With stock and bond markets having a rough 2020 so far, and with markets poised for even greater losses this year as economic production craters, more and more investors are looking to protect their assets with gold. Gold’s price performance this year has already been terrific, with the yellow metal pushing $1,700 an ounce. Yet even at that price, a mere $200 or so from its all-time highs, serious investment analysts and institutional investors are calling it severely undervalued.
If $1,700 is undervalued, then what should gold be at? We know that some on Wall Street think $2,000 is easily achievable within the next year, and that $3,000 in the near term isn’t unreasonable. With the Federal Reserve having increased the size of its balance sheet by 50% in less than two months, it’s certainly rational to expect a significant devaluation of the dollar and a corresponding increase in the value of gold.
Silver is poised for huge gains as well, as it’s widely considered to be undervalued with respect to gold. With the gold to silver price ratio currently at over 110 to 1, silver has never in history been more undervalued. But as investor demand picks up later in the year to take up the slack left by falling industrial demand, and as above-ground silver supplies continue to shrink, expect silver to rise to more reasonable levels.
Even a rise to a 75:1 price ratio would result in a 50% rise in the silver price. And a ratio of 50:1, more in line with long-term historical levels, would result in silver more than doubling in price. Of course, as gold rises in price in the future, it will pull silver along with it. And with gold likely fully able to take advantage of current economic conditions to rise in price, it’s only a matter of time before silver will start rising too.
The coming months and years could see some pretty amazing price growth for gold and silver investors, but only if they capitalize now on the opportunity to purchase precious metals while they’re still cheap. Many investors failed to take advantage of the opportunity to buy gold and silver in 2008, and watched jealously as they shot up in value in the aftermath of the financial crisis.
If you’ve been paying attention to markets and to the economy recently, you’ll know that we’re on the verge of another financial crisis, only one that will be much worse than 2008. If you haven’t already made the move to protect your retirement savings, can your investment portfolio really afford to take a 50% or larger hit like many did during 2008? Or would you rather protect your investments with gold and silver? The clock is ticking. Don’t let your investments lose value because you failed to invest in gold when the price was right.