4 Scenarios for BIG Moves in Precious Metals Markets / Commodities / Gold and Silver 2022

World events are driving a volatile andpotentially pivotal environment ahead for investors.Huge swings in financial markets are likely still to come.

Direction, magnitude, and timing aredifficult to predict. But precious metals bulls are eying massive upsidepotential for gold and silver as war and inflation stoke safe-haven buying.

What follows are four major macro scenariosthat could impact metals markets in a big way in the months ahead.

Scenario 1: Recession Incoming

In recent weeks, rising yields have stuckbondholders with big losses. Higher borrowing costs also threaten to hit thehousing market and force businesses to scale-down spending.

Economists are paying particularly closeattention to the shape of the yield curve.

A flattening yield curve (meaning long-termrates are converging closer to shorter-term rates) suggests a slowing economy.An inverted yield curve (with long-term bond yields falling below shorterduration paper) is a classic indicator of an incoming recession.

On Tuesday, a key zone of the U.S. Treasuryyield curve inverted for the first time since September 2019. Yields on thetwo-year note moved slightly above those on the benchmark 10-year note.

Federal Reserve officials may be afraid tohike their ultra-short benchmark rate much further into this yield curve setup.

If recession warnings continue to build,the Fed may opt to pause on tightening – and possibly even reverse course bynext year with rate cuts.

In the event of a recession, though,industrial metals and other economically sensitive commodities could suffersharp sell-offs – at least until the Fed reinflates the economy.

Gold, being uncorrelated to the economiccycle, is likely to hold up relatively well in a recession scenario.

Scenario 2: Summer of Shortages

Recent spikes in energy and food prices areraising fears of widespread supply shortfalls.

A devastating war in agriculture-richUkraine combined with sanctions on Russian fertilizer exports could deliver amassive shock to the global food supply chain. Some are warning of a famine infood-insecure countries.

By the summer, it will be too late torecapture losses from a diminished planting season.

Summer also typically sees peak demand forgasoline. But with global energy markets thrown into chaos by war andsanctions, supply may be insufficient to meet that demand.

Any shortages in food, energy, and otheressentials are likely to extend to precious metals markets at the retailbullion level – and possibly the physical delivery mechanism on futuresexchanges as well.

Scenario 3: Global Monetary Disorder

The world monetary order based on the U.S.dollar as world reserve currency is becoming unstable.

In waging a currency war on Russia, theU.S. government may have inadvertently accelerated the process of dethroningKing Dollar. The U.S. has essentially announced to all countries that wish totrade with Russia that they must seek alternatives to the dollar. (Or if theyever envision themselves being crossways with the U.S. in the future.)

Russia, meanwhile, has declared that thosewho wish to obtain oil, gas, and other Russian exports should be ready to payin rubles or in gold.

In a surprising twist, Russia is now seeingan influx of demand for rubles – and the currency is actually strengthening invalue.

In part that is because Moscow intends touse surplus rubles to buy gold.

Gold could suddenly become a lot morerelevant to other countries, including China, as the ultimate money and afacilitator of international trade.

Even if no new formal gold standardemerges, a large increase in central bank buying of gold around the world wouldpressure precious metals prices higher in terms of depreciating U.S. currency.

Scenario 4: World War III

The final scenario is the bleakest forinvestors and for humanity overall: an escalation of U.S.-Russia tensions pastthe point of no return.

Vladimir Putin’s government has said itwon’t use nuclear weapons unless it perceives an “existential threat.” AU.S.-led campaign for regime change would likely constitute such a threat.

President Joe Biden asserted last week insupposedly off-the-cuff remarks that Putin “cannot remain in power.”

Biden’s foreign policy handlers scrambledto issue statements denying that the administration intends to pursue regimechange in Russia.

They understand the dangers of such talkeven if Biden himself doesn’t.

A single misstatement or diplomatic blundercould start World War III. The nuclear Doomsday Clock is ticking closer towardmidnight than at any time since the height of the Cold War.

Among the economic consequences of war arehuge spending commitments, a scramble for resources, and ramped up pressure oninflation.

The time to hunker down is before the firstbombs are dropped. Hunkering down financially means holding assets outside thebanking system and far removed from Wall Street. It means holding thehighest-quality, most durable, most universally recognized assets. It meansholding gold and silver inphysical form.

Stefan Gleason isPresident of Money Metals Exchange, the national precious metals company named 2015"Dealer of the Year" in the United States by an independent globalratings group. A graduate of the University of Florida, Gleason is a seasonedbusiness leader, investor, political strategist, and grassroots activist.Gleason has frequently appeared on national television networks such as CNN, FoxNews,and CNBC, and his writings have appeared in hundreds of publications such asthe Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2022 Stefan Gleason - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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