Declining USD Bolsters Prospects for Gold and Silver

A new report published by BMO Capital market analysts has brought forth interesting insights concerning the price of silver and gold. As major market contenders erode the value of the USD, precious metals like gold and silver are set to gain steady price momentum in the future.

With the USD’s valuation fluctuating and dipping to new lows, users have now started to flock and purchase gold and silver as a hedge against inflation and economic meltdowns. The ratio has documented a sudden spike, with speculations signaling the USD losing its prestige on a global platform. 

Also Read: Indian Rupee May Spell Trouble For the US Dollar, Expert Warns

USD is Slowly Losing its Power

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Source: WatcherGuru

With elements like de-dollarization and multipolar currencies in the mix, the value of the USD is shaking and hitting new lows. A new insight outlined by The Kobeissi Letter on X highlights that the US dollar is undergoing a perpetual bear market momentum. 

“The purchasing power of a dollar is in a perpetual bear market. If you took $1.00 from 1920 and held it until today, it would be worth just $0.06. But you don’t have to look too far to see how damaging inflation can be. $1.00 from 2020, right before $4 trillion in stimulus was handed out, is worth just $0.80 today. That’s a 20% decrease in purchasing power in just 4 years.” 

Driven by rising inflation and economic woes, the value of the US dollar has lost half of its power. The development has compelled investors to shift their focus toward appreciative/profit-bearing assets. This particular dynamic is driving the values of assets like gold and silver to record new highs.

    Also Read: BRICS: US Dollar Weakened 25% Since 2020 Amid Global Shift

    Gold and Silver as Shields Against Inflation?

    With the USD gradually losing its reputation as a stellar store of value, precious metals are rising at an impeccable speed. 

    BMO Capital Markets predicts that gold will average around $2,100 an ounce next year.

    “BMO predicts gold prices to average around $2250 an ounce in Q4 noting a 13% increase”

    Similarly, for silver, the BMO analysts have kept an average of $25.60 price threshold.

    “Silver prices are expected to average in Q4 around $28 an ounce, a 22% increase from December’s forecast. The price is expected to average around $25.30 an ounce next year, up 11% from the previous estimate.” Kitco later shared. 

    The analysts later shared how US currency may lack glimmer when competing with Gold and Silver prices.

    “ can happen that later in the year we may see further currency concerns supporting precious metal performance. This development may happen as a new era of elevated fiscal spending across global economies gathers traction.” The analysts later shared. 

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