2], and even though its momentum has been ongoing for at least three years in spite of the Federal Reserve’s interest rate increases[3], the election seemed to throw gold prices into a tailspin. It lost 6% from November 5th through the next couple of weeks.[4]
Analysts could see three reasons for the struggles gold showed after the election.
First and most immediately, many investors felt that the election caused uncertainty, even if they were happy with the results.
Second, some analysts had a theory that many investors may have worried President-Elect Trump’s tax cuts and spending plans could add to the U.S. debt burden, increase bond yields, and strengthen the dollar — all conditions usually contrary to gold’s strength.[5]
Finally, there was a belief that a relaxed regulatory scene under Trump could inject some energy into the stock market, causing many investors to become averse to gold and other safe-haven assets.[6]
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Reasons to Rethink the Recent Gloomy Gold Decline
In spite of the bad-for-gold talk going on after the election, several analysts are looking at the post-election gloom on gold as a temporary thing. Why? Mostly because all the drivers that usually strengthen gold are still very much active.
Peter Grant of Zaner said, “Once the post-election dust settles” we should look for gold to “once again focus on geopolitical tensions, concerns about the Chinese and European economies, soaring global debt levels, ongoing central bank gold buying, and the political uncertainty in Germany and Japan.”[7]
Based on both traditional structural and cyclical drivers of gold, analysts at Goldman Sachs (second-largest investment banker in the world) believe gold will thrive throughout the next 13 months or more. They’re seeing gold prices go beyond $3,000 per ounce by the end of 2025. (See background for their opinion that investors should “go for gold” [8][9] in Augusta Precious Metals’ full article – link at top of this page.)
Again, their reasoning has a lot to do with believing the uncertainty that has been driving gold prices isn’t going to change anytime soon.
In fact, the analysts say, a gold price consolidation following the election could provide “an attractive entry point to buy gold.”[10]
The structural demand they point to is driven by central bank demand for gold.[11] It also has something to do with geopolitical risk that is expected to continue. Read the cause and effect in the full Augusta Precious Metals article.
And the cyclical demand is being sustained due to investors wanting to hedge against the impact of rate cuts[17] and growing fragility in the labor market[12].
Goldman Sachs analysts also see soaring indebtedness (in fiscal year 2024, we saw the third-highest annual budget deficit in history), potential rate cut plans of the Fed, and possible liberal tariffs as a shot in the arm for gold, flying in the face of the recent gold-decline gloom.[13]
Among other analysts who agree with the Goldman Sachs team is Matthew Jones of Solomon Global, who believes tariffs can generate economic uncertainty, and that in itself could catalyze higher gold prices.[14] Jones also says tariffs could trigger upward price pressures (inflation), and it is well-known that investors flock to gold when that happens, especially when central banks are easing rates.[15]
Jones also believes tariffs could compromise the dollar's strength.
“During Trump’s first term in office,” he explains, “trade restrictions coupled with uncertainty in global supply chains weakened the value of the dollar relative to other currencies. A weaker dollar makes gold cheaper for international buyers, which increases demand and pushes up the price of the precious metal.”[16]
Time to “Go For Gold” Through Gold IRAs?
The opinions of Goldman Sachs analysts and other respected economists seem to support even individual moves to gold, such as adding gold (and silver) to retirement portfolios. However, each investor needs to examine their particular situation with the help of their own professional tax, financial and legal advisors.
For those who decide the recent gold decline is going to be temporary and gold is a viable option for them, a tax-advantaged gold IRA could be a great way to “go for gold.” It means getting not only potential benefits from the current market for gold but also the possible long-term tax benefits based on the ongoing fundamental drivers of gold and other precious metals.
For details on gold's outlook, read the full article here.
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[1] Jake Lloyd-Smith, Yahoo Finance, “Goldman Says ‘Go for Gold’ as Central Banks Buy, Fed Cuts in ‘25” (November 18, 2024, accessed 11/21/24).
[2] CNBC.com, “Gold COMEX (Dec′24)” (accessed 11/21/24).
[3] CNBC.com, “Gold COMEX (Dec′24)”; FederalReserve.gov, “Open Market Operations” (accessed 11/21/24).
[4] CNBC.com, “Gold COMEX (Dec′24).”
[5] Ernest Hoffman, Kitco, “Gold’s dramatic decline is not Trump-specific, silver demand from solar boosts long-term projections – Heraeus” (November 11, 2024, accessed 11/21/24).
[6] Saefong, “Why gold prices are now dropping.”
[7] Ibid.
[8] Lloyd-Smith, “Goldman Says ‘Go for Gold.’”
[9] Statista, “Leading banks worldwide as of September 2024, by revenue from investment banking” (accessed 11/21/24).
[10] Christiaan Hetzner, Yahoo Finance, “Donald Trump’s presidency could light a speculative fire under gold, pushing the price to a fresh all-time high” (November 19, 2024, accessed 11/21/24).
[11] World Gold Council, “2024 Central Bank Gold Reserves Survey” (June 18, 2024, accessed 11/21/24).
[12] Cam Hui, MarketWatch, “Opinion: Why gold is a better bet than stocks for 2025” (November 19, 2024, accessed 11/21/24).
[13] Hetzner, “Donald Trump’s presidency could light a speculative fire under gold.”
[14] Matthew Jones, London Loves Business, “Golden tariffs: When Trump trade wars strike gold” (November 18, 2024, accessed 11/21/24).
[15] Ibid.
[16] Ibid.