Our office will be closed Friday, February 9th. We will reopen on Monday, February 12th. All emails and voicemails will be responded to early next week.

 By Appointment Only

24 Bold Economic, Financial & Precious Metals Predictions for 2024

Share this info!

24 Bold Economic, Financial & Precious Metals Predictions for 2024

As we wrap up 2023, and look ahead to 2024, economics, finance and precious metals are always top of mind for most of our readers. It’s commonplace for folks to say that the coming year will be the most important yet (just like we hear at every election), and while wenew years fireworks agcb don’t typically buy into that mantra, we believe that 2024 will be an interesting year as it relates to our economy, the financial markets and precious metals.

While we don’t have a crystal ball, and realize that most of our bold predictions likely won’t come to pass in 2024, we believe that it’s worth at least considering some of our predictions for 2024, as while we admit that they’re bold, but not completely unrealistic.

We’ll try and break down our predictions by category so that they’re not there’s some semblance of organization with our thoughts. Also, considering that we’ll be providing 24 predictions, there won’t be much room for commentary, but we’ll provide a few brief comments to support each of our predictions.

Without further ado, we’ll begin with comments about the state of the economy:

The Yield Curve Will Correct in the First Half of 2024

The yield curve, which provides a visual depiction of the interest rate relative to the term,  has been inverted since October of 2022. This means that short term bonds are paying higher interest rates than long term bonds. This isn’t indicative of a healthy economy and will likely correct in the first half of 2024. The yield curve has been inverted since October of 2022.

The U.S. Economy Will Be in a Recession by the End of 2024

Recessions typically don’t begin until an inverted yield curve corrects or “uninverts.” The correction will most likely occur by the Federal Reserve lowering short term interest rates as opposed to seeing an increase in longer term rates.  A reduction in short term rates is referred to as a “bear steepener,” whereas an increase in longer term interest rates is referred to as a “bull steepener.” Check out a recent article we published titled, “How to Accurately Predict When the Next Recession Will Occur“.

Average U.S. Home Prices will Continue to Decline

The slowing of the economy, coupled with 7% – 8% mortgage rates will put downward pressure on the U.S. housing market, causing it to drop from current levels. China has seen a substantial drop in real estate prices over the past few months, so there’s no reason to believe that we’re immune from seeing the same here.

Commercial Real Estate will Continue its Decline in 2024

Commercial real estate will continue its decline in 2024, most notably in the office and retail sectors. Apartment buildings are also experiencing issues due to higher vacancy rates and a higher cost of capital as landlords attempt to roll over their expiring debt at much higher interest rates. Most notably, we’ll continue to see a plunge in the value of office buildings as vacancy rates increase and market rents decline.

 

State Laws Restricting Short Term Rentals Will Accelerate a Housing Decline

The unprecedented amount of monetary intervention by the Federal Reserve in 2020 caused mortgage rates to plummet to an all-time low. This resulted in a good bit of real estate speculation with expectations of above market rents from short-term rentals, such as on AirBnB. New York, including other states, have recently passed laws making short-term rentals difficult, if not impossible, which makes these investments no longer viable, resulting in forced sales.

 

Home Prices Will Begin to Revert to the Mean, but Won’t Bottom in 2024

Home prices are currently at 4.5 times average income levels, which is unsustainable. Historically, prices have been closer to 3 times earnings. While prices won’t revert to the mean in 2024, they’ll begin heading in this direction in 2024, and will likely bottom a few years later. For comparison purposes, the last recession started in 2008, but home prices didn’t bottom until 2012.

The Unemployment Rate will Rise to Above 5% by the End of the Year

At the time of this writing, the unemployment rate is 3.7%. While it’s still near record lows, it has increased by .3% since April and will likely rise to above 5% by the end of the year due to a slowdown in the economy. If you’re in the real estate market or are in an industry that relies on discretionary income, you’re at substantial risk.

The Federal Reserve Will Reduce Interest Rates 2 – 3 Times

The market is predicting up to five rate hikes of .25% beginning in March 2024. We believe that the Fed will reduce rates, but they’ll try to hold off as long as they can, with the first rate cut most likely mid-year. We don’t anticipate that they’ll reduce rates as many times as the market predicts, unless the economy absolutely collapses, as the inflation rate remains stubbornly above their 2% target.

Inflation Will Rise Above 4% in 2024

The current inflation rate is 3.14%, which is well below the peak of 9.1% reached in June of 2022. This has been in response to the Fed’s interest rate hikes, which appear to be on pause. The next likely move is a rate cut, and an expansion of the balance sheet, which historically has caused inflation rates to rise. There’s typically a lag between changes in interest rates and inflation, so inflation will likely be higher in 2025 than 2024.

GDP Will be Negative in 2024

The definition of a recession, at least historically, has been two quarters of negative GDP growth. We don’t know exactly when growth will turn negative in 2024, or how severe it will be, but we would not be surprised if we see a contraction in the economy at the end of the year. In other words, the negative quarters will surpass any positive growth we see during the year.

Stagflation Will Make a Resurgence in 2024

Stagflation occurs when the economy contracts, unemployment rises, and inflation increases. Until the 1970’s, economists thought this was an impossibility. However, we believe thatus household credit card debt we’re going to see stagflation in 2024, which is going to be incredibly difficult, as most folks are barely getting by and are already carrying record levels of credit card debt.

Oil Prices Will Drop to Below $60 & Rise Above $80

Despite OPEC’s production cuts, we’ll see oil prices temporarily drop to below $60 as the U.S. economy slides into a recession, but anticipate that prices will rise above current levels in response to the Federal Reserve’s monetary policies and government’s fiscal policies, which will dilute the value of the dollar.

The Dollar Index Will Rise & Decline During 2024

At present, the U.S. dollar index, as measured by the DXY is 102.1, which is below its 52 week high of 107.35, but is still historically strong in the foreign exchange market. During a recession, the initial response by investors is to rush into US treasures, as they’re seen as a safe haven investment, which will cause the DXY to increase. However, the Fed’s and government’s responses to the recession will cause the dollar to drop to below 100 by the end of the year.

The Dollar Index May Test its All-Time Lows of 70

The DXY dropped to as low as 70.698 in March of 2008, which may be retested by the end of 2024. This would be a 30% decline from current levels, which would cause prices to increase (especially items we import) substantially from current levels. This is not out of the question and will in part be based on the government’s response to the 2024 recession.

The Federal Reserve’s Balance Sheet Will Shoot to North of $9 Trillion

The Federal Reserve’s balance sheet swelled to an all-time high of nearly $9 trillion in April of 2022 and currently stands at $7.7 trillion. However, we believe that the Federal Reserve will ramp up the printing presses again in 2024 and will reach an all-time level of over $9 trillion. Depending on the severity of the recession, we could even test the $10 trillion mark.

The National Debt Will Rise to $36 trillion by the end of 2024us debt clock 1.2.2024 10am

According to the US debt clock, our current national debt stands at $33.96 trillion. By the time you read this article we’ll likely hit the $34 trillion mark. The anticipated recession in 2024 will reduce tax revenues, will increase government spending, and push our national debt to $36 or more by the end of 2024.

2024 Deficits will be $2 Trillion or More

In recent years, we’ve seen annual deficits of over $1 trillion. In other words, we’ve been spending $1 trillion more than we’ve received in tax revenue. We saw extreme fiscal stimulus in 2020, and while we’re not predicting the same level of intervention in 2024, we’re predicting an annual deficit of $2 trillion. This will be driven in large part by increased government spending and reduced tax income.

The Stock Market May Drop by 20% in 2024

Any way you look at it, the stock market is highly valued and is predicting strong earnings in 2024, which likely won’t be the case. Current valuations indicate that future returns will be low going forward, but the more likely scenario is a sharp sell off in the market beginning in 2024. If we see a repeat of the global financial crisis (GFC) of 2008 – 2009, we’ll see negative returns over the next couple of years.

High Flying Tech Companies Will Fall to Earth in 2024

The Nasdaq returned 43% in 2023, which led all stock indexes. The top companies in the Nasdaq are all trading at high multiples to their earnings. Case in point, the PE ratio of the Nasdaq 100 is 25, which is nearly double the average PE ratio. This doesn’t take into consideration some companies, such as Tesla, which has a PE ratio north of 80. In other words, it’s priced to perfection. Don’t be surprised if we see a bursting of the dot com bubble, similar to 2000.

Cryptocurrencies Will See a Pullback in 2024

After a 65% loss in 2022, cryptocurrencies have seen a resurgence in 2023. Bitcoin has seen a return of roughly 160% while some of the smaller coins or tokens have returned multiples of this figure. While in the past cryptocurrencies have operated independently of the stock market, as of late, they have been trading as “risk-on” assets. 2024 will certainly be a “risk-off” type of year, as investors flood into safe haven investments, which will negatively impact the crypto markets in 2024. Investors who missed the last buying opportunity may have another chance to pick up cryptocurrencies at a 50% discount from current levels.

Gold & Silver Prices Will be Positive, but Volatile in 2024

Historically, gold and silver prices perform well when the Federal Reserve lowers interest rates and increases its balance sheet. This is because precious metals have an inverse relationship to the strength of the dollar. However, gold and silver prices have the potential to pullback at the beginning of a recession before Fed intervention. This is because demand for commodities, including industrial demand for gold and silver, slow in response to a weak economy. In other words, there may be a buying opportunity at some point before the Federal Reserve ramps up their efforts and gold and silver prices respond accordingly.

Silver Prices Have thesilver stacking precious metals Potential to Increase by 25%, if not More

At present, the price of silver is $24. A 25% increase would put the price at $30 an ounce, which is well within reach. Even at $30, the price of silver would still be 40% below the $50 year highs reached in 1980 and 2011. If you think this is impossible, look at the recent performance of silver.  In 2020, silver increased by 47%, so a 25% increase is not an impossibility.

Gold Prices May Increase as Much as the Price of Silver

In a precious metals bull market, silver tends to lead the way, however, gold has been leading the way in this most recent rally. Like silver, gold also has the potential for large annual returns. As recently as 2020, we saw returns of 25%. Gold also saw a nice multi-year return of 102% from 2005 – 2010, topping out at $1,900 in April of 2011. A 25% return from current levels would put the price of gold at over $2,500.

We’ll Experience Gold & Silver Coin Shortages in 2024

Every couple of years or so there’s a catalyst that drives people to invest in gold and silver, which results in shortages in the market. In recent years, we saw unprecedented demand in 2020 when the government shut down the economy. We also saw high demand when the Russia-Ukraine conflict started in February of 2022, when inflation spiked to 9.1% in June of 2022 and most recently in March of 2023 in response to bank failures. We don’t know what the catalyst will be in 2024, but it’s a safe bet that a “black swan” event will occur during the year that will drive investors to precious metals, causing a shortage in the markets.

 

Summary

In conclusion, we’ve shared with you 24 bold predictions for 2024. We covered a good bit of ground ranging from the economy, the financial markets and the precious metals markets. Are all our predictions going to come to fruition? Of course not, however, none of our predictions are out of the realm of possibility.

Furthermore, as you may have noticed, none of our predictions were positive. This is because we believe that 2024 is going to be a very difficult year for the economy and the average household. If you happen to work in a cyclical industry that relies on a strong economy, and especially the consumer having a substantial amount of discretionary income, you might want to begin taking steps now to get your financial house in order.

Of course, as one of our favorite podcasters likes to say, “there are no certainties, only probabilities”. We believe that the probabilities of many of our predictions coming to fruition are relatively high, but it’s also possible that the government and Federal Reserve will be successful in continuing to kick the can down the road, as they have in the past.

If the above predictions have you concerned and you want to protect your wealth during tough financial times ahead, consider an investment in gold and silver. These metals have historically performed well while traditional investments have suffered, which makes them an ideal way to diversify your investment portfolio. Gold and silver have become a much more popular investment in recent years and will likely continue to gain traction as the financial markets struggle and investors look to secure their financial future.

atlanta gold and coin hq

Picture of Tony Davis
Tony Davis
Tony Davis is the owner of Atlanta Gold & Coin Buyers, a full service Atlanta based coin and bullion dealer specializing in buying, selling and appraising coins and coin collections of all types and sizes. Tony frequently writes on various economic and numismatic related topics affecting the coin and bullion markets and has been published on some of the industry’s leading websites, including Coin Week, the American Numismatic Association, Coin Collector, Coinflation, and Coin Auctions Help, just to name a few. Visit Atlanta Gold & Coin’s website at atlantagoldandcoin.com to obtain additional information on the products, services and educational resources offered by his company. Tony can be reached at sales@atlantagoldandcoin.com or at 404-236-9744

Share this info!