One thing that I have noticed and now I understand it very well is the relationship between the US dollar and metals. Whether it is gold, silver or any other metal, they have a strong connection with the dollar.
Without any doubt, silver has real use cases. It is used in many different industries and for many different purposes. It is used in jewelry and ornaments, electronics, electric cars, solar panels, the medical field and many other places. One thing I think is important to tell you is that the demand for silver keeps increasing day by day.
If you are a long term holder and you buy silver at the current price which is around $62.5 then in the long term its price could even become 2x or 3x.
In the short term it is definitely volatile because different news events affect its price. But in the long term because its demand keeps increasing, its price is also likely to keep rising.
Whenever you see the FED increase interest rates the value of the US dollar becomes stronger. People start investing in the dollar and consider it a safe asset so they can continue earning a good APR through interest.
But as soon as the FED cuts interest rates we usually see the value of the dollar decrease while the prices of other assets begin to rise.
Remember, whenever the dollar becomes stronger the demand for silver becomes lower and people start moving their money out of metals and into the dollar. But when interest rates are reduced the demand for the dollar decreases and the price of silver starts increasing.
Recently I observed this very carefully on Binance P2P. I noticed that when the price of USDT increased from 282 to 292, silver had already dumped by around 10% to 15%. That was a huge drop. It showed that people were taking money out of metals and giving more importance to the US dollar.
But now, as the price of the dollar has fallen from 292 to 285 against the Pakistani Rupee (PKR) I have noticed that the price of silver has started rising again. It has increased by around 6% to 7% in just a few days.
This is how their relationship works. You can get a good idea by checking Binance P2P. If the price of USDT keeps increasing the demand for metals usually decreases. And if the price of USDT falls on P2P the demand for metals usually starts increasing as well.
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