Rate Hikes Won't Deter Gold and Silver's Long-Term Prospects

Investors are selling gold and silver due to rate hike expectations, but this conventional wisdom is based on a classic misperception.

While higher interest rates do boost yields on bonds and cash, making non-yielding assets like gold and silver less attractive, the current round of central bank tightening is driven by persistent structural inflation and ongoing currency depreciation, not an overheating economy.

The core driver behind rate increases is not to cure inflation at its root, but rather to raise financing costs for the real economy without reversing the underlying trend of currency devaluation.

Markets widely confuse energy price swings with monetary inflation, which erodes household wealth and is fueled by years of loose central bank policy and the monetization of fiscal deficits.