Lately, the precious metals market has witnessed an occurrence that it hasn’t seen in some time: declining prices. Both gold and silver have taken a sizable hit to their early September peak, which isn’t too surprising. With the broader markets stabilizing, the fear trade to push gold and silver bullion doesn’t exist in the nearer term.
However, I wouldn’t dismiss the metals, particularly silver bullion. Indeed, this might be the time to consider taking a stronger position at this discounted rate. For example, E.B. Tucker, director of Metalla Royalty & Streaming, who forecasted $1,500 gold, is now aiming for $20 silver. His time frame is over the next two months.
It’s a bold prediction, to be sure. Few people in the sector want to dish out price targets, let alone combine them with a time period. However, the $20 target in eight weeks isn’t the most audacious forecast.
Just based on the technical charts, we can see that silver bullion incurred a healthy correction. That it correct relatively early into the precious metals bull market is a positive sign. Certainly, you want to avoid jumping aboard assets that are grossly overheated.
This present correction helps ensure that the speculation and valuation balance remains rational.
Fundamentals Are Incredibly Positive for Silver Bullion
But the biggest factor driving silver prices is the fundamentals. Over the past few weeks, I marvel that so many negative events have occurred, yet society maintains the semblance of normalcy. That, however, will not last indefinitely.
If you look at the U.S. Debt Clock, we’re racing toward $23 trillion in national debt. We should hit that dubious target by the end of this year. From there, the situation will worsen to unprecedented levels.
For instance, our annual budget deficit has exceeded $1 trillion. If my memory serves correct, that is the first time this has happened. Moreover, federal spending exceeds $4.5 trillion. In order to truly correct this situation, we need a valuation reset on the U.S. dollar.
Of course, that would create a massive panic in the financial system. Almost surely, that would mean the greenback is no longer the world’s reserve currency. It would also mean that safe haven assets, such as gold and silver bullion, find their true value in this alarming context.
A few years back, cryptocurrencies dominated the investment landscape. Of course, I still believe in this sector. But for the time being, it appears the most surefire bet is in the precious metals.