The year 2016 was quite a year for “Black Swan” events. These are events that caused major geo-political shifts that were difficult to predict or account for in market projections. Here’s a look at some of these events and how it seems they will affect future markets — in particular, the rising price of silver.
The United States Presidential Election
The election of Donald Trump as President of the United States was an occurrence that few could have predicted and one that has sent market analysts into a frenzy. As a political outsider, Trump is a wildcard, and the actions he will take and how they will affect markets will be extremely difficult to predict.
What we know so far, however, is that Trump has proposed major increases to defense and infrastructure spending. Such a move is historically inflationary and will also benefit the industrial sector, both of which are trends that we can expect to benefit silver tremendously.
Brexit, the decision by the United Kingdom to withdraw from the European Union, shocked the world, including many in the U.K. itself. Investors braced for economic chaos — and historically, the place investors run to when the fear of unstable markets is raised is to precious metals like gold and silver.
While the long-term effects of the Brexit vote are still not clear, what is clear is that many savvy investors are likely to hold on to and even accumulate more silver and gold as a hedge against Brexit uncertainty.
London Silver Fixing Ltd. Antitrust Litigation
In 2016, a group of investors sued a number of banks, including Deutsche Bank, AG., UBS, AG, HSBC Holdings PLC and the Bank of Nova Scotia, over allegedly manipulating the London Silver Fixing, a calculation used to price gold and silver instruments. Deutsche Bank AG and affiliates agreed to a settlement in April of 2016.
Evidence strongly suggests that several banks colluded to artificially inflate silver prices so they could short sell and make a large profit when prices dropped. How the lawsuit will affect long-term silver prices is unclear. However, one move some investors are making is switching to physical storage of gold and silver, rather than gold and silver ETFs or other paper contracts for precious metals. This requires less trust on the part of the investor and enables them to have more confidence in their investment.
Invest in Silver With Fortress Gold Group
At Fortress Gold Group, we remain strongly convinced in the power of gold and silver as investment products, especially in the face of Black Swan events such as these. The nature of such events is that they are difficult to predict, but they always happen sooner or later, and tend to do much more damage to traditional investment products like stocks and bonds.
Both gold and silver have proven themselves over the long-term as solid investments, and although it’s impossible to predict what will happen down the road, the future looks bright for precious metals.
Learn more about Fortress Gold Group’s ways that you can secure your future with an investment in precious metals, call our precious metal specialists today at 1-800-777-6177.