Gold And Silver Higher in All Currencies in ‘Turbulent’ 2022; Gold $4,000/Oz in 2023?
The comments below are an edited and abridged synopsis of an article by Mark O’Byrne
Gold was higher in all currencies in 2022 and outperformed stocks, bonds, crypto and Bitcoin as investors fled risk assets and sought shelter in gold and silver bullion. Gold was marginally higher in US dollars but saw stronger gains in euros, sterling, yen, Swiss francs and other fiat currencies. Gold and silver were safe-haven assets in a turbulent year.
Central banks are nervous to buy and hold US and other government debt, and are buying gold to protect/hedge their FX reserves. Central banks accumulated gold last year at a pace not seen since 1967, when the dollar was still backed by gold.
Commodities surged in 2022, and the war in Ukraine and global tensions have contributed to surging prices in energy and food. Natural gas was 24% higher while oil was 5% higher. This has contributed to inflation.
Bitcoin fell 64% in 2022, showing that it is not a safe-haven asset or a currency. Other cryptos also fell, with some going to zero as the sector experienced mass liquidations by speculators.
Every asset class except precious metals and certain commodities finished in the red as inflation, slowing global growth, an energy crisis, a food crisis, supply-chain challenges, war and the risk of a world war affected risk assets.
Gold’s recent performance will continue for the next few years as it resumes its secular bull market and stocks and bonds enter secular bear markets.
US dollar strength is unlikely to continue, and its demise should contribute to gains for precious metals. Markets are likely to have a roller-coaster ride of volatility in 2023, making the case for owning bullion even more compelling.
Gold could rise to $4,000 in 2023 as recession fears persist. Many economies could face recessions in the first quarter, which would lead to central banks slowing their pace of interest rate hikes and make gold more attractive. Silver could see even greater gains and surge to levels between $50 and $100 per ounce.
People should prepare while gold and silver are still affordable. The uncertainty/instability is not going away. Plans for central bank digital currencies highlight the benefits of owning gold and silver as stores of value and decentralized forms of money in the event of stagflation, hyperinflation or the forced introduction of digital currencies.