Central Bank digital currencies have become a topic of discussion among investors, and people are wondering if they will have an impact on gold and silver prices. The CPM Group has posted videos on YouTube and has received many comments asking for their thoughts on the topic. The answer to this question is not as simple as some may believe. The move to digital currency will not happen overnight, and it will be a long process. The Bank of Canada recently published a report highlighting that there are many technical issues that need to be addressed before this transition can happen.
It took decades for various European countries to dissolve their national currencies and adopt the Euro. The move toward digital currency will not take that long, but it is still underway. It will be a change in the medium of exchange and not a change in the substance of money. People will continue to want to hold some of their assets in gold and silver, and no central bank in the world has discussed taking away gold and silver from its citizens. Central banks view gold and silver as investments and financial assets, not necessarily as monetary assets.
Investors are worried about the impact of Central Bank digital currencies on gold and silver prices. However, the impact is expected to be negligible, and people will continue to trade and buy gold and silver, even when the technology of money has changed. People will continue to hold their assets in gold and silver, and they will still be traded by investors and others.
The price of gold and silver has been rising since early November into January, but it has been coming down for the past few weeks. Since Wednesday, gold and silver prices have fallen further. Investors are less concerned about economic and financial market conditions, less concerned about a recession, less concerned about inflation, and less concerned about the stock market collapsing. They have shifted their holdings of gold to more liquid ETFs run by systemically important banks.
CPM Group’s expectation is that the prices of gold and silver will be peaking in the first quarter, and we may have already seen the highs for a while. We may see prices fall for the next seven months or longer, but this is subject to change based on political or economic developments. In conclusion, the move to Central Bank digital currencies will not have a significant impact on gold and silver prices, and investors will continue to hold their assets in gold and silver.