The weakness of the US dollar and inflation are two significant factors that influence the price of gold and silver. With inflation at a record high and the value of the dollar becoming weaker, gold and silver have a pretty shiny outlook for 2022. If you are thinking about investing in gold and silver for 2022 to protect your retirement, diversify your portfolio, or are a first-time investor, keep reading for what experts are saying about the gold and silver outlook for 2022.
What’s Happening with Gold for 2022
In an article by CNBC, David Lennox, CEO of Fat Prophets, gives an outlook for gold in 2022.
Lennox said it looks like everything is in place for the U.S. dollar to decline, though it hasn’t happened yet. If the greenback weakens, it would be a “boon” for gold, he added. Meanwhile, inflation in the U.S. is close to 6% — up from around 1%, he said. Gold is seen as a hedge against inflation and increases in value as the dollar declines, but its track record has been spotty in the past.
“We do believe that high momentum in inflation and that lower U.S. dollar is going to drive the gold price higher in 2022,” he added. Geopolitical tensions between major military powers could also drive up gold prices earlier than expected, Lennox said. In particular, Russia’s military presence along its border with Ukraine has been building up, and that’s “a focus point where it could quickly turn to something disastrous,” he said.
“If that happened, then we would see the gold price reacting quite significantly and our … $2,100 an ounce [target] would probably get here sooner rather than later,” he added.
What’s Happening with Silver for 2022
Supply and demand are major factors that influence the price of silver, which can drive up prices and value for the year. Last year, silver underperformed gold in the second half of 2021. Prices failed to reflect rising industrial demand, but in 2022, the Silver Institute forecasts a supply deficit. The prices haven’t been driven up yet, but experts predict a significant rise in prices. This means that investing in silver now is an excellent opportunity for investors.
Analysts weighed in on the price of silver in an article by Kitco:
“Silver had no life of its own this year, fluctuating merely in gold’s slipstream. On balance, it suffered disproportionately high losses as compared with gold. As a result, the gold/silver ratio has climbed from a good 70 at the beginning of the year to over 80 now,” said Commerzbank analyst Daniel Briesemann.
“Silver is a hybrid. It’s a precious metal with a role as an inflation hedge, but it’s also an industrial metal that has a lot of different applications,” said Ned Davis Research (NDR) chief global investment strategist Tim Hayes. “We’ll see that maintained. Silver made a multi-year low in 2020. And as much as it’s been weak recently, it’s still above the 2014 and 2019 lows, and it’s making higher lows.”
Commerzbank analyst Carsten Fritsch sees silver reaching $26 an ounce in 2022. “The silver price should benefit from this positive demand outlook and rise to USD 26 per troy ounce next year. Silver would thus also make up some ground against gold. This is not unusual, as silver normally follows gold’s price movements disproportionately. This year it happened downwards; next year, it should happen upwards,” Fritsch said.
Capitalizing on Gold and Silver for 2022
People want to know an answer to the big question: Should I invest in gold and silver for 2022? The answer?
Silver is the quintessential inflationary metal, said Goehring & Rozencwajg Associates managing partner Leigh Goehring in the same article by Kitco.
“I do think that silver should be accumulated by everyone. And I’m convinced that in this bull market, there’s going to be another corner attempted at the silver market,” he said. “It’s hard to believe that in January 1980 on a very brief basis, the gold-silver ratio was 17:1. I wouldn’t be surprised if we see that ratio again at some point in this bull market.”
Longer-term, Goehring does not rule out silver climbing to over $500 in this decade. “Silver plays massive catch-up rally to gold. And if gold gets to $10,000 in this decade and the gold-silver ratio gets down to 20:1. That’s $500 silver,” he said. “It will be the decade of shortages, and everyone’s going to get poorer except for the people that own physical gold and silver.”
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