Gold and silver boom predicted as US hits debt ceiling, dollar devalues
Expert: 'Government spending is a major problem'
Potential consequences of breaking debt ceiling are 'catastrophic,' Joe Lieberman warns
Former Connecticut Sen. Joe Lieberman (I) discusses the Pentagon's announcement of a $2.5 billion aid package to Ukraine and the measures enacted by the Treasury after the U.S. hit the debt limit.
Ongoing inflationary pressures and increasing risk the federal government could default on its loans will likely see Wall Street traders rush to precious metals in 2023.
The U.S. hit its $31.4 trillion debt ceiling on Thursday, after the latest inflation data showed consumer prices still 6.5% higher on an annual basis.
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Meanwhile, gold and silver jumped roughly 15% and 21%, respectively, the last three months, as plummeting stocks pulled the major U.S. benchmarks even lower, and the U.S. dollar slumped to just $0.81 of the British Pound and just $0.92 of the Euro.
In an interview with FOX Business, Jonathan Rose, CEO of Genesis Gold Group, said, "The primary driving force behind gains in the precious metals market are a devaluing US dollar, inflation, and other federal government monetary policies."
As consumers spend more on household products and the U.S. dollar devalues, the lure of precious metals on Wall Street and tangible wealth is mounting in 2023. (AP Photo/Nam Y. Huh / AP Newsroom)
"Anyone can see that government spending is a major problem for our country’s economic health, and now our government is at risk of defaulting on its bills," he continued. ". If the federal government defaults on its loans, it will destroy whatever investor faith might be left in the U.S. dollar and weaken it dramatically."
"This environment creates a strong case for allocating funds to physical precious metals," he added.
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A Kitco News' online survey showed investors could see silver jump more than 50% in 2023 to reach $38 an ounce, while gold could top out at a record $2,100 an ounce.
Gold or silver?
According to Morgan Stanley, "The volatility of silver prices can be two to three times greater than that of gold on a given day."
Rose said this was due to the silver market being "significantly smaller" than that of gold, resulting in lower market liquidity.
Silver's increasing industrial applications could decrease the metal's trading volatility and bring it closer to gold's status on Wall Street. (iStock)
However, silver’s increasing applications in industry could begin closing the gap in 2023, particularly as the automotive sector makes greater shifts to electric, and alternate forms of energy are harnessed through solar.
As an investment for the near future, Rose said "professionals are hailing silver as having a much higher ceiling due to its industrial potential, from its chemical use as a catalyst and conductor to electrical switches and solar panels."
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"Demand for silver is at an all-time high the last 12 months, he went on. "Combining the allure of physical silver as a haven asset creates a strong case for investments into the metal in the near future."
Gold is predicted to reach $2,000 an ounce in 2023. Over the last year, the yellow metal is up roughly 5% and 5.5% year-to-date. (REUTERS/Mike Segar (UNITED STATES) / Reuters Photos)
Primarily used in industry for its properties as a conductor in electronics manufacturing in both the aerospace and defense sector, gold remains the enduring metal on Wall Street because of its connection to currency alongside supply and demand factors.
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Rose said, "The gold and silver ratio illustrates the number of ounces silver would need to purchase a single ounce of gold.
"When that number is high, it is generally a good indicator of when silver is undervalued," he continued. "When the ratio increases, it typically implies a buying opportunity."
Halfway through the session on Friday, gold is up roughly 0.22% to $1,928.30, while silver is roughly 0.42% higher to $23.97 an ounce.