Gold and silver prices have recently pushed higher on the back of the US dollar, as the Federal Reserve pumps trillions of dollars into the economy each month. Gold and silver are valuable because they provide the backing of gold in monetary markets and have been used as money for a very long time. Although the value of gold and silver is based on their supply and demand, it is possible that these precious metals may go higher in value over time.
Gold and silver prices push higher when US Treasuries sells off a record amount of bonds, last week’s record Treasury bond sale saw a record $112billion of bonds sold, pushing the market’s average real yield up by two basis points. This means that if the bond buyers sell the bonds for the same amount as they bought them for, the real yield would be higher. These bond buyers are seeking to offset their high cost of financing with lower yields, in order to make the most of the low price of borrowing cash and getting interest-only deals with minimal payments and balloon payments.
The bond holders and central banks are not alone in their quest to find ways to lower their real yields. Investors in the commodities market are seeking ways to get return on investment by investing in metals and commodities like oil, soybeans, diamonds, copper, and silver. This can mean that the price of gold and silver are going to continue to climb. Investors in the commodities market are now looking for ways to get returns on investment by investing in metals and commodities like oil, soybeans, diamonds, copper, and silver.
With the US economy still struggling to recover from recession, companies will continue to expand production, driving up the price of gold and silver. Because of this, the price of the precious metals will continue to rise, which will benefit investors and central banks everywhere. Many companies are taking advantage of this current economic environment by investing in metals like gold and silver, while others are cutting back on production to keep the prices at a reasonable level.
The bond market is also trying to increase the real yield by encouraging more borrowers to borrow money, which will lower the costs of borrowing. Many governments are now offering cheap and better rates on their bonds to attract more bond holders to purchase more of their debt. Although the Federal Reserve is printing money to increase the amount of money in circulation, there is a limited supply of money and interest-only rates are high, making these options even more appealing.
The real yield on United States bonds has risen slightly, but it is probably still too low to support the purchase of gold and silver. However, the recent increase in real yield will likely be temporary, as the Federal Reserve keeps pumping money into the economy in an effort to get the unemployment rate down.
Many people are looking to invest in metals such as gold and silver because of the way it can hedge against inflation and the impact of a weak bond market, which could lead to deflation in the future. If the Federal Reserve tightens its belt in an attempt to stimulate economic activity, there is a greater chance that interest rates will fall further. In this case, gold and silver would be the safe haven investment because they are not affected by an economy that is in recession.
In order to guard against inflation, gold and silver should be held for long-term investment and this will be a good reason for investors to hold onto their own assets, rather than sell. immediately, when the Federal Reserve pumps more money into the economy. With inflation still being a concern, and the unemployment rate rising, holding onto your own assets is a good idea.