Liquidity warning for gold and silver market from Bawden Capital

Bawden Capital founder Jen Bawden stated that the sharp sell-off in gold and silver prices is driven by a global liquidity crunch rather than a loss of fundamental value. Comparing current market conditions to the 2008 and 2020 crisis periods, Bawden pointed out that prices could decline further before a permanent recovery.

Although Jen Bawden described the pullback in precious metals as an opportunity for long-term investors, she stated that the downward trend has not yet ended. Noting that silver is 60 percent below its record high and gold is at its lowest level in the last year, Bawden warned that investors may not have seen the bottom yet.

The primary reasons for the pressure on the markets are cited as expectations regarding the US Federal Reserve's (Fed) interest rate policy and rising oil prices due to tensions in the Middle East. The strengthening of the dollar stands out as a technical factor hindering the upward movement of gold and silver.

Assessment: Recalling that gold and silver showed strong gains following sharp declines during past crisis periods, Bawden noted that gold gained 170 percent in value during the 2008 crisis, while silver experienced a 150 percent rally in 2020. Based on this historical data, the financier stated that she is preparing limit orders to buy mining stocks and predicted that precious metals will come to the fore again in the long term as the dollar loses strength.