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Here is where today gets concerning.
In the 1970s, federal debt sat at around 50% of GDP. Today it is over 100% and climbing. The federal deficit averaged 1.9% of GDP back then. Today we are running 6 to 7%, a level usually only seen during wartime. If the economy slips into recession, that deficit could climb above 10%, unprecedented in peacetime. Consumer sentiment, tracked by the University of Michigan since 1978, is near an all-time low.
Against this backdrop, gold and silver are doing what they have always done. Both metals are building a base at new, higher levels after sharp rallies. Gold trades near $4,600 an ounce, roughly 17% off the all-time high of $5,589 set earlier this year. Silver sits around $73, more than 40% off its $121 peak that same week. Real pullbacks, but the fundamentals have not weakened. They have strengthened.
Central banks continue accumulating gold at a pace not seen in generations. Major Wall Street banks including J.P. Morgan and Deutsche Bank are holding year-end gold price targets well above current levels, with neither revising lower despite the correction.
We are seeing this play out on our end as well. Longtime clients are adding to existing positions on the pullback, and premiums on most products are meaningfully lower than they were earlier this year. For investors who have been watching from the sidelines, this is the kind of entry point that does not come along often in a bull market of this size.
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