- Precious metal prices are rallying towards new record highs. Wells Fargo predicted that gold can become one of the best performing assets in 2022.
- Analysts are now saying precious metals could be in the first stages of a commodity supercycle.
What Is A Supercycle
A supercycle is a long period of growth that lasts between 15 and 20 years. It is distinct from a bull market. The average bull market only lasts 2.7 years. Economic supercycles tend to produce strong demand for raw materials such as metals. Commodity producers cannot keep up with that demand. As a result, prices keep going up and up.
With commodities, a rising tide raises all ships. They don’t act like other major asset classes such as stocks or bonds. Instead, they move together through long boom and bust cycles.
Silver’s rise alongside gold is an example of this. While gold was setting record prices in January, the U.S. Mint sold 5 million ounces of silver. This was the best start since 2017.
A supercycle is fueled by investors turning to precious metals in response to numerous factors. Some of these include the anemic post-pandemic recovery and spiraling inflation. A deteriorating U.S. dollar and supply chain issues are also influencing investors.
These issues are combining with a lack of faith in the Fed. There is a growing belief that Fed policy can either worsen inflation or shrink the economy.
Investors can see that the days of high risk, high return stock payouts are ending. UBS strategists recently stated that gold continues to outperform other common portfolio diversifiers. This includes digital assets such as bitcoin.
Charts Point to a Supercycle
Past bull supercycles were not straight lines up the charts. Dips, lulls, and pauses in commodity prices are to be expected. Part of what makes bull supercycles last so long is that each dip, lull, and pause makes investors question the run. This often keeps excess supply firmly in the ground.
Gold is a prime example. It has had a great three-year run. Gold hit a new all-time high last year. It reached over $2,100 per ounce. Yet, gold’s supply growth remained negative in 2021. This scarcity feeds the supercycle by insuring a rise in prices.
Precious metals have always been a proven hedge against inflation and troubled economic times. Now, they have the potential to steadily increase in value for more than a decade.
You can ride this supercycle to economic freedom by making gold a part of your portfolio as soon as possible.
Call American Hartford Gold at 800-462-0071 to learn how Americans are using tangible assets like gold to protect their wealth and retirement.