Gold & Silver

We are now at the end of a major economic era and bubbles in many asset markets and commodities are typical for the end of a cycle. This is exactly what we have seen in this century with historical overvaluations of stock, bond, and property values.

As central bankers themselves clearly understand, as fiat currency debasement continues and even accelerates in the coming months and years, physical gold is set to provide the only reliable and time-tested haven from the storm that lies ahead. 

According to the Pew Research Center, despite some ups and downs over the past several decades, the real average wage in 2018 had the same purchasing power it did in 1978 as a result of inflation and the inability of fiat currencies to protect against it.

The Dow-to-Gold Ratio presently stands at 19-to-1 and we expect it will fall at least down to 13 with gold gaining more and/or holding its value better than the Dow in 2022.

Those who are insistent that silver has huge ground to make up in comparison to the gold price should take special note of this article.

With the Fed and most other G10 central banks beginning the rate hiking cycle, we highlight below 10 things we think gold/precious metals investors should watch for that may influence gold price dynamics in 2022.

A severe economic recession will force the Fed to abandon its tightening stance by mid-2022 and resume its money printing and near-ZIRP monetary policies and this will serve as rocket fuel for the precious metals sector.

If gold were to be included in a new reserve currency at this stage, it would likely lead to a chaotic surge in the metal, pushing it perhaps to $5,000 or even higher very rapidly.

The question of how much gold or silver one should hold is a common one. The answer is usually expressed in terms of portfolio percentages, as in 10 – 20% of one’s investments. Such an answer is without basis. Why is 15%, for example, any better than 100% or 0%?

Many traders use the Gold/Silver Ratio as a measure of price comparison between these two metals and, right now, Silver is extremely undervalued compared to Gold.