Precious Metals Rise with Inflation

Over the past 25 years we have seen a significant increase in the value of precious metals and a notable decrease in the purchasing power of the U.S. dollar. This is not a coincidence. When government debt rises, fiat currency values fall in comparison to goods, services, and commodities. This is referred to as inflation. When inflation is present, the costs of goods, services, and commodities rise. Investors utilize physical precious metals to offset the erosion of wealth that is caused by inflation.

Under the Clinton administration, the U.S. government held surpluses for fiscal years 1998-2001. By 2000, the ratio of debt held by the public to GDP was 33.6%. Currently, the ratio of debt to GDP is 97.39%. As the GDP debt has risen, the U.S. dollar purchasing power has fallen. Let’s Review what gold, silver, platinum, and palladium have done since 2000.

Gold 

Over the past 25 years, gold has risen approximately 700% in value. Gold is currently at an all-time high. The rise in gold’s value is attributed to inflation, geopolitical tensions, and supply and demand fundamentals. Currently, the cost to produce an ounce of gold is approximately $1,050 per ounce and is trading at approximately $2,440 per ounce. Gold is expected to continue to rise in value moving forward. This trend is expected to continue due to ballooning government deficits, central bank buying, and a concerted effort by other countries to move away from the U.S. dollar in international trade.

Silver

Over the past 25 years, silver has risen approximately 600% in value. Silver will need to increase approximately 70% to reach its all-time high. The rise in silver’s value is attributed to inflation, geopolitical tensions, and supply and demand fundamentals. Currently, the cost to produce an ounce of silver is approximately $20 per ounce and is trading at $30 per ounce. Silver is expected to continue to rise in value moving forward. This trend is expected to continue due to ballooning government deficits, central bank buying, and a concerted effort by other countries to move away from the U.S. dollar in international trade.

Platinum

Over the past 25 years, platinum has risen approximately 190% in value. Platinum is considered the most undervalued precious metal currently. Platinum will need to increase approximately 120% to reach its all-time high. The rise in platinum’s value is attributed to inflation, geopolitical tensions, and supply and demand fundamentals. Currently, the cost to produce an ounce of platinum is approximately $1,150 per ounce and is trading at $1,000 per ounce. Platinum is expected to continue to rise in value moving forward. This trend is expected to continue due to a global push to green energy, ballooning government deficits, central bank buying, and a concerted effort by other countries to move away from the U.S. dollar in international trade.

Palladium

Over the past 25 years, palladium has risen approximately 210% in value. Palladium will need to increase approximately 230% to reach its all-time high. The rise in palladium’s value is attributed to inflation, geopolitical tensions, and supply and demand fundamentals. Currently, the cost to produce an ounce of palladium is approximately $600 an ounce and is trading at $960 per ounce. Palladium is expected to continue to rise in value moving forward. This trend is expected to continue due to supply and demand fundamentals, ballooning government deficits and a concerted effort by other countries to move away from the U.S. dollar in international trade.

Conclusion

It’s important to state that gold, silver, and platinum are expected to make new all-time highs within the next 5 years. Since January of 2020, the U.S. dollar has lost 25% of its purchasing power and the U.S. government has spent more money in the past 4 years than the prior 230 years combined. Physical precious metals are generally utilized to protect purchasing power against inflation. Did you know that Sovereign Mint’s offers precious metal coins that are legal tender designated? Precious metal coins are generally utilized to hedge and diversify away from the risks associated with debt. Aside from insured home delivery or insured commercial storage facility options, did you know that certain precious metal coins are IRS approved and can be owned and stored in an accredited retirement account? Precious metal coins are a great way to invest in real money while protecting your portfolio from counterparty risk.

The following article is created by Orion Metal Exchange for the benefit of our investors and perspective investors alike. We seek to provide relevant content concerning precious metals and the impact caused by economic and geopolitical trends that will most likely impact your financial future. If you are interested in learning about precious metal investing, call 1-800-559-0088, for a FREE investor kit.

Questions? We’ve Got Answers!