The Gold and Silver Markets Have Changed…What About You?
The comments below are an edited and abridged synopsis of an article by David Smith
The physical gold and silver markets have fundamentally changed. Over the last year or so, gold and silver ETF inflows (supposedly backed by growing amounts of metal) have been surging, setting monthly records time after time.
There is an interesting discrepancy between the amount of gold going into ETFs and the implied build taking place elsewhere—non-banking vaults, private storage facilities, or (quite literally) holes in the ground.
Central banks have been among the largest buyers of gold over the last decade, apart from the UK, which sold half its reserves at an average price of $275, and Canada, which holds next to nothing.
The large buying build in both gold and silver has reached the stage where investors are realizing that elevated premiums, long delivery delays, and difficulty in finding metal at all are becoming the norm. Expect these trends to become worse as we move into the fall, typically one of the strongest periods for both metals.
The biggest decrease in silver mine supply in recorded history has taken place during the last four years (2017-19, CPM Group).
In 2019, only a single new primary silver mine came online anywhere in the world. Not to mention that, due to the pandemic this year, we can expect a further 10-20% production decrease.
If you have yet to acquire enough precious metal for your needs, now is the time to buy. Decide what your acquisition plan should look like, how much you intend to budget, what you should buy, and how often you will buy.
The odds indicate that the historic gold and silver institutional and speculator demand now being witnessed will lead to a virtual gold rush for what’s left over, so don’t wait for lower paper prices in the hope of getting some cheap metal.
Real money—gold and silver—holds and builds value as a counterweight to the ongoing depreciation in fiat currency’s purchasing power. And since 2000, those paper promises have declined in value by about 44%.