Why Gold and Silver Will Be the Most Secure Currencies

10 Jul
Gold bars and coins stacked

Why Gold and Silver Will Be the Most Secure Currencies

Gold Market Discussion

Why Gold and Silver Will Be the Most Secure Currencies

silver overtakes gold

Many eminent investors consider gold and silver as currencies. Peter Boockvar considers precious metals an “anti-fiat money” currency. Because gold is a tangible, finite resource, its value cannot be as easily manipulated or created electronically through central banking monetary policy as fiat currencies can.

Central banking policies – particularly in Europe and Japan – of negative interest rates has resulted in nearly $11 trillion worth of negative yield government bonds. These polices are also hurting the return prospects of pension funds and savers, threatening the existence of insurance companies, and straining the banking systems. In Boockvar’s words, “We are living in a world of monetary mayhem where monetary policy has embarked on an experiment that is now going haywire.” As central banks lose their grip on the policies they’ve embarked upon, the global economy is slowly grinding to a barely creeping pace.

What this means for investors: The warning signs that the global economy is in trouble are increasing. Many of these dangerous macro trends are prompting investors to move into gold and silver now. Boockvar believes gold and silver will be the last currencies standing when the current monetary regime inevitably falls apart.

WATCH: Why Gold Investors Should Also Be Watching Silver

Silver hit two-year highs on Monday as it climbed to $21 an ounce. Part of the price climb is still driven by post-Brexit safe haven demand. Some analysts are saying an increase in demand for silver’s industrial uses – particularly in solar panels – is also spurring the price climb. Silver still has a long way to go to hit its 2011 highs of $49. This suggests that prices could continue to rise. The French bank Societe General raised its long and short-term price forecast this week for both gold and silver.

What this means for investors: Silver has two strong drivers right now. Because of its lower price relative to gold, it can be more erratic in movement, but generally rides on gold’s wake. The white metal is so far performing better overall than gold for the year, however. While part of that is due to industrial remind, when analyzed in conjunction with gold price movement, signs indicate that safe haven investing is the strongest factor as investors diversify against increasing risk in the market.

WATCH: More Leading Analysts Flocking to Gold in New Bull Market

Investment strategists have been saying for a couple months that gold has entered a new bull market. Prices bottomed out at the end of 2015 and gold is up nearly 29% this year. At the start of the week, the metal reached $1,377, which was its highest level since March 2014.

An increasing amount of financial risk is in great part the catalyst for gold’s climb. Central banks around the world are pursuing low and negative interest rates as the U.S. Federal Reserve struggles to raise them. The economic indicators, however, have not been strong enough thus far to justify a hike. Divergent and unconventional monetary policies across the board along with a stock market that could be topping out are making many investors uneasy about the future.

What this means for investors: Gold prices rallied for twelve years until they peaked in 2011 and fell. It appears, as predicted, that the price truly did bottom in 2015. This new bull market could last a long time with the amount of volatility and future uncertainty for the global economy.

Federal Reserve June Meeting Minutes a “Non-Event” for Gold

The Federal Reserve released the minutes of its June meeting on Wednesday. Even following the tumultuous Brexit week’s volatility, there was little new information about the markets and direction for the economy. For the gold market, it amounted to a non-event and did not seem to impact gold price movement. The minutes acknowledged however that weak employment and payroll data for May was of concern, and that a July interest rate hike is now off the table.

What this means for investors: The stock market saw some gains after the minutes were released, but gold was not impacted. Generally gold moves in opposition with the stock market, so the fact that it made little movement suggests there is much uncertainty about the positive outlook that the Fed continues to attempt to project for the U.S. economy. The lack of growth in the labor force is sending warning signs despite the stock market’s positive movement. Some strategists are doubting whether a rate hike – first planned and postponed for June, and now for July as well – will even happen this year.


Here are some articles from the web discussing the topics in this week’s post:

Why Gold Investors Should Also Be Watching Silver
Read Here

More Leading Analysts Flocking to Gold in New Bull Market
Read Here

Federal Reserve June Meeting Minutes a “Non-Event” for Gold
Read Here

Why Gold and Silver Will Be Most Secure Currencies
Read Here

As always, I encourage you to speak with your broker at RME for more market updates. Expert brokers are available Monday-Friday from 9 AM- 5 PM or by special appointment after hours. Call today at  602-955-6500 or toll-free at 877-354-4040.

“I’ll be keeping a sharp eye on the market and I encourage you to do the same!”