In 2021, after the central bank indicated that it would halt plans to increase interest rates, the price of silver began to rise. Historically, silver tends to perform well when interest rates are lower than the inflation rate. __________________.

Which of the following most logically completes the passage above?

Answer Choices

Correct answer marked below

As the inflation-adjusted return turns negative, investors feel more secure holding silver as a hedge against inflation, even if it does not provide interest.

Correct

Thus, the interest rates significantly influenced the market, resulting in a surge of investors.

Silver became a popular asset for many investors as they started accumulating it in large amounts.

Due to this, inflation significantly impacted the purchasing choices of investors.

The return on investment did not fail to attract investors, who played a crucial role in the silver market.

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Official Explanation

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In 2021, after the central bank indicated that it would halt plans to increase interest rates, the price of silver began to rise. Historically, silver tends to perform well when interest rates are lower than the inflation rate. This means that when the inflation-adjusted return on other investments turns negative, investors often seek alternatives like silver, which serves as a…

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Comments

RonMar 13, 2025

thanks for posting

ShubhankarMar 6, 2025

taking my GMAT next month, this helps!

PatrickApr 30, 2024

can you explain more?

AnkitaMay 16, 2024

Can you explain more?

What this question tests

What it tests

Whether you can complete the last sentence of an argument in a way that is logically consistent with it.

Common trap

Choosing an option that sounds plausible but contradicts the argument or introduces new information.