As Keith Weiner has pointed out on many occasions, one of the major factors causing prices to go down is monetary. Since 1981, central banks have forced ever-lower interest rates onto the markets. Falling interest rates lead inexorably to increasing supply and falling prices
Other factors bringing about lower prices are competition, innovation, economies of scale, technical advances, general cost savings and falling demand.
On the other hand are the factors that cause prices to rise: regulatory, fiscal, social, ingredient costs, falling supply and rising demand.
Of these factors leading to price rises, ‘rising demand’ is the interesting one at the moment – think Bitcoin. Bitcoin mania makes the 17th century tulip mania look like prudent investing (at least they got a flower bulb). That the demand makes little sense though, is neither here nor there. Nothing makes much sense in today’s markets. The US$ and Bitcoin are both rising as measured by value’s only metric – Gold. Where is the sense in that? Has risk become irrelevant? I suspect that the answer to that is ‘yes’. To most, risk is perceived as non-existent. The Fed can and will fix everything with ‘stimulus’; it even has its own slang now – ‘stimmi’.
But the point is, if there can be a rush to a fictitious asset like Bitcoin, then there can be a rush to anything. Have you heard about the energy stock that harvests farts from unicorns? Until the debt collapses, it is apparent that the band will keep playing and the crowd will keep not just dancing, but prancing around like freaks on acid.
So what is the future for Gold and silver? In the short term, with regard to Gold, not much. It will continue to hold the same stable value that it has done since it emerged from the temples in Ancient Egyptian times. One day the reality of the precarious nature of not just markets, but the dollar and Western Civilization will become apparent. Gold will then become much sought after as the dollar is sold off. Barring a major war, that does not seem to be an event for the near future.
Silver may not have to wait as long. Silver acts as money’s surrogate in the marketplace, but it is not money and has an independent vector and impetus. It is also cheap enough to be bought by stimmi boppers. If it takes a sudden hike from $26 to, say, $50 (it reached that at one point over 40 years ago), then a serious number of dollars could come galloping into Silver and drive it to heights now unimaginable.
I suspect that over the next 24 months there will be a dramatic narrowing of the Gold to silver ratio. That will likely be the time to switch it all for Gold.