Gold May Rise but Silver May Double in 2022

The comments below are an edited and abridged synopsis of an article by Keith Weiner

Gold may reach $2,100 by the end of 2022, and silver could hit $40. The reasons for a gold-price spike:

Gold May Rise but Silver May Double in 2022 - BullionBuzz - Nick's Top Six
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—Zombie corporations (companies overly dependent on outside financing) that the Fed has subsidized for years with its 0% interest rate policy to encourage economic activity.

—Zombie debt is vulnerable to rising rates. In the face of this growing default risk, investors will likely demand assets with low to zero counter-party risk, i.e. gold.

—The Fed can’t raise interest rates without triggering bankruptcies and liquidations, including exacerbating supply chain issues already causing inflationary pressure. If there’s a crash in asset prices caused by higher rates, expect gold to crash less and recover more quickly than other assets, even more pronounced than in 2008.

Expect the Fed to do an about-face and again loosen credit, spurring demand for gold and silver.

It would be crazy to hike interest rates in this environment. Higher interest equals higher prices by increasing the cost of production. The Fed can’t push rates up far, nor hold them there for long. If it does, silver could jump much more than gold. Silver is lower than it was last August. Compared to gold, silver is behaving more like the riskier asset.

Spread changes between futures and spot markets indicate abundance/scarcity in gold and silver, and the historical trends of each. Periods of abundance typically precede downward price movement, while periods of scarcity often presage the opposite.

Weiner discusses other factors for rising inflation and gold; green energy restrictions keeping prices high; and lockdown whiplash contributing to higher prices.

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