This Is the Best Time in a Decade for Investing in Gold and Silver, Says Citi’s Head of Commodities Research

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As a seasoned crypto investor with over two decades of market experience under my belt, I found Max Layton’s analysis on CNBC’s “Squawk Box” particularly insightful and compelling. Having witnessed numerous market cycles, I can attest that Layton’s observations about gold and silver are spot-on – the best gains for these precious metals often occur when developed markets like the US and Europe are weakening, and China is in a phase of economic easing.

On October 25, 2024, Max Layton, a commodities expert from Citi, talked about the fluctuations in gold, silver, and other robust resources on CNBC’s “Squawk Box.” During this discussion, he shared his insightful perspectives on their price changes.

As a crypto investor, I’ve noticed an intriguing pattern in the gold and silver market. Despite some unfavorable indicators like rising interest rates, robust payroll data, and a decline in Chinese imports during July and August, these precious metals have remarkably persisted in their upward trajectory. Layton attributes this resilience to a persistent underlying trend in the market. He suggests that China’s return to the market in September could have played a significant role in this growth, as the negative price premiums in China might not fully reflect the true dynamics of consumption.

According to Layton, it seems that the optimal times for gold and silver over the last twenty years have been during periods when developed countries such as the U.S. and Europe were experiencing weakness, and when China was undergoing economic relaxation. He boldly declared, “This is one of the most advantageous conditions for gold and silver in a decade,” expressing his conviction in a prolonged upward trajectory.

Regarding palladium, Layton noted its recent spike in price, reaching heights not seen since the last December. Yet, he urged caution about future expectations. He highlighted that China’s escalating electric vehicle (EV) adoption, rising from 30% to 55% over the past year, could significantly impact palladium’s demand. Most of palladium’s demand comes from traditional vehicles with internal combustion engines, which are being replaced by EVs. This trend, according to Layton, poses a structural problem for palladium’s long-term viability.

According to Layton, the recent strong performance of palladium can be attributed to issues concerning its supply, primarily due to geopolitical conflicts in Russia and production problems in North America and South Africa. He anticipates that these supply-related difficulties might persist in the immediate future, strengthening palladium further. However, he maintains a negative long-term perspective on palladium’s performance.

Regarding platinum, Layton pointed out that it hasn’t yielded significant returns, even under advantageous circumstances like decreasing real interest rates and economic volatility in developed economies. In his view, platinum doesn’t offer a way to capitalize on the risks of recession in established markets or the growth opportunities in emerging ones. Layton further noted that platinum encounters extra hurdles due to the rising preference for electric vehicles. Although he conceded that both palladium and platinum have shown strong performance lately, he warned that investors might view these surges as chances to liquidate their assets rather than as long-term investment possibilities.

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2024-10-25 18:19