Investing in Gold and Silver

Did you know that there are approximately 4,500 banks in the United States as of 2021? In recent days, America has faced two of its largest bank failures in history. Silicon Valley Bank and Signature Bank had a total of approximately $320 billion in assets. Now, First Republic Bank is on the way. Its stock has fallen 97% since the beginning of the year. A critical week has begun. The Federal Deposit Insurance Corporation (FDIC) is approaching banks about their interest in buying First Republic (FRC), which regulators intend to seize soon. The FDIC is approaching some of the same banks that came to First Republic's aid in March with $30 billion in uninsured deposits. These banks were reluctant this week to provide a second rescue, fearing the First Republic would be seized anyway.

In short, the banking crisis in America could deepen even further. We are likely to hear more news about rescues and bailouts in small and medium-sized banks. On the other hand, there are expectations that the FED will stop raising interest rates after the 25-basis point increase in the upcoming meeting. As the FED tries to reduce inflation, another major problem has arisen in the banking sector due to the rise in interest rates, which has led to liquidity problems. Therefore, there is not likely to be an expectation of an interest rate increase for a while. On the other hand, there is an expectation that the American dollar will lose value and that this will strengthen the euro. On top of all this, the economic recession in 2023, which has already begun to appear since the beginning of the year should be considered.

Taking all this into account, gold and silver investments stand out. Many reports are being shared and price predictions are being made. The major expectation is the high probability of an upward movement this year. Given the recession and the American banking crisis, this increase may be expected to be even stronger with the increased demand for safe investment strategies. In the case of silver, the need for industrial use also increases the attractiveness of silver.

On the other hand, in developing economies, investors seek safe and secure investment alternatives due to the depreciation of local currencies against the dollar, high inflation environments, and increasing economic uncertainties. Both the appreciation of gold and silver and the potential for local currencies to depreciate against the dollar create a two-sided gain opportunity.

Gold and silver should be considered in investment portfolios this year. Especially if there is inflation and devaluation risk in developing countries, weights may be considered higher. The easiest way to invest in gold and silver is through exchange-traded funds (ETFs). The correlation between gold and silver ETFs and the price of gold and silver is generally quite strong, as the ETFs are designed to track the price of gold and silver as closely as possible.

ETFs are a popular investment instrument due to their ability to provide portfolio diversification, ease of investment transactions, and low management fees. The iShares Gold Trust (IAU) and iShares Silver Trust (SLV), the largest and most active ones, can be considered if you want to invest in gold and silver.

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Disclaimer: Any advice in this article is not within the scope of investment consultancy. It may not be suitable for your financial situation, risk and return preferences, and expectations. Responsibility isn't accepted for any investments and results of financial transactions and trades to be made based on advices stated here.