The 2022 Ukraine War – Will It Push the Silver Rates?

War is evidently as bad for the people of a country as it is for the country’s government. Speaking of which, the recent Ukraine war news is flooding the concerns whether it is going to cause gold and silver prices to rise or not? Especially when it comes to silver investors and traders, they may be stuck between investing with an expectation that it may rise or wait for accurate news to come out before they sell silver Brisbane.

But what exactly is the primary reason that can cause the gold and silver price to rise at a time of war in Ukraine? Is there a connection? Evidently yes! However, will the rally last?

When it comes to war between two countries, a significant amount of investment and money is spent on buying war supplies and other necessities, which are endlessly needed until the war ends and a specific army wins. So, where does this money come from, and how do these fighting armies ensure that it doesn’t end any time before they win or lose? 

Have you been curious about this too? Well, the secret answer to that is – no one. Yes, no one pays for wars themselves. In fact, the country’s or armies involved in war print or borrow the intense amount of money to handle the expenses to equip and sustain the war.

Eventually, the economies of the two combatting countries pay back this money over two generations. At a time like this, physical metals price moves also moves higher as the money supply increases or inflation occurs. 

In addition to this, physical metals have zero counterparty risk unlike bank accounts, which also causes the prices to increase rapidly during war. However, usually on the announcement of a war gold and silver prices initially inflate to high prices. Due to this reason, smart money normally sell silver Brisbane into a rally to potentially buy it back waiting for the realistic price increases due to inflation in war times. While this isn’t an ideally favorable situation for everyone, ultimate higher precious metal prices are still an evident when a country goes to war

So what’s Ukraine Set to Experience?

Although, no one really wants WAR. It’s undoubtedly the final solution in any country’s rift with another country. But when it comes to the NATO vs. Russia situation, there doesn’t seem to be a second solution that can influence a better future for Ukraine.

Yet, with 2022 being a complex year, central banks may be fully occupied with raising interest rates and shrinking the money supply overall. Especially since increased rates turn out to be a bad situation for both gold and silver – but silver, itself, could go down as interest rates rise.

As per  reports of the Current Fed interest rate forecast, interest rates are expected to rise from .25% to 1.15% in 2022. Having said that, there’s a chance that interest rate hikes in in 2022 may serve as a factor that will cause siler to decline even if it is for a short while. 

But will this interest rate rise cause the value of silver to go lower for those planning to buy silver back after selling it? Probably not! Since the US spending for war will cause significant money printing once again and most likely delay interest rate rises.

Conclusion:

All in all, it can be evidently said that 2022 could be a volatile year for silver and investors are advised to buy and sell silver bullion with caution while following the moves of the federal reserve. 

 

Leave a Reply

Your email address will not be published.