Investing

2 More Strong Indicators for Gold and Silver Price Growth

gold price charts

While both gold and silver prices have seen solid growth this year, there is still the potential for much greater gains. With a potential recession on the horizon and a growing possibility for rate cuts later this year, there certainly is a strong underpinning for both gold and silver.

But while growing investment and safe haven demand continue to support both gold and silver, there are some other factors that play into both gold and silver prices that could continue to push those prices higher, regardless of what happens elsewhere in the market.

Gold Favored by Central Bankers

20-25 years ago, central bankers were almost universally of the opinion that gold was passé. Alan Greenspan, when he was Chairman of the Federal Reserve, even had the chutzpah to declare that the Federal Reserve’s conduct of monetary policy had essentially replicated the stability of the gold standard.

Central bankers around the world decided to sell their gold, entering into a series of central bank agreements to coordinate their gold sales. In fact, these agreements began in response to UK Chancellor Gordon Brown’s decision to sell off most of the UK’s gold reserves, an action which depressed gold prices which were already low at the time.

Of course, gold prices today are nearly ten times higher than they were back then, underscoring the foolishness of Brown’s actions. And gold today is once again back in favor with central bankers around the world.

Central bank gold purchases have been at record or near-record levels for the past several years, as gold prices continue to climb. And nearly 30% of central bankers polled in a recent survey expect to add to their gold reserves over the next twelve months.

Central bankers overall are much more bullish about gold’s future prospects, with nearly 60% of central bankers from advanced economies expressing a positive opinion about gold’s future, up from under 40% last year.

And more than 80% of central bankers expect reserve managers to increase their bullion holdings this year. At the rate central bankers have been adding to reserves in recent years, that seems to be a near certainty.

At the same time, central bankers are becoming more pessimistic about the role of the US dollar and its place in central bank reserves. Over half of all advanced economy central bankers believe the dollar’s share of central bank reserves will fall, joining nearly two-thirds of central bankers from developing countries.

Given the weaponization of the dollar and continued inflation, that’s not entirely unusual. And given gold’s continued growth, it’s no wonder that central bankers are continuing to add rising gold to their reserves at the expense of devalued dollars.

Silver Supported by Solar Panel Supply Chain

One of the biggest potential drivers of the silver price in the future is the growing demand for silver from the photovoltaic industry. Silver is an essential component of solar panels, and with demand for green energy growing every day, silver demand is rising.

Silver demand has outstripped silver supply in recent years, and it’s not inconceivable that this could continue in the future. This could help drive the silver price even higher.

But what is news to most people is that China controls about 80% of the solar panel silver supply chain. While much of that solar panel production gets exported to Europe or the United States, the silver used for those solar panels stays within China.

Think of China almost as a big black hole, swallowing up silver to produce solar panels. That diminishes the amount of silver available elsewhere, whether for industrial use or for investment purposes.

While much of the focus on China and metals has been on China’s dominance of the rare earth market, much less focus has been placed on China’s use of gold and silver. If China continues to demand and use precious metals in the manner it has been, it could continue to drive prices up in the future.

And with so much solar panel production taking place in China, rising solar energy demand could correlate to increasing silver demand from China, and rising silver prices on world markets.

Are You Taking Advantage of Rising Gold and Silver Prices?

Bull markets in precious metals markets tend to be somewhat cyclical, with the last bull market peaking in 2011. Both gold and silver seemed to struggle to maintain their footing for the next few years, with the 2020 pandemic finally providing a much-needed real boost that hasn’t faded.

With more and more people fearful of recession, investment demand for both gold and silver has remained strong, even as gold prices have hit new all-time highs this year and silver prices have risen to their highest levels in over a decade.

But with gold continuing to see strong demand from central bankers and silver seeing strong demand from the photovoltaic industry, there are additional drivers behind gold and silver prices than just investment demand.

The next bull market for gold and silver could see a multitude of factors converging to push prices higher, which would greatly benefit anyone who owns gold and silver.

Many Americans have already taken steps to protect themselves with gold and silver, seeking out safe havens amid the prospect of increasing financial uncertainty. One way of doing that has been through gold and silver IRAs, which allow you to protect existing tax-advantaged savings with physical gold or silver coins and bars.

Both gold IRAs and silver IRAs can be funded with a tax-free rollover from existing 401(k), 403(b), TSP, IRA, or similar accounts into a gold or silver IRA. Those funds can then be used to purchase IRA-eligible gold and silver coins, which then enjoy all the same tax benefits as any other IRA account.

For those who have cash or cash-equivalent assets to protect, the option of direct cash purchases of gold and silver is an option too. Direct cash purchases of gold and silver coins and bars can be shipped right to your door, or if you make a large enough purchase you can even choose to have your gold and silver stored at a bullion depository.

No matter which way you choose to buy gold and silver, Goldco has options available to you. We work with mints around the world to source gold and silver coins directly from the mints that manufacture them, ensuring that the gold and silver you buy from us is 100% authentic.

With over $2.5 billion in precious metals placements and over 6,000 5-star reviews from our satisfied customers, Goldco has worked hard to make ourselves one of the best and most trusted gold companies in the country. Give us a call today to find out why so many Americans have chosen to buy their gold and silver from Goldco.

 

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