Silver Set to Outshine Metals Sector in 2025 (week ending 1.24.25)

A Daily Journey Through the Week's Market

Monday - 1.20.25: Global stock markets experienced mixed performances. In the U.S., markets were closed in observance of Martin Luther King Jr. Day. In Europe, the FTSE 100 reached a new high, driven by strong performances in the mining and financial sectors. In Asia, China's directive for mutual and pension funds to increase investments in local A-shares aimed to boost domestic markets, though investor response was cautious.

Tuesday - 1.21.25: U.S. stock indexes opened higher, with the Dow Jones Industrial Average gaining over 500 points, reflecting investor optimism. However, Trump Media & Technology Group's stock declined by more than 11%, indicating sector-specific challenges. In corporate developments, major tech companies' leaders attended President Donald Trump's inauguration, signaling potential collaborations with the new administration.

Wednesday - 1.22.25: The European Commission proposed extending EU banks' access to UK derivatives clearing houses until June 2028, aiming to ensure financial stability post-Brexit. This move was welcomed by financial services representatives, providing market certainty and indicating a potential reset in EU-UK financial relations. 

Thursday - 1.23.25: The potential $30 billion merger between Swiss company SGS and French rival Bureau Veritas faced complications due to Swiss stock exchange protections implemented in 2019. These measures prevent the listing of Swiss shares in the EU, posing challenges for the merger. The Swiss finance ministry acknowledged that these protections could obstruct such transactions, and discussions are ongoing regarding their potential lifting.

Friday - 1.24.25: Gold is closing in on resistance at $2,800, with bulls targeting the all-time high of $2,826.30, while silver remains strong above $31.71, eyeing $33.33 by December. Safe-haven demand continues to drive momentum amid economic uncertainty. Meanwhile, President Trump’s recalibration of trade strategies has eased market concerns, adding to bullish sentiment, though his push for immediate Fed rate cuts introduces further volatility, keeping gold and silver in focus.

Silver Set to Outshine Metals Sector in 2025

Silver is expected to lead all metals with a 14% gain in 2025, driven by a long-term supply deficit fueled by the solar industry, according to StoneX Financial's annual outlook. The metal’s dual identity as both a precious and industrial asset positions it uniquely for continued growth.

Why it matters:
Silver’s role in solar, AI, and electrification is strengthening, pushing it into structural deficit despite past years of surplus. Investors are increasingly bullish, seeing it as both an inflation hedge and an industrial necessity.

Key takeaways:

• Silver to outperform: StoneX analysts Rhona O’Connell and Natalie Scott-Gray highlight silver, copper, and tin as the top metals to watch, while cautioning against aluminum.
• Solar is the game-changer: Photovoltaic demand is expected to grow 16% annually through 2027, increasing silver consumption.
• Silver decoupling from gold? While gold is expected to peak in 2025, silver could continue climbing, targeting $33 per ounce by year-end.
• Long-term deficit ahead: After a surplus from 2011 to 2023, silver entered deficit in late 2024, which is expected to widen due to rising demand.

Between gold and copper:
Silver has historically mirrored gold in inflationary periods but tracked copper during recessions. Its supply, largely a byproduct of base metals, lacks a market-clearing price, making it prone to volatility.

The investor outlook:

• The metal’s accessibility makes it attractive for traders looking to leverage gold’s moves.
• Volatility remains a risk—silver markets are prone to knee-jerk reactions to macroeconomic events.
• Tariff concerns: Any potential trade policies under a new U.S. administration could temporarily disrupt silver’s trajectory.

What’s next:
With silver closing 2024 at $29 per ounce, StoneX projects an average price of $32 in 2025, reaching $33 by year-end. While short-term risks remain, long-term fundamentals support continued investment interest and speculative demand.

Debunking the Keynesian Illusion: Spending Doesn’t Drive the Economy

The widely accepted belief that aggregate spending fuels economic growth is based on a flawed foundation. Instead of relying on government stimulus and monetary expansion, economic stability and progress stem from values, prices, and productive alignment with consumer demand.

Why it matters:

Mainstream economics prioritizes spending flows as the key to preventing recessions, leading to policy interventions that distort markets and create unintended consequences. A more accurate understanding of economic dynamics focuses on production, price flexibility, and entrepreneurship rather than artificial boosts to demand.

Key takeaways:

• Spending is a consequence, not a cause. Economic downturns happen because production fails to match consumer demand, not because spending arbitrarily declines.
• Say’s Law holds true. Supply—not government stimulus—creates demand, and a drop in spending reflects market misalignment, not systemic failure.
• Money hoarding isn’t a market failure. Holding cash signals changing consumer priorities, not economic collapse, and markets naturally adjust through price shifts.

The Bigger Picture:

Keynesian models reduce the economy to a circular flow of spending, ignoring the complex web of production, investment, and exchange that truly drives growth. The economy is not a simple loop of money changing hands but a dynamic latticework where entrepreneurs, consumers, and businesses interact based on price signals and shifting values. When spending declines, it reflects changing consumer needs—not a fundamental breakdown requiring artificial stimulus.

Markets recover not through government intervention but through price flexibility and realignment of production. Stimulus measures distort signals, misallocate resources, and prolong inefficiencies. True economic resilience comes from allowing supply and demand to adjust naturally, not from forcing spending to meet artificial targets.

What’s Next:

As policymakers continue to rely on spending-driven economic models, markets will face distorted signals, rising debt, and misallocated resources. Governments may push for further stimulus to counter slowdowns, but these efforts will only delay necessary market corrections. A more sustainable approach recognizes that growth comes from productive investment and value creation, not artificial demand boosts. Long-term stability depends on letting market forces guide economic adjustments rather than relying on government intervention to prop up spending.

Freeport Wraps Up Strong 2024 on Rising Copper and Gold Prices

Freeport-McMoRan (NYSE: FCX) ended 2024 on a high note, reporting better-than-expected earnings, thanks to higher gold and copper prices. Despite slightly lower production, the company capitalized on strong market demand, boosting its financial performance.

Why it matters:
Freeport is one of the world's largest copper producers, and its earnings reflect broader commodity trends, especially as copper remains crucial to green energy, electrification, and infrastructure.

Key takeaways:

• Earnings beat expectations:
  • Reported Q4 net income: $274 million ($0.19 per share).
  • Adjusted net income: $450 million ($0.31 per share), well above analyst estimates of $0.20 per share.
• Higher prices drive revenue:
  • Copper prices surged to $4.21/lb (from $3.85 in 2023).
  • Gold prices averaged $2,418/oz, a sharp increase from $1,972/oz last year.
• Production steady but slightly lower:
  • Copper: 4.214 billion pounds (flat vs. 2023).
  • Gold: 1.88 million ounces (down from 1.993M in 2023).

What’s next:

• Freeport projects 2025 production of 4.1 billion pounds of copper, 1.7 million ounces of gold, and 77 million pounds of molybdenum—a slight dip in copper and gold output.
• The company emphasized cost management, capital efficiency, and long-term growth opportunities as priorities for 2025.

The big picture:
With copper’s role in global electrification expanding, Freeport sees itself as a key player in the future of industrial metals. A strong balance sheet and large-scale assets position it well for long-term growth.

Gold as a Shield Against Fiscal Uncertainty—Sprott’s McIntyre

With gold trading near a three-week high above $2,750 per ounce, Sprott’s Ryan McIntyre sees the metal as a long-term safe haven, shielding investors from rising global debt and economic uncertainty. While short-term volatility remains, he argues that fiscal instability makes gold a critical asset for wealth preservation.

Why it matters:
Governments are pushing the limits on debt, forcing investors to reconsider risk. Gold’s role as a hedge against monetary debasement and fiscal turmoil makes it increasingly attractive despite rising bond yields.

Key takeaways:

• Gold up 5% in January, benefiting from a weaker U.S. dollar and falling bond yields.
• McIntyre remains bullish, citing government overspending and debt concerns.
• Debt ceiling risks loom: The U.S. Treasury is using “extraordinary measures,” and Congress must act before summer to prevent a government shutdown.
• Gold vs. Opportunity Cost: Rising yields increase gold’s non-yielding disadvantage, but McIntyre argues protecting wealth is more critical than minor opportunity losses.

The big picture:

Trump’s economic policies, including tax cuts and tariffs, have the potential to be inflationary, further solidifying gold’s role as a hedge against economic uncertainty. In response, McIntyre maintains a portfolio strategy that includes a 10% allocation to gold, with an additional 5% in mining stocks, anticipating that these assets will outperform if gold prices continue to rise. Rather than focusing on short-term price targets, he takes a long-term view, believing that gold will outpace the S&P 500 over the next decade, making it a cornerstone for wealth preservation in an unpredictable economic landscape.

What’s next:
As inflation, debt, and central bank policy uncertainty persist, gold’s status as a monetary refuge remains strong. Investors recalibrating risk could drive further gains in both gold and mining equities.

Why Stimulus Can’t Prevent Recessions

Conventional wisdom suggests that fiscal and monetary stimulus can soften or prevent recessions by boosting spending and restoring economic activity. However, this view rests on flawed Keynesian assumptions about the economy functioning as a circular flow of money. Rather than preventing downturns, stimulus distorts markets and prolongs economic misalignments.

Why it matters:

Government interventions often prop up inefficient sectors, misallocating resources and delaying necessary corrections. True economic recovery depends on allowing prices and production to realign naturally, not artificial spending boosts.

Key takeaways:

• The Keynesian multiplier is misleading. Stimulus does not create wealth—it redistributes existing resources, often to less productive sectors.
• Government spending weakens private savings. Taxes and borrowing extract capital from the private sector, limiting real investment in productive activities.
• Recessions are not random shocks. They result from prior monetary expansion, which fuels unsustainable booms that inevitably correct when stimulus slows.

The Bigger Picture:

The economy does not operate as a simple cycle of spending but as a complex structure of production and value creation. Recessions occur when inflation-driven, non-wealth-generating activities collapse, exposing economic distortions created by excessive monetary expansion. Stimulus only props up failing enterprises and delays the market’s ability to redirect resources to productive uses.

What’s Next:

As governments continue relying on stimulus to counter downturns, markets will face longer and more severe distortions. Sustainable recovery requires restraint from central banks and governments, allowing inefficient activities to liquidate, savings to grow, and capital to flow into productive, wealth-generating investments.

Trump Moves to Cement U.S. Crypto Leadership

President Donald Trump signed an executive order on Thursday aimed at promoting cryptocurrency innovation in the U.S. and developing a national digital asset stockpile. The move marks a stark reversal from his first administration, where he was a vocal crypto critic.

Why it matters:

The order signals a major shift in U.S. crypto policy, with the administration embracing digital assets, blockchain development, and self-custody rights. The federal government is now positioning itself as a long-term holder of cryptocurrencies instead of liquidating seized assets.

Key takeaways:

• National crypto reserve: A working group will explore a government-held digital asset stockpile, potentially sourced from lawfully seized cryptocurrencies.
• Regulatory shift: Trump’s new SEC and Treasury picks favor market-friendly crypto policies, marking a break from Biden-era crackdowns.
• Industry protections: The order defends blockchain developers, miners, and self-custody rights, ensuring crypto users can control their own assets without reliance on exchanges.
• Stablecoin push: The administration seeks to strengthen dollar-backed stablecoins, reinforcing the U.S. dollar’s dominance in global digital finance.

The Bigger Picture:

Since his election victory, Trump has aggressively reshaped financial leadership to favor pro-crypto policies. His nominees—Paul Atkins for SEC chair and Scott Bessent for Treasury Secretary—signal an end to regulatory hostility. The new SEC crypto task force, led by longtime digital asset advocate Hester Peirce, further solidifies the administration’s commitment to fostering innovation over enforcement.

What’s Next:

The “war on crypto” is officially over, according to Trump’s crypto czar, David Sacks. Expect lighter regulation, increased institutional adoption, and potential federal accumulation of bitcoin and other assets. With Trump backing long-term government crypto holdings, the U.S. could emerge as a dominant player in digital finance.

 

Next Week’s Key Events

Economic Calendar: January 20–24

Monday, Jan. 27

• 10:00 AM ET – New Home Sales (Dec.)

Tuesday, Jan. 28

• 9:00 AM ET – S&P Case-Shiller Home Price Index (20 cities) (Nov.)
• 10:00 AM ET – Consumer Confidence (Jan.)

Wednesday, Jan. 29

• 2:00 PM ET – FOMC Interest-Rate Decision
• 2:30 PM ET – Fed Chair Powell Press Conference

Thursday, Jan. 30

• 8:30 AM ET – GDP (Q1)
• 8:30 AM ET – Initial Jobless Claims (Jan. 25)
• 10:00 AM ET – Pending Home Sales (Dec.)

Friday, Jan. 31

• 8:30 AM ET – Fed Gov. Michelle Bowman Speaks

 

IMPACT ON PRECIOUS METALS MARKETS

New Home Sales

• A strong report suggests a robust housing market, implying economic strength, which can boost risk assets like stocks while weakening gold and silver.
• A weak report indicates economic uncertainty, potentially increasing demand for safe-haven assets like gold and silver.

S&P Case-Shiller Home Price Index & Consumer Confidence

• Higher home prices reflect a strong economy, which can lower gold demand as investors favor equities.
• Consumer Confidence: If confidence is high, people may spend more, reducing safe-haven demand for gold. If low, investors may shift toward precious metals for stability.

FOMC Interest-Rate Decision & Powell’s Speech

• Higher interest rates make bonds more attractive relative to gold, pushing gold and silver lower due to the lack of yield.
• Dovish Fed statements (suggesting lower or steady rates) weaken the dollar, making gold more attractive as a hedge against currency depreciation.

GDP & Initial Jobless Claims

• Higher GDP growth signals economic strength, which is bearish for gold.
• Weak GDP could drive investors toward gold and silver as economic insurance.
• Jobless claims: Rising claims indicate a weaker labor market, often boosting gold demand as investors seek safety. Lower claims reduce recession concerns, dampening gold and silver prices.

Pending Home Sales

• A strong number means economic confidence, which hurts gold as investors expect continued growth.
• A weak number signals economic slowdown, boosting gold and silver as hedges against uncertainty.

PCE Index & Fed Speech

• PCE (Personal Consumption Expenditures) Index is the Fed’s preferred inflation gauge.
  • If inflation rises, gold and silver rally as hedges against declining purchasing power.
  • If inflation cools, gold could fall as the Fed is less likely to cut rates.
• Fed speeches: If Fed officials signal tighter monetary policy, gold declines. If they hint at easing or concern over growth, gold rallies.