Continuing reflections on the prospects for silver:
Today we will take a closer look at one of the potential arguments in favor of silver growth – real rates in the US, and their relationship with silver.
Real rates are the difference between the key rate of the Central Bank (US Federal Reserve) and the inflation rate in the country. That is, if the key rate is near zero, and inflation is> 0, then the real rate is already negative. As a rule, the rate of return of classic protective instruments (deposits, bonds) is equal to the Central Bank rate. And if inflation exceeds the yield on deposits, then we get the following picture:
It becomes unprofitable for people to keep their savings in classical protective instruments, since in conditions of negative% interest rates, their savings are actually depreciated. From here we get the flow of money into other assets. For this reason, we are seeing a rise in stock markets around the world. But not everyone is ready to invest money in risky assets, which are stocks. Fiat currencies bezgrachino are printed by the world central banks, respectively, their value tends to zero. Real estate is far from always suitable for savings, for one simple reason – liquidity, it is difficult to get out of this asset quickly and at a market price. There remain precious metals, which have historically served as a protective tool for more than one century, especially in conditions of negative real rates.
And negative rates will remain for a long time – the US Federal Reserve does not plan to raise the rate in the coming years, inflation is only likely to grow, due to the rapid growth of the money supply.
Why silver and not gold? Gold has already renewed its historical highs, and for silver to ATH more than 100%! Also, the demand for silver may be increased due to plans to develop alternative energy, especially solar, where silver is used in the production of solar panels.
On the chart, I gave an example, a similar picture that was observed in 2011, when negative rates very quickly reached -4%. It was then, from roughly current levels, that silver rose more than $ 20 in a few months!
Why not repeat history again?
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