Many Americans are aware that our economy is no longer backed by a gold reserve (see link below for information on the change off of the gold standard). For individuals, the purchase of gold and precious metals continues to be popular as a hedge against the possible devaluation of the dollar (with the rise of cryptocurrencies we have seen a shift in the future stability of the dollar.)
Historically, the value of gold and precious metals has an inverse relationship
with the size of the national debt.
This is also true with the inverse relationship of the value of precious metals to real estate.
It is all very much tied together.
From February 2020 through June 2022 the national debt obligations continued to climb almost vertically up to 1,200%. If the historical inverse relationship were true, then the value of gold should have gone down. Ironically, performed remarkably well and was simply unable to keep up with the climbing federal debt.
Let’s look at what happened to silver in June of 2022. On June 17th the silver spot price was $22., pre-1933 coins were and remain at around $35. Previously, prior to Covid, pre-1933 coins were running around $27. This means that silver had an increase in value of 22% during Covid. Security was a major factor for the silver growth as fearful consumers scrambled to gain hard assets in the event of the possible financial crisis. Just as item like toilet paper and hand sanitizer became scarce, banks and retailers were running out of physical coins.
The good news is that there has never been a better time to invest in gold and/or silver!
Many experts/brokers in the gold and silver industry are extremely optimistic about the potential for the value of gold and silver to increase as early as this fall. One example, based on where we are currently, with our Federal Balance Sheet and the current value of gold was shared recently via a pod cast: https://www.buzzsprout.com/1757896/10812064
The example shared on the podcast was theoretically, if we take the $35 silver price today and raise it 8 times (to lessen the 800% gap with the Fed Balance Sheet) that would be a price of @$280+, and even if it meets it halfway, it’s still 2 or 3 times the multiple of where it’s currently at.
So, right now silver is “on sale.”
There is no question the market is nervous, and with the increased spending – foreign aid to Ukraine, etc., a correction must occur to avoid mayhem. The Fed is backed into a corner. A recession seems imminent. The stock market is purging. Gold and silver is performing the same as in historical recessions—it is doing exactly what it should be doing.
Gold and silver are a long-term play.
While there are a vast number of citizens in this country who are “prepping” or shifting back to living a simpler lifestyle, one thing remains: some form of currency or trade is needed to exist.
Having some precious metals in your portfolio, provides is a certain level of security that can protect you and your family.
Additionally, you have physical coins, a tangible safeguard with which to bargain when needed. For a brief history on what happened when Roosevelt took the US off the gold standard, read here: https://www.federalreservehistory.org/essays/roosevelts-gold-program
If you want to learn more about how to provide additional security to your portfolio by owning some hard assets in precious metals, please reach out to us at info@mvplwrc.com or call: 775.365.9429
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