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Park Avenue Numismatics
5084 Biscayne Blvd, Suite 105
Miami, FL 33137
 
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Park Avenue has over 30 years experience buying and selling Rare Coin and Precious Metals. We have the knowledge and ability to provide our customers with the best products and services.

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Is Economy in Worse Shape than we Think?

Wednesday, June 26, 2024

6.26.24 - Is Economy in Worse Shape than we Think?

Gold last traded at $2,298 an ounce. Silver at $28.77 an ounce.

Citigroup and Bank of America Predict Gold Prices Could Reach $3,000 Within a Year -Business Insider

The gold market has been getting one favorable review after another when it comes to performance expectations this year; the latest from Citigroup & BofA. It comes as no surprise, as the overall global economy is on very shaky ground.

 

Gold prices have shown strong performance this year, increasing nearly 13% year-to-date and currently trading at $2,326.94 per ounce.

Recent reports from Bank of America and Citigroup suggest that gold prices could surge to $3,000 per ounce within the next 12-18 months, representing a potential 30% increase from current levels. Key factors driving this bullish outlook include robust physical demand, central bank purchases, concerns over U.S. Treasury securities, and anticipated Federal Reserve interest rate cuts.

Bank of America (BofA) forecasts that gold prices could reach $3,000 per ounce in the next 12-18 months. BofA emphasized that this scenario would require an increase in non-commercial demand, potentially triggered by Federal Reserve interest rate cuts, which could lead to inflows into physically backed gold ETFs. Central bank purchases are another critical factor, as efforts to reduce the U.S. dollar's share in foreign exchange portfolios may drive central banks to buy more gold.

BofA also highlighted that concerns over U.S. Treasury securities could sustain a gold bull market. They pointed out that significant volatility in the U.S. Treasury market represents a "tail risk" that becomes more probable over time. Moreover, the market does not need an actual disaster to spur demand for safe-haven assets; increasing fears of a potential disaster are sufficient. The liquidity of the U.S. debt market has deteriorated, and with the political deadlock and rising debt levels in the U.S., there are legitimate reasons to worry about unexpected shocks. 

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