Gold is not the only precious metal that shines in the financial markets. Silently, silver is also experiencing a significant rise in its price, amid growing fears of a global economic crisis. In times of uncertainty, investors often seek safe-haven assets to protect themselves from market volatility caused by inflationary pressures and geopolitical issues. As BitcoinDynamic already reported, gold continues to set new all-time highs (ATH) since the United States Federal Reserve (Fed) announced an interest rate cut of 0.5 pointstaking it to 5%. Macroeconomic data from that country sparked optimism in markets, including bitcoin (BTC) and cryptocurrencies, although some analysts maintain that the Fed's decision It is a sign that a recession is on the way. For the analysts at “The Kobeissi Letter”, a global market analysis firm, an example of this is what is happening with silver so far in 2024.
The price of silver has risen 36% from January to September 25, outperforming goldwhich has been 28% in the same period. At the time of publication of this note, the price of silver is $31.68 per ounce.
Silver price in the last 5 years. Source: TradingView. Specialists at the site founded by finance specialist Adam Kobeissi warned: “Like gold, silver is trading as if we were in another major crisis. But it has barely received any attention.” They noted:
“It continues to appear that gold and silver are incorporating a long-term macroeconomic crisis into their prices.” The Kobeissi Letter, global market analysis firm.
Likewise, they indicated that The price of silver rose 80% in the last two years and is showing similar behavior to that which occurred in the 2009 financial crisis in the United States and in 2020, during the COVID-19 pandemic. As seen in the following image, the annual performance of the price of silver in different currencies and it is seen that it was higher in 2009, 2010 and 2020. But, in addition, it is highlighted that the 36% that silver registered in the 9 months of 2024, five times higher than the average annual return of 6.5%.
Annual return of silver from 2008 to 2023 and its average return. Source: The Kobeissi Letter. Likewise, analysts believe that “perhaps the markets are incorporating into prices the possibility that inflation will return.” “With the Federal Reserve implementing a 50 basis point cut and expecting others in the future, could inflation return?” they added. To argue this point, they shared a graph that shows how the consumer price index (CPI) since 2020 has followed a similar pattern to that of the 1970s.
The behavior of inflation in the United States as of 2020 is similar to that of the 1970s. Source: The Kobeissi Letter. That decade was marked by geopolitical uncertainty due to conflicts in the Middle Eastamong which the Iranian Revolution, which overthrew the Shah of Iran, and the hostage crisis in Tehran stand out. As a result of these conflicts, the supply of oil was affected in at least two periods during that decadeleading to increased costs and inflation. For its part, another of the issues that specialists mention is the United States debt, which «is on track to reach $50 billion in 2030.» In the economic bulletin, they indicated:
“The United States aims to add $5.2 billion in debt per day over the next 10 years. “This is clearly a crisis for which no solution is being discussed.” The Kobeissi Letter, global market analysis firm.
In the following graph you can see the projection they make of the increase in the federal debt of the United States in the coming years.
Projection of the increase in the United States federal debt. Source: The Kobeissi Letter. Finally, they highlighted: “Currently, markets have less than a 10% chance of entering a recession in 2024. Looking towards 2025, the situation is more uncertain, with a 50% chance of recession.” For the bitcoiner public, what is happening with gold is of special relevance because, as BitcoinDynamic has mentioned, the digital currency is showing great correlation with the precious metal. There is a lot of expectation that bitcoin will set new all-time highs starting in the last quarter of 2024.