Precious Metals Get a Boost From Inflation Prone Economies

September 25, 2022
Written by Peter Anderson

If the price of precious metals were to fall by even just a single percent, it would cause an economic collapse that could lead to civil unrest and war. It is precisely these conditions that the precious metals market is actually based on. If the prices of precious metals fall by just a small amount, the economy is in trouble, but a further drop of even less value could cause an economical collapse that could take years to recover from. Therefore, a smart investor must be buying up as many precious metals as he can afford, no matter what the political situation is.

“There is Something Happening”

This is how a lot of people are feeling these days. The global economy is in trouble and a lot of people are watching their savings account shrink as a result. However, if you consider that gold and silver are likely to increase in value over time, even during a rocky economic recovery period, you will realize that your savings are not going to go anywhere. It is true that the price of precious metals as a whole is likely to drop. Nevertheless, there is something happening and something is bound to happen in the markets soon.

Precious Metals Climate

Even though this seems unlikely to materialize anytime soon, extreme inflation levels suggest that it may very well happen at some point. In fact, investors who have been watching the markets closely are starting to take profits from their investments and companies that are heavily dependent on heavy oil and gas production, like Continental Divide, Range of The King, and Continental Inc., are actually enjoying a growth spurt. Oil prices are likely to continue their historic run up until supply and demand meets in a way that helps prices drop for these commodities. If you are thinking about buying precious metals when these prices start rising again, you better be waiting for a long time until supply and demand really works in the users’ favor.

 

Regardless of what you call this climate, you should know that supply always runs ahead of demand, and the industrial sector has been growing for the last few years while the consumer price index has been growing consistently for the last eight years. This means that all those years that the cost of living has been increasing at an accelerating rate while the price of precious metals has been going down, the cost of gold and silver have increased at an accelerating rate. Even when inflation rears its ugly head and the consumer price index starts rising at an increasing rate, precious metals will still continue to increase. In fact, this shows that there is enough time to regain the losses already suffered this past year. While the inflation and unemployment issues in the United States will continue to be reeled in for the time being, gold and silver will likely experience price increases through the end of 2021, which will certainly help the precious metals bull move higher.

Higher Prices for Everything- Including Gold & Silver

A lot higher price means a lot higher value, and gold and silver are no exception. When the price of precious metals increases, so will the value of each individual unit. Right now, the cost of silver is decreasing because the economy is recovering. While inflation may not be seen as a good thing in the short term, it actually gets worse. However in the long run, people see the benefit of purchasing and investing in precious metals like gold and silver when the costs of essentials like food and basic living expenses go up.

 

The silver spot price is currently $13 dollars an ounce, but this average inflation rate might continue to rise as the economy heals. Gold and silver are popular commodities because they do not lose their value during inflation. If the prices of precious metals go up, the costs of essential living commodities like food will also increase, making it harder for people to cope. Gold and silver are under priced and will only increase in value during the inflation rate.

 

With inflation going straight up and no sign of the Federal Reserve raising interest rates, it looks like the precious metals will be on the rise. Gold and silver are commodities just like oil and gas. If you choose to invest in them, you should prepare yourself for more good news for gold and silver as they are expected to increase in value as the average inflation rate rises.

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