adminIn a recent interview, Lear Capital founder and Chairman Kevin DeMeritt told Clayton Morris, host of the Redacted News show, that several factors — including the risk of the U.S. entering a recession and central banks liquidating the U.S. dollar — could affect the price of gold in the remaining months of the year.
Central banks, according to DeMeritt, have increasingly been unloading the U.S. dollar in favor of assets such as physical gold. The share of U.S. dollar reserves, he said, has fallen by 25% since 1999 — and if a large number of countries that hold dollars sell them to pursue other asset choices, it could flood the market in the U.S.
A recent World Gold Council survey found 30% of central banks say they plan to add to their gold reserves in the next year.
“More U.S. currency is held outside the United States [than] inside the United States,” he said. “If those countries don’t have to hold those dollars and they start liquidating, what happens to the value of the dollar here in the United States? The dollar crashes.”
Kevin DeMeritt told the Redacted News host he views that possibility as “the scariest part of the entire economy.
“It’s the most worrisome thing that keeps me up at night,” DeMeritt said. “Because you can’t do anything about it. These banks can sell — and all of those dollars coming back would take the inflation rate absolutely through the roof.”
Additional Economic Aspects
Interest rate activity could also play into how gold prices perform in the coming months.
They’ve already moved in an upward direction in 2024. While the precious metal and interest rates have generally had an inverse relationship, with higher rates potentially translating to a lower demand for gold, and vice versa, other elements, such as weak job data, can have an impact, according to Money. Despite the elevated interest rate environment this year, gold prices climbed to a series of new record levels. By Sept. 1, gold was up 21.04% for the year, according to USA Today.
On Sept. 5, Reuters reported that the price for gold — and silver — had risen based on the mere anticipation the Federal Reserve’s Federal Open Market Committee might announce a rate cut at its mid-September meeting.
After the Fed’s FOMC met on Sept. 17 and 18, it announced plans to make the first reduction to the target range for the federal funds rate, which influences interest rates, in more than a year — bringing it down by 1/2 percentage point to 4.75% to 5%.
A week after the Fed announced the rate cut on Sept. 18, gold hit another new high — $2,685.61 on Sept. 26, according to USA Today. As of Oct. 8, gold’s price is up more than 28% year to date.
More cuts may be on the way — which could give gold demand a boost. Although economists polled by Reuters in July said they anticipated the FOMC would enact just two by the end of the year, in September, before the most recent rate reduction was announced, a poll the news agency conducted found economists’ sentiment had shifted and to believing the Fed could end up making three cuts in 2024 — 25-basis-point reductions in November and December, in addition to the rate cut the Fed approved in September.
The Pursuit of Gold
As Lear Capital reviews that have been shared on various platforms indicate, numerous investors have shown an interest in physical gold assets in the past year.
David V.’s testimonial about working with the company to obtain precious metals — which he shared in one of the Lear Capital reviews posted on the Trustpilot platform in January — suggested current and future economic conditions have been on his mind.
“Our contact [with the company] was very informative, educational, and [I felt] no pressure,” David said. “I look forward to our continued relationship into the future with all the unknowns in the world economy.”
In another one of the Lear Capital reviews posted on Trustpilot in recent months, Earl said the Lear Capital representative he spoke to was “exceptional in every way.”
“He explained the process of purchasing, and walked me through every step,” Earl wrote on Trustpilot in May. “He is the ultimate professional and stayed in contact with me during the purchase process and continuously kept me updated until the items were delivered. I will recommend him and Lear Capital to any of my friends [who are] interested in precious metals.”
Earl said he contacted the company about purchasing gold as a hedge against inflation. Following its rise in 2021, inflation remained elevated throughout 2022, hitting a 9.1% high point that year — and didn’t reach the 2% range the Federal Reserve was targeting until August 2024. Data released on Sept. 11 listed it at 2.5% that month.
A week after that data was shared, following its September meeting, the FOMC noted inflation had made progress toward its goal — but said it “remains somewhat elevated.”
Inflation was also a factor in James H.’s decision to obtain precious metals.
“[The Lear Capital representative] has done an exceptional job of sharing his market knowledge with regard to gold and silver opportunities as an investment guide to invest in precious metals as a hedge against inflation, bank failures, and possible stock market swings,” James said in one of the Lear Capital reviews shared on Trustpilot last November. “I enjoy hearing his perspective and recommendations.”
Michael G. was a first-time precious metals buyer when he worked with the company.
“While I’ve long been a stock investor, I’d never purchased gold before,” he said in one of the Lear Capital reviews shared recently on Google. “I’m happy I chose Lear. They were patient and helpful with my many questions. There are more options than you think.”
Wayne C. also shifted from more traditional assets to alternative options, according to the review he posted on Google this summer.
“My wife and I both switched our 401(k)s to precious metals [individual retirement accounts] with Lear Capital,” he said. “We can’t thank Lear’s management and [the representative we spoke to] enough for truly caring and helping secure our retirement savings.”
