The Great Bull Market: How Gold and Silver Could Soar Again

By Doug Young – 08 October 2023

Introduction

In the world of investments, few assets have captured the allure and resilience of precious metals like gold and silver. The 1970s witnessed a remarkable bull market in these metals, making them highly sought after.

Today, as the global economy faces uncertainties, discussions about the potential resurgence of gold and silver have gained momentum.

Let’s delve into the factors that could drive these precious metals to new heights.

I. Past Performance and Potential Gains

During the 1970s bull market, gold experienced a staggering increase of 25 times, while silver skyrocketed by an astonishing 41 times. These figures, accounting for intraday highs and lows, highlight the immense potential gains that these metals can deliver to investors.

It’s noteworthy that these numbers remain unmatched, except by the recent rise of cryptocurrencies.

II. Increased Accessibility

Intriguingly, there is a key difference between the 1970s and today. The availability of gold and silver has significantly increased, providing more opportunities for individuals to access these precious metals.

With a global population nearly 18 times larger than in the 1970s and a currency supply that has grown 55 times, the stage is set for a potential surge in demand for gold and silver.

III. The Preference of Established Investors

Renowned investor Warren Buffett, known for his conservative investment approach, has expressed skepticism towards cryptocurrencies. Instead, he has placed a significant portion of his net worth in physical gold and silver.

This sentiment resonates with many older individuals who, when seeking a safe haven for their capital, are less likely to turn to the volatile world of cryptocurrencies.

Differentiating Money from Currency

It is crucial to distinguish between gold as real money and fiat currencies. While gold has historically retained its value, national fiat currencies are prone to devaluation and loss of purchasing power.

Money is a fair and honest medium of exchange, while currency, created by banks, constitutes IOUs.

IV. The Flaws of Fiat Currency

Fiat currency, conjured into existence by banks, has led to a loss of trust in traditional monetary systems. Over the years, national currencies have experienced significant devaluation, with the US dollar alone losing over 97% of its purchasing power.

As a result, gold has the potential to compensate for the expansion of currency supply.

V. Factors Triggering Change

Two significant factors have the potential to trigger a shift towards gold and silver.

First, the creation of currency during the pandemic saw the M2 currency supply increase by approximately 40%. This surge in money supply has led to concerns about inflation, prompting central banks to raise interest rates at an unprecedented pace.

Second, the refinancing of the national debt, which occurs every five years, poses risks as interest rates rise.

VI. Conclusion

As the global economy faces uncertainty and central banks grapple with inflationary pressures, gold and silver are poised for a potential resurgence.

The historical performance and the increased accessibility of these precious metals, coupled with concerns about fiat currency and the actions taken by central banks, create a favorable environment for gold and silver to soar once more.

While the future remains uncertain, investors are keeping a close eye on these metals as potential safe havens in times of economic volatility.

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