Continued inflationary pressures and the growing risk that the federal government could default on its loans will likely see Wall Street traders flock to precious metals in 2023.
The United States hit its $31.4 trillion debt ceiling on Thursday, after the latest inflation data showed consumer prices were still up 6.5% on a yearly basis.
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Meanwhile, gold and silver have jumped around 15% and 21%, respectively, over the past three months as falling stocks have dragged major US benchmarks even lower, and the US dollar fell to just $0.81 from the British pound and just $0.92 from the euro.
In an interview with FOX Business, Jonathan Rose, CEO of Genesis Gold Group, said, “The main driver of gains in the precious metals market is the devaluation of the US dollar, inflation and other federal government monetary policies. “.
“Everyone can see that government spending is a major problem for the economic health of our country, and now our government is at risk of defaulting on its bills,” he continued. “.If the federal government defaults on its loans, it will destroy investor confidence in the US dollar and weaken it significantly.”
“This environment creates strong arguments for allocating funds to physical precious metals,” he added.
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An online survey by Kitco News showed investors could see silver jump over 50% in 2023 to $38 an ounce, while gold could hit a record high of $2,100 an ounce.
Gold or silver?
According to Morgan Stanley, “the price volatility of silver can be two to three times that of gold on any given day.”
Rose said this was because the silver market was “significantly smaller” than gold, leading to lower market liquidity.
However, silver’s growing applications in industry could begin to close the gap in 2023, especially as the automotive sector shifts more towards electricity and other forms of energy are harnessed through in the sun.
As an investment for the near future, Rose said “professionals hail silver as having a much higher ceiling because of its industrial potential, from its chemical use as a catalyst and conductor to electrical switches and solar panels.” .
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“Silver demand has reached an all-time high over the past 12 months, he continued. “Combining the appeal of physical silver as a safe-haven asset creates a strong case for investing in metal in the near future.”
Primarily used in industry for its conductive properties in electronics manufacturing in the aerospace and defense sectors, gold remains the enduring metal on Wall Street due to its connection to currency alongside economic factors. supply and demand.
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Rose said: “The gold to silver ratio illustrates the number of ounces of silver that would be required to purchase a single ounce of gold.
“When this number is high, it’s usually a good indicator that silver is undervalued,” he continued. “When the ratio rises, it usually implies a buying opportunity.”
Midway through Friday’s session, gold is up around 0.22% at $1,928.30, while silver is up around 0.42% at $23.97 the ounce.
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