A new report released by market analysts at BMO Capital has provided some interesting insights into the price of silver and gold. As major market competitors erode the value of the dollar, precious metals like gold and silver are expected to see consistent price momentum in the future.
As the valuation of the US dollar fluctuates and hits new lows, users have now started flocking in and buying gold and silver to protect themselves against inflation and economic crises. The ratio recorded a sudden rise, with speculations that the US dollar would lose its prestige on the global platform.
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USD Slowly Losing Its Power
With things like dedollarization and multipolar currencies, the value of the dollar is shaking and hitting new lows. A new insight presented in Kobeissi’s Letter on X highlights that the US dollar is undergoing perpetual bear market dynamics.
“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 only be worth $0.06. But you don’t have to look very far to understand how damaging inflation can be. $1.00 from 2020, just before $4 trillion in stimulus, is worth just $0.80 today. This represents a 20% reduction in purchasing power in just 4 years.”
As a result of rising inflation and economic difficulties, the value of the US dollar has lost half its value. This development has forced investors to focus more on assets that generate profits and valuation. This particular dynamic pushes the value of assets like gold and silver to reach new heights.
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Gold and silver as shields against inflation?
As the dollar gradually loses its reputation as an exceptional store of value, precious metals are rising at an impeccable rate.
BMO Capital Markets forecasts that gold will average around $2,100 per ounce next year.
“BMO expects the price of gold to average approximately $2,250 per ounce over the coming months. T4 noting an increase of 13% »
Similarly, for silver, BMO analysts maintained an average price threshold of $25.60.
“Silver prices in the fourth quarter are expected to average $28 per ounce, an increase of 22% from the December forecast. The price is expected to average around $25.30 per ounce next year, up 11% from the previous estimate. Kitco later shared.
Analysts then explained that the U.S. currency could lack luster when competing with gold and silver prices.
“…it may be that later in the year we see further concerns about currencies supporting the performance of precious metals. This development could occur as a new era of high fiscal spending in global economies gains momentum. The analysts then shared.
reference: watcher.guru