Investors are growing increasingly confused as gold and silver spot prices remain low despite record physical gold and silver demand and worsening economic conditions. However, a quick review of historic gold and silver performance puts these concerns to rest.
In this week’s The Gold Spot, Precious Metals Advisors Tim Murphy and Joe Elkjer explain why the gold and silver market is stagnant, why spot prices won’t stay low for long, and how investors can take advantage of this unique opportunity.
Big Picture: Gold vs Dollar Value
It’s easy to get bogged down in the day-to-day price performance of gold, which recently hit a new low of around $1,810. However, a big-picture perspective reveals the true value of gold when compared to the US dollar.
Just 100 years ago, gold was valued at $20 and ounce. In 2023, it reached over $2,000 an ounce, marking nearly a 10,000% increase in value. On the other hand, the US dollar has lost 97% of its purchasing power over the last century. As a result, investors who have held physical gold for long periods of time have generated impressive gains.
If you look at the bigger picture…gold and silver…always go up.”
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The performance of gold and silver compared to that of the US dollar puts the current dip in gold and silver prices into perspective. In the long run, the value of physical metals continues to rise as the value of fiat currencies drops.
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Manipulation Suppresses Prices
Gold manipulation has been an unfortunate reality of the precious metals market for decades. Recently, former J.P. Morgan traders were sentenced to prison for market manipulation and fraud, putting years of speculation to rest. Given this revelation, it’s safe to assume other institutional players are engaged in similar schemes. This large-scale manipulation has artificially suppressed gold and silver prices far below their true values. This reality is backed up by the fact that some of the biggest players in the market are taking advantage of these relatively low spot prices.
Central Banks Can’t Get Enough Gold (and Silver)
Over the past year, central banks have been buying record amounts of physical gold with emerging markets such as China, India, Russia, and Turkey leading the pack. Even demand for physical silver reached a record high in 2022 with no signs of slowing down. While part of this surge in gold and silver bullion demand is driven by economic uncertainty, investors shouldn’t discount the role lower paper spot prices play in the frenzy to buy precious metals.
Suggested reading: Spot Price vs Physical Price of Gold & Silver: Why There’s a Difference
Low Interest = Perfect Buying Opportunities
It’s an age-old investing axiom that one of the best times to buy an asset is when public interest is at its lowest. That’s because massive interest in an investment usually leads to inflated prices and a bubble market. You see this every few years in the stock market. On the flip side, a market without much engagement usually means prices are an absolute steal. This is precisely what’s happening in the gold and silver markets.
Don’t Wait to Buy Gold, Buy Gold and Wait
When taking a long-term perspective on precious metals, this current dip in value is a fantastic opportunity to dollar-cost average into physical metals. As mentioned before, gold and silver prices will inevitably rise, so this buying window isn’t going to last forever.
Be prepared. Take advantage of the artificially low prices.
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Cracks are forming in the US economy, and it’s only a matter of time before the mounting burdens of de-dollarization, inflation, high interest rates, and geopolitical tensions push gold and silver prices to new heights.
Contact us by calling toll-free at 1-888-812-9892 or using our live chat function. We’ll pair you with a dedicated Precious Metals Advisor to help you answer your questions and determine how gold and silver can support your investment goals.
