While many seasoned observers note a slight drop in the prices of gold and silver, these precious metals very popular with investors especially in times of crisis like today, we will analyze together the 3 reasons to invest in 2020 in gold and silver. While it is true that the yellow metal often pulls the quilt of popularity on it, the white metal has nothing to envy. Its physical properties, however, make it one of the best currencies that have been around since the dawn of time, and even if the value of a silver coin is lower than that of a gold coin, many observers are to announce that its price should experience an unprecedented increase in the years to come. Whether physical or dematerialized, what are the 3 good reasons to invest in gold and silver these days?
Warning : This article is brought to you by the company Veracash. Crypto investments are risky by nature, do your own research and invest only within the limits of your financial capacity. This article does not constitute an investment invitation.
Small details on precious metals
For the most assiduous of you, we wrote last week about precious metals to invest in in 2020.
These precious little ones, each with more bizarre shapes than the next, usually make the headlines during major crises. Elementary metals directly extracted from the ground, it must be said that they have been known to be strong links in the wallet since the dawn of time. Already hundreds of years ago Men fought for scraps of the precious yellow metal during the historic episode of the Gold Rush, especially popularized in West America.
Long before the digital gold rush started by Bitcoin (BTC) and its very famous Satoshi Nakamoto, gold was already a currency used for the purchase of goods and services. Precious metal without doubt the most popularized today, it alone constitutes a timeless asset that many investors do not hesitate to flock to as soon as the alarm bell rings for a crisis in the current monetary system. But it must be said that other precious metals are not left out, with their very high resistance to corrosion, many of them see their prices gradually increase, and this is particularly the case with money, which we will also develop in this article.
So, gold or silver, your heart swings? You are told why to invest in these precious in times of crisis.
Reason 1: central bank liquidity and money supply
Since the shock created by the COVID-19 pandemic around the world, the price of gold has panicked investors by reaching the symbolic mark of $ 2,000 an ounce this summer. In parallel, money, more measured and above $ 20, which had not happened for several years, continues its path and takes an interesting trajectory for the lovers of precious metals. But why such returns and such prospects even as the world has continued to shake in the face of the catastrophic fallout from the crisis we are experiencing?
You did not miss it, the countries, and foremost of which central banks, do not stop injecting liquidity into the economy. The pioneer in this field remains the FED which declared to the American market that Fed funds rates (the loans that U.S. banks make to each other to meet the reserve requirements set by the Federal Reserve) would likely remain close to zero until at least 2023. With an unprecedented crisis situation for our contemporary economies, coupled with a trade war between China and the United States, the central banks are adopting a monetary policy with a very low interest rate, tending towards zero, which advantageously benefits Gold and Silver since these assets do not remunerate through interest rates.
You don’t have to be in science fiction to imagine that large financial institutions will continue their strategy of flooding economies by injecting liquidity continuously with a single goal : encourage borrowing and spending and curb saving. In 2020, the FED printed 20% of dollars that are currently circulating on the planet, when we know that gold and silver are present in limited quantities on Earth, they represent investments that fairly protect this to the endism of the Central Banks which spin the banknote as much as they measure.
At the same time, commodity prices follow those of precious metals and rise again, mirroring increasingly negative negative rates. This leverage effect, combined with the good performance of gold mines in particular, therefore creates an interesting air call for investors wishing to diversify their portfolios.
It must be said that historically, gold has always been correlated with the development of real interest rates. So after a bullish rally from 2018 to 2020 how will it behave in the coming years?
Finally, if we look back a decade earlier when the subprime crisis was in full swing: even if the financial crisis was of a different nature, the approach of financiers to stabilize the situation seems to be the same, and if we are to believe the evolution of prices on the gold and silver markets between 2008 and 2011 there is a good bet on a similar situation for 2020 and the years to come.
“Insanity is doing the same thing over and over and waiting for a different result”
You will understand, precious metals are intimately linked to currencies: as soon as there is a lack of return on fiat currencies, then the price of gold and silver is appreciated. The wolf of Wall Street needs to behave.
Reason 2: rarity
As you probably know, if we use the term precious next to metal, it is not for nothing. Every word has a meaning. As it happens, above all, talking about precious metal underlines the scarcity of the asset in question. For the most cryptophiles among you, you can see the common point between Gold and Bitcoin: the rarer their number, the more their price increases as the asset becomes valuable and in limited quantity. Like Pokemon Go, many investors then seek to find the precious good.
Even if the price of gold is churning out right now, now might be the time to think about it. However, it is close to $ 1,800 an ounce, nothing to worry about its performance at the end of 2020 which will have marked the spirits.
Regarding the yellow metal, humanity has already extracted 197,576 tons of gold during its history, and there would be “only” 50,000 tons of gold underground, or about 15 years of exploitation at its own pace. current, despite efforts to find new gold deposits. This shock of supply vis-à-vis demand, and even if it tries to be absorbed by new practices such as recycling, of course, it is likely to increase the price of gold and therefore achieve attractive returns for the holders of the precious.
Regarding gray metal, its presence in large numbers in new battery technologies and the reduction in mining supply are also likely to create an imbalance between supply and demand. As it rose above $ 20 for the first time in 4 years this summer, the turnaround in silver, like gold, is notably boosted by robust speculative demand.
If many avenues are being studied to find new gold deposits such as in space, the fact remains that today all the factors we have just detailed continue to confirm the thesis of a scarcity of these assets making them attractive and increasing in value over time.
Reason 3: a safe bet since the dawn of time
In the midst of the global COVID-19 crisis, it must be said that precious metals are once again making a name for themselves thanks to their main characteristic of a safe haven. Indeed, far from us the speculative effects of the crisis, precious metals are a formidable means of resisting the troubles of our time and their price is moreover completely transparent.
At a time when governments and banks are trying at all costs to find ways to avoid bankruptcy, holding gold and physical silver thus protects your nest egg from the banking storm.
While banks and governments only need to press a button to issue entire liquidity programs, gold and silver, they, as we told you earlier, require energy to extract them from the ground. This crucial role held by precious metals is then permitted by the course of history, which has repeatedly shown us the interest in holding such assets both for central banks themselves and for individuals and institutional investors.
Besides, gold and silver are no one’s debt and that is why central banks are turning to them more and more.
Indeed, according to the latest World Gold Council survey, 20% of global central banks plan to increase their gold reserves over the next 12 months, up from just 8% in 2019. 88% of central banks say negative interest rates are relevant to their reserve management decisions
Safe values since the dawn of time, Gold and Silver guarantee stability and security thanks to their possibilities of holding them in physical or dematerialized form, and are therefore in these times an option to study if you wish to embark on the market. alternative investment.
Gold or Silver your heart swings?
You’ve all been watching the bullish rally in gold this summer, which hit the $ 2,000 an ounce mark: Bloomberg rushed to make his bets and announced his upside forecast for 2023.
Gold would therefore be capable of peaking, leaving silver much cheaper and more appreciable for its investors. Even if the gold price is falling now, it might be a good time to learn more about alternative investments and to jump into the world’s oldest stock. It must be said that yellow gold is often compared to digital gold, Bitcoin, since they are broadly in the same niche.
Since the original idea was to protect against inflation and to get out of the traditional economic circuit, this natural competition can also have an impact, with increases calling for increases. And while production is expected to rise sharply in the coming year, silver is, according to some analysts, the investment of the decade. If gold is king in the investor kingdom, silver might be its crown prince.
Both industrial and precious metal, it is more and more popular in electrical and electronic products and in particular a major asset in the energy transition since it is contained in photovoltaic panels. Sure the 850 million ounces ($ 21 billion) of annual mining production, more than 60% goes to industry, which, given the expected demand for solar power for years to come, is expected to explode.
In short, if gold rises, silver in turn will rise, and benefiting from rising demand should catch up with the historic ratio. Investors could then turn more to silver, the price of which will be more attractive, do we place the bets?
You don’t know what to choose?
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Getting out of the banking system without changing your habits is indeed the value proposition we were talking about in a previous article.
From your savings to your baguette, gold and silver have never been so close at hand.
Operating the synthesis of the two worlds, before offering the third world with the VRO token, Jean-François Faure’s company has not finished surprising you and announces good prospects for the year 2021!
If you are still hesitating before embarking on obtaining your precious assets, follow our sections every week to learn more and more about the alternative investment forum and stay tuned … new things are coming!
Karen is passionate about new technologies in general, and blockchain in particular! Uncovering trendy news, the latest market developments, and the treasures of the ecosystem, she is happy to help you discover this universe in all its colors.