The newsletter is a roundup of financial news, investment status, and other financial trivia, giving you the insight you need to manage your money in any economic situation.

Overview

• China’s central bank cut its key interest rate and injected extra liquidity into the banking system in a bid to revive the economy.
• Wall Street has continued in a positive mood since 18 September, when the Fed cut interest rates by half a percentage point. Two more rate cuts are expected to follow in November and December, each by an additional 25 basis points.
• Among the important investments, the past week has seen the rise of bitcoin, which is currently at USD 63 000, and gold at USD 2 650 per ounce.

China launches liquidity facilities to boost the economy

China is facing major economic challenges and its central bank has taken decisive measures to stimulate the economy. They have cut the key interest rate by 50 basis points to support economic growth. This move is making capital more readily available and facilitating corporate financing, which should encourage greater investment and increase liquidity in the market. In addition, China is releasing capital on a large scale, which is key to maintaining stability and reviving economic activity at a time of slowing global growth.

Global net liquidity on the rise

Over the past year, we have witnessed a significant growth in global net liquidity, which has increased by as much as USD 7,300 billion. This represents the highest rate of growth in two years, pointing to a greater availability of financial assets in global markets. The increase in liquidity is having an upward impact on asset prices, including precious metals, which may have a positive impact on investment markets and overall economic activity.

Vir: Envato

Gold follows US debt

The US public debt has increased by a factor of 100 between 1966 and 2023, reflecting the enormous growth in borrowing during this period. Interestingly, the price of gold has risen by a factor of 50 over the same time period, underlining the close correlation between the growth in US debt and the value of gold. This means that gold is often perceived by investors as a safe haven in times of rising indebtedness and uncertainty in financial markets, contributing to its long-term appreciation.

Banks raise gold and silver price forecasts

All major global banks are raising their forecasts for future price growth in precious metals, notably gold and silver. UBS has increased its gold price target to USD 2,900 per ounce from USD 2,750 per ounce, reflecting the expected continued growth in demand for gold as a safe-haven investment. Similarly, Citi Bank has increased its 2025 forecast for gold from USD 2,800 to USD 3,000 per ounce, while forecasting silver to reach USD 35 per ounce by the end of 2024 and between USD 38 and USD 40 per ounce by mid-2025. These forecasts reflect the market’s belief that precious metals will continue to appreciate in value, linked to increased global uncertainty and rising inflationary pressures.

Silver price at highest since 2012

• • While gold reached a new record high, silver reached its highest level since 2012 as expectations of further interest rate cuts by the US Federal Reserve (Fed) boosted precious metals prices.
  • Silver has been one of the best performing commodities this year as the reversal in the Fed’s monetary policy, along with the possibility of further interest rate cuts, has also benefited other metals.
  • Gains have been supported by the prospect of increased industrial use as China seeks to stimulate its economy, while there are signs of increasing inflows into silver-backed funds.

The newsletter “Financial insights and trivia” does not constitute an investment advisory service. Its content does not constitute recommendations to buy or offers to buy, but is intended to inform the public about developments in the financial field. Past returns are not a guarantee of future returns. Please consult a financial adviser for advice.