🥇 Gold's 2024 Rally: What To Expect In 2025?

Good Morning!

Asian markets are closing 2024 on a cautiously optimistic note, with China dropping a whopping 3 trillion yuan ($411B) stimulus bomb – their largest ever. Meanwhile, the dollar's flexing near two-year highs as markets dial back Fed rate cut expectations to just 35 basis points for 2025. Between China's property woes and Trump's looming return to the White House, central banks are keeping their powder dry. The real kicker? Even Japan's getting antsy about their sliding yen, now flirting with 157 per dollar.

In today’s email:

• China: Launches a new $411B stimulus! 

• Bitcoin: Sitting at $94K for now

• MSTR: Buying more Bitcoin as it joins Nasdaq-100! 

• Gold: What’s in store for 2025?

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THE BIG IDEA

Gold's stellar 2024 performance could be just the beginning, with State Street forecasting 80% odds of prices staying above $2,600 or climbing higher in 2025, despite Fed policy shifts

Gold's putting on quite a show, and veteran market watcher George Milling-Stanley thinks we're just getting started. After a dazzling 25% surge in 2024 that sent prices soaring past $2,600, State Street's chief gold strategist is betting big on 2025 – and he's got receipts to back it up.

Here's the golden forecast: State Street sees an 80% chance of prices either holding steady above $2,600 or pushing even higher toward $3,100. And that Fed noise about fewer rate cuts? Milling-Stanley shrugs it off as a mere sideshow, pointing to gold's recent history of shining bright despite hawkish Fed policies.

What's really driving this precious metals party?

It's a perfect storm of emerging market central banks gobbling up gold (they're accounting for a whopping 15% of total demand) and Asian investors fleeing shaky stock markets. Chinese investors, spooked by their wobbling economy, are going back to their age-old golden safety net. They're not alone – India, Vietnam, Korea, and Thailand are all joining the gold rush.

The market's getting spicier too. Those 14-kg LBMA gold bars? They've just crashed through the $1 million mark for the first time. With geopolitical tensions simmering and economic uncertainty bubbling, State Street's banking on another record-setting year.

But here's your reality check: While the upside looks mighty tempting (think $2,900-$3,100 territory), there's still a 20% chance we could see prices retreat to the $2,200-$2,600 range. Welcome to 2025's gold market – where "boring" isn't in the vocabulary, and volatility is the name of the game.

MARKETS AT A GLANCE

TOP NEWS

Japanese investors see positive yen-hedged US Treasury yields for the first time since 2022, marking a significant shift in cross-border investment dynamics

Here's a fresh twist in the global bond saga: yen-hedged US Treasury yields have finally crawled back into positive territory at 0.28%, thanks to the Fed's rate cuts and BOJ's tightening moves. While that's still a quarter of what Japanese bonds offer, it hasn't stopped Japanese investors from pouring a whopping ¥15.1 trillion into unhedged US bonds this year.

China unveils mammoth $411B special treasury bond plan for 2025, marking its largest fiscal stimulus ever as Beijing braces for potential Trump tariffs

Beijing's pulling out the big guns with a jaw-dropping 3 trillion yuan stimulus package – triple this year's amount. The kicker? They're spreading the love across consumer subsidies (think cash for your clunker), business upgrades, and their pet project "new productive forces" (EVs, chips, robots). With Trump's tariff threats looming, China's not taking any chances. State banks get a slice too, as Beijing doubles down on domestic growth.

Catastrophe bond market hits record $50B as climate disasters drive insurers to seek innovative risk transfer solutions, with investors eyeing double-digit returns

Cat bonds are having a moment, with issuance hitting $17.7B this year as insurers scramble to offload climate risk. Here's the kicker: investors are pocketing 16% returns while essentially betting against disasters. But there's a twist – insurers want coverage for more frequent events like wildfires, not just the rare mega-storms. Talk about playing with fire.

CRYPTO

MicroStrategy continues its aggressive bitcoin accumulation strategy, adding 5,262 BTC at $106K each while joining the Nasdaq 100, bringing its total holdings to 444,262 BTC

Fresh off joining the Nasdaq 100, MicroStrategy's still playing its favorite game: buying bitcoin like there's no tomorrow. Seven weeks straight of purchases has pushed their stash to 444,262 BTC, worth a cool $42.2B. The latest haul? 5,262 coins at $106K each. With $7.08B left in their war chest, Saylor's shopping spree isn't done yet.

As Bitcoin nears $100K, here's how to handle the inevitable crypto questions at your holiday dinner table without becoming the family's unofficial financial advisor

'Tis the season for crypto FOMO! With Bitcoin flirting with all-time highs, your relatives will likely pepper you with crypto questions over Christmas dinner. The smart play? Keep it real: admit you can't predict markets, explain we're deep in a bull cycle, and suggest a conservative approach (think Bitcoin/Ethereum/Solana split). And remind them about the taxman – he always wants his slice of the crypto pie.

Trump's Pro-Crypto Agenda Sparks Hope for Day-One Executive Orders

The crypto industry anticipates President-elect Trump may issue executive orders on his first day in office to advance key priorities like establishing a national Bitcoin reserve, easing banking access for crypto firms, and creating a coordinated crypto growth council. While some proposals face hurdles, such moves could mark a sharp shift from the current regulatory environment and signal strong government support for innovation in the sector.

Crypto ETFs to expand in 2025 with Solana, XRP, and more in the pipeline

Following the success of Bitcoin and Ethereum ETFs in 2024, analysts anticipate a wave of new crypto ETFs in 2025, including Solana, XRP, Litecoin, and Hedera. The incoming Trump administration and crypto-friendly SEC leadership are expected to accelerate approvals, though regulatory clarity on asset classification will be key to ensuring broader adoption and investor confidence.

GOLD

Gold Gains Amid Uncertainty Over 2025 Rate Cuts

Gold edged up 0.2% to $2,618.93 as traders considered the Federal Reserve's cautious approach to interest-rate cuts in 2025. While lower rates generally support gold, the rally has slowed due to a stronger US dollar and economic concerns tied to the incoming Trump administration's policies. Despite this, gold is poised to end 2024 over 25% higher, driven by monetary easing, safe-haven demand, and central bank buying.

DAILY ECONOMIC CALENDAR (ET)

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