Gold and Silver

Gold and Silver are having an incredible year. In fact, absent a rampant bull market in the last month of the year in Bitcoin, they might take the podium as the most profitable asset class (precious metals) for the year. Silver is up 90%, and gold is up 58% YTD. On Friday, the CME had a problem to open the futures market, that was supposedly related to the inability to deliver phisical silver to one big investor. Officially, it was due to a failure in the cooling system in their data centers, which quite frankly, it’s not believable. The silver spot price went up 5.77% just on Friday, after the incident. What it seems to be happening is that there is not enough physical silver (and gold) to confront deliveries paired with huge demand on both metals from central banks, some investors and some digital assets. On one hand, the amount of debt the US is accumulating is worrisome to central banks, which have a high percentage of their reserves in Treasury bonds. They have decided to diversify into gold, cornering the market. On top of that, the decision of freezing and confiscating Russian money after the invasion of Ukraine, has been interpreted by many central banks as an additional risk that was not in the books, particularly by China, which may see that as a problem should they want to escalate the tensions related to Taiwan. Last by not least, this is a big bet against the US dollar. With rampant deficits and the inability of congress to control spending, the dollar will inevitably weaken, forcing everyone to look for alternatives, precisely when there aren’t many. The Euro is not a believable option, the Yuan is not ready, and have geopolitical implications that very few are ready to confront, leaving Gold and silver as the most viable options, with a 5000 year track record.

Want to know more? You can find all our posts at https://www.myfundamental.net/insights

#iamfundamental #soyfundamental #wealthmanagement #familyoffice #financialadvisor #financialplanning #policymistake #ratecut #stagflation