Long Term Outlook for Gold and Silver Prices

Long Term Outlook for Gold and Silver Prices

Long Term Outlook for Gold and Silver Prices

October 27, 2021 1523 view(s)

If you’re like me, you sometimes get caught up in the day-to-day or week-to-week changes in the precious metals sector. Sometimes it is essential to step back and take a longer view, especially when evaluating the “whys” of precious metals investing. While the last couple of weeks have been pretty good, we have to broaden our scope and look at the big picture to understand why the next few years will likely continue to be even better. In light of current financial conditions, it might be a little frightening to consider the broader picture. But for those invested in precious metals, the view is much more favorable and balanced. As we will see, looking out 5-7 years provides ample reasons for hope when we analyze patterns developing in the dollar and commodity sectors.


Long Term Outlook for Gold and Silver PricesLong Term Outlook for Gold and Silver Prices

Building Chorus of Voices for Gold & Silver


Signs indicate that we are entering a 6-8 year trend beginning in the spring of 2020, mirroring a similar trend that started in 2002, according to commodities trader Gary Savage with the Smart Money Tracker. That implies 5-7 years are remaining for these trends to develop fully. These trends don’t occur all the time, but precious metals investors are typically rewarded when they do. Similar sentiments are expressed by Otavio Costa, portfolio manager with Crescat Capital, a firm specializing in resource investing (including gold and silver mining stocks). We have entered a period where commodities and precious metals are moving higher, while the dollar appears to have entered a downward trend. These trends are showing favor to those investors purchasing or continuing to increase their precious metals holdings.

For those involved with precious metals over the last five years, it is good to know that indicators for the best days for gold and silver are just ahead. Comforting when we consider that the last five years have already been favorable. Spot gold is up 42% from five years ago today. The price to obtain a 1 oz American Gold Eagle coin is up 43% from five years ago due to slightly higher premiums for physical gold. Spot silver is up 37% from five years ago today. But the price to obtain a 1 oz American Silver Eagle coin is up 73% from five years ago due to higher premiums for physical silver. These numbers indicate an annual average return of 6.33%/year for spot silver and 7.03%/year for spot gold. Physical silver and gold eagle coins have an annual average of 11.05% for silver and 7.19% for gold.


Respectable Gains vs. Spectacular Gains


We have discussed what can happen to gold prices following a period of stagflation, as was observed during the 1970s. Within five years, gold increased 8-fold and experienced growth of over 30% per year during a languishing stock market, ending the decade with an overall loss of 62%, or -8.06% per year. It would have been a great time to consider the trends and transition from paper investments to gold and silver. Current data suggests we have entered a similar period today. While the gains in precious metals have been respectable the last five years, the next 5-7 years are shaping up to be spectacular. There will be down days, which are possible buying opportunities.


Long Term Outlook for Gold and Silver PricesLong Term Outlook for Gold and Silver Prices

If we look at the 10-year performance metals, it encourages us about the future. Not because the 10-year performance was good, but because it was much lower than expected for gold, silver, and platinum. Only palladium has an impressive 10-yr return, with platinum and silver decreased. For gold, silver, and platinum to return to long-term average performance, they must have higher-than-average performance in the upcoming years. It requires a specific economic environment for that to occur. Thankfully, that economic environment currently exists and appears ready to continue for the next several years. Even mainstream economists now acknowledge that inflation is not transitory and will likely continue to create an environment positive for gold and silver.


Less Pain, More Gain


Of course, we do not enjoy seeing the difficult circumstances that often accompany the financial conditions we see today. As precious metals owners and investors, we also live in the same world as everyone else. No one enjoys seeing people suffer under the repressive financial conditions that now exist. But we can and should enjoy the results of hedging by owning gold, silver, and platinum and helping others to discover the same benefits that we have found. Palladium is also a precious metal that we cover weekly and often discuss, but it has recently had an above-average, multi-year run. I believe more opportunity exists in the other three metals in the future.


Long Term Outlook for Gold and Silver PricesLong Term Outlook for Gold and Silver Prices

Turning Ideas Into Action


An obvious question often revolves around what to do next and how to take advantage of this information. If you believe, as I do, that the next seven years could be some of the best we have seen for precious metals since the 1970-1980 time frame, that suggests it would be beneficial to become or continue to be an owner of precious metals. The sometimes negative correlation between higher commodities prices and lower stock prices also suggests that significantly rising gold and silver prices may come at the expense of lower stock prices. While no article can serve as individual investment advice, analyzing and evaluating the information and charts presented can inform investors. While history doesn’t always repeat exactly, it does often rhyme and follow similar patterns. History suggests the future is bright for gold, silver, and platinum.

For those who wish to take the next step to transform your ideas into action, I recommend calling the folks at the United States Gold Bureau. They have the types and quantities of precious metals necessary to help protect your family’s financial future in today’s environment. Whether you are looking for bullion rounds or bars, investment grade, or historically significant coins, they can help you build an all-weather portfolio that can thrive in the challenging financial conditions of today.