Gold May Rise but Silver May Double in 2022

The price of gold may reach about $2,100 an ounce, up from its present price of around $1,800 per ounce by the end of 2022. However silver prices, could hit $40 -- roughly double from where they are today if certain conditions are met.

Gold market commentary is often dominated by a lot of noisy perma-bull commentary. We’ve built a model to provide a clear signal. Its ten-year track record speaks for itself.

Since 2012, Monetary Metals has accurately predicted 75% of future price moves in gold and silver, and the gold to silver ratio, over a one-to-two-year period. The proprietary model issued a “buy” signal in 2020, and the price of gold notched a new all-time high, climbing over $2,000 per ounce later that year.

Consider the following reasons for a gold-price spike:

  • A growing percentage of corporations are considered zombies -- a Bank of International Settlements term for companies overly dependent on outside financing in order to continue. The Fed has effectively subsidized zombies for years with its zero interest rate policy (ZIRP), keeping short-term interest rates at or near 0% to encourage economic activity.
  • Zombie debt is especially vulnerable to any interest-rate rise. In the face of this growing default risk, investors likely will demand assets with low to zero counter-party risk, i.e. gold.
  • The Fed will not be able to raise interest rates much or for very long, without triggering widespread bankruptcies and liquidations, including potentially exacerbating the supply chain issues already causing inflationary pressure.
  • If there’s a general crash in asset prices caused by higher rates, Weiner expects gold to crash less and recover more quickly than other assets, even more pronounced than in 2008.
  • Expect the Fed to do an about-face and again loosen credit -- spurring demand for gold and silver.

It would be “insane” to hike interest rates in this environment, higher interest rates cause higher prices by increasing the cost of production. If the Fed tries it will not be able to push rates up very far, nor hold them there for very long. If the Fed reacts to this crisis, to tamp down any credit stress among zombies and everywhere else and gets even meme stocks to go back to their old ways of rising against all reason, then the silver price could jump much more than gold’s, possibly 60% more. The silver fundamental price is now lower than last August. Compared to gold, silver is behaving more like the riskier asset.