Jeff Clark, Senior Analyst, GoldSilver.com
DEC 16, 2021
What can we expect from gold and silver in 2022?
Part of effectively answering that question is to look at the context of what happened this year. Nothing happens in a vacuum, after all.
With that in mind, see if this review of 21 things that happened with gold and silver this year helps you prepare for 2022…
#1. Central banks continued to be net buyers in 2021, and surprisingly two developed-market central banks purchased gold this year: Singapore bought 26 tonnes, its first gold purchase since at least 2000; and Ireland bought 2 tonnes, its first purchase since 2008. As the World Gold Council puts it, “This is notable given that official sector demand since 2010 has been dominated by emerging market banks.” Central banks have been net buyers of gold since 2009, and that trend shows no signs of letting up.
#2. Institutional investors look poised to buy more gold… A WGC survey reported that, “40% of current institutional gold investors plan to increase their gold allocation over the next three years, and four of ten non-gold investors plan to buy. Much of this is not just a tactical (short-term) move but a strategic (long-term) investment.”
#3. China isn’t complaining about the weak gold price but instead is taking advantage of it: gold imports just hit their highest level since 2019… wholesale demand is rising due to higher gold consumption… and the average daily trading volume of their primary gold contract—the one designed for physical delivery—is now at a 2021 high.
#4. The existing financial system has never been more precarious, says Jim Grant of Grant's Interest Rate Observer. “I don’t know of a moment in financial history in which there was less inhibition about spending, lending, or borrowing, and speculating.” This increases financial and market risk, and any fallout from it will reinforce gold’s safe-haven status and make it a natural target of investors.
#5. Focus on gold’s fundamentals instead of short-term factors that push the price around, says Brian Lundin, who puts on the New Orleans Investment Conference. “Don’t buy gold because of these real and imagined crises. The reason we need to own gold now is because of the underlying factors (asset bubbles and debt loads) that will prevent the Fed from ever normalizing monetary policy to any significant extent. Unlike new variants or any other such crisis, these factors are both knowable and irreversible. We need to own gold if we’re going to protect ourselves against them.” Gold’s fundamentals arguably couldn’t be stronger heading into 2022.
#6. A Central Bank Digital Currency (CBDC) may be gaining steam with some governments, but this automatically raises concerns about personal privacy. Physical gold and silver, on the other hand, are outside the banking system and can’t be “programmed.” And if CBDCs make currencies more volatile, it might actually push some central banks to build up greater gold reserves to offset it.
#7. Has anything changed with the 3 D's? Skyrocketing debt, record deficit spending, and uncontrollable currency devaluation leave me no choice but to own gold and silver. It also means their big move is still ahead.
#8. No matter what, gold holds your purchasing power, and can even increase it.
#9. Passage of the US infrastructure bill means industrial use for silver is about to kick into high gear. First Majestic CEO Keith Neumeyer says the world will need 140 million ounces of silver just for solar panels next year, a 30-40% YoY increase. Remember, if you go green, you go silver by default.
Silver supply is already a concern. Metals Focus, a leading precious metals consultancy, said that “among the four precious metals, silver is the only one likely to achieve a persistent deficit over 2021-22…”
#10. The Silver Institute recently projected that, “physical silver investment is on track to jump 32%, to a 6-year high."
Remember, the primary driver of silver prices is investment demand. The institute pointed out that physical investment (coins and bars) is expected to surpass 100 million ounces for the first time since 2015, and that total holdings in silver ETFs are almost back to the 2020 record high of 1.21 billion ounces.
#11. It may be frustrating and confusing and even angering, but silver’s poor price action this year has happened before. It’s no fun in the short-term, but this movie has played out before. And in the big picture…
#12. History is very clear on this fact: another spike in silver is coming!
#13. In fact, Mike told us this year that he’s bet his life on triple-digit silver.
#14. Manipulation is a reality, BUT as Mike Maloney has made clear, manipulations always fail.
#15. Silver remains one of the most undervalued assets, especially when you realize the S&P 500 closed at its 67th record high of the year last Friday. When silver matches what other assets have done since 1980, the average price would be in triple digits.
#16. Real money can’t be printed or conjured up out of thin air, one reason it’s so valuable… last summer I got to tour a working mint and watch it being made.
#17. “NFT” was the 2021 word of the year according to Collins Dictionary. Aren’t you glad we invest in something real, one of the last tangible assets left for investors?
#18. Silver isn’t anti-viral, but new research shows that silver nanoparticles “may be an effective method of protecting healthcare personnel exposed to the SARS-CoV-2 virus.” New applications for silver continue to be discovered, which will continue to push industrial demand higher.
#19. Gold and silver haven’t responded to inflation yet, BUT according to Grant Williams and his interview with Wealthion Founder Adam Taggart, be careful carrying that assumption forward. “Inflation is gonna be like bizarro-world, because it will be the opposite of everything we’ve experienced throughout our entire investment careers… inflation is such a powerful force, and such a damaging force given the amount of debt that’s been building up in the system, that it really will change everything, including gold and silver.”
#20. Investors must take into account how the government will respond to any event. And under the current monetary system, that response will always be inflationary, a reality that will make gold and silver increasingly valuable.
#21. Want to guess the top selling product at GoldSilver in 2021?
A high degree of uncertainty surrounds us, whether it be geopolitics, the economy, the markets, the monetary system, or the pandemic. This unusually high level of risk points to the crucial need to own physical gold and silver. We hope, like us, you’re prepared for whatever may happen in 2022.
An active investor with a love of writing, Jeff Clark is a globally recognized authority on precious metals. As the son of an award-winning gold panner, with family-owned mining claims in California, Arizona, and Nevada, Jeff has deep roots in the industry. Jeff regularly speaks at precious metals conferences, serves on the board at Strategic Wealth Preservation in Grand Cayman, and provides exclusive analysis and market commentary to GoldSilver customers. Follow Jeff on Twitter @TheGoldAdvisor