Bart Melek, Head of Commodity Strategy at TD Securities, has highlighted the sustained and robust gold purchases made by central banks as a significant factor in maintaining the floor for gold prices during a recent downtrend. Melek predicts that these central bank purchases will be the key driver pushing the precious metal to new all-time highs in the coming year.
In his latest commentary, Melek explains that central bank buying likely prevented a significant gold selloff despite the recent higher interest rates. The yellow metal managed to recover modestly as the Federal Reserve indicated a prolongation of higher rates in its FOMC minutes, and interest rates remained elevated across the yield curve. TD Securities projects a price target of $2,100/oz for gold next year, with the official sector’s continued support playing a vital role in achieving this projection.
Melek emphasizes the importance of physical gold purchases by central banks following the Federal Reserve’s anticipated pivot, as it is expected to remove the high cost of carry as a major obstacle for discretionary traders. He believes that the US central bank will pivot even with inflation above target, but the market will require clear signs of significant economic weakening before this occurs.
Regarding China’s central bank, Melek notes that while it has been steadily purchasing gold in substantial quantities, the yellow metal’s representation of only 4% of its $3.115 trillion in reserves remains relatively low. Comparatively, the US holds around 69% of its foreign exchange reserve in gold, Germany holds 68%, and Russia holds 25%. If China were to increase its gold reserves to just 10%, it could potentially buy an additional 3,000 tons of gold.
Melek believes that central banks’ appetite for gold will remain robust for years to come. He cites the World Gold Council’s 2023 survey, which revealed that 24% of central banks intend to increase their gold holdings in the next 12 months. This indicates strong demand from the official sector in the coming years. The survey also showed that central banks view gold’s reserve status as growing while the dominance of the US dollar diminishes. Melek points out that 62% of monetary institutions believe that gold will have a greater share of total reserves, compared to 46% last year, potentially driving higher demand from the official sector. In 2022, central banks purchased a record 1,136 tons, and as of July, they have officially purchased around 224 tons.
TD Securities estimates that by September, the total would reach approximately 353 tons, indicating a prorated total of around 470 tons for 2023. Melek highlights that unreported official purchases, including non-central bank buying, have accounted for more than 50% of gold purchases over the past year, suggesting that the actual tonnage of gold purchased by the official sector could be significantly higher.
Overall, TD Securities expects central bank gold purchases to have a substantial impact on driving gold prices higher in the coming years, with the official sector playing a pivotal role in shaping the future of the precious metal.
Independent Journalism Is Dying
Ever since President Trump’s miraculous victory, we’ve heard an incessant drumbeat about how legacy media is dying. This is true. The people have awakened to the reality that they’re being lied to by the self-proclaimed “Arbiters of Truth” for the sake of political expediency, corporate self-protection, and globalist ambitions.
But even as independent journalism rises to fill the void left by legacy media, there is still a huge challenge. Those at the top of independent media like Joe Rogan, Dan Bongino, and Tucker Carlson are thriving and rightly so. They have earned their audience and the financial rewards that come from it. They’ve taken risks and worked hard to get to where they are.
For “the rest of us,” legacy media and their proxies are making it exceptionally difficult to survive, let alone thrive. They still have a stranglehold over the “fact checkers” who have a dramatic impact on readership and viewership. YouTube, Facebook, and Google still stifle us. The freer speech platforms like Rumble and 𝕏 can only reward so many of their popular content creators. For independent journalists on the outside looking in, our only recourse is to rely on affiliates and sponsors.
But even as it seems nearly impossible to make a living, there are blessings that should not be disregarded. By highlighting strong sponsors who share our America First worldview, we have been able to make lifelong connections and even a bit of revenue to help us along. This is why we enjoy symbiotic relationships with companies like MyPillow, Jase Medical, and Promised Grounds. We help them with our recommendations and they reward us with money when our audience buys from them.
The same can be said about our preparedness sponsor, Prepper All-Naturals. Their long-term storage beef has a 25-year shelf life and is made with one ingredient: All-American Beef.
Even our faith-driven precious metals sponsor helps us tremendously while also helping Americans protect their life’s savings. We are blessed to work with them.
Independent media is the future. In many ways, that future is already here. While the phrase, “the more the merrier,” does not apply to this business because there are still some bad actors in the independent media field, there are many great ones that do not get nearly enough attention. We hope to change that one content creator at a time.
Thank you and God Bless,
JD Rucker
