Two Huge, Overlooked Drains on Global Silver Supplies
The comments below are an edited and abridged synopsis of an article by Mike Gleason
The question facing precious metals investors is whether current price drawdowns represent a change in the long-term fundamentals from bullish to bearish. The answer depends on whether physical supply is set to grow faster than demand.
Keith Neumeyer, head of First Majestic Silver, one of the world’s leading silver producers, sees mining output declining and demand rising. Gleason presents an excerpt from Neumeyer’s presentation to the Denver Gold Group.
Another important driver of gold and silver demand will come from the bullion market. Investors who buy physical coins, bars and rounds can certainly influence the supply and demand dynamics.
Bullion buying surged last year amid the pandemic, driving premiums and spot prices higher. Investment demand has since cooled off, but it could surge if another fear-driven event catalyzes safe-haven buying.
A number of political threats now loom, and the Treasury Department is seeking the power to identify and analyze every transaction over $600 that goes through an individual’s bank account. Congressional Dems are pushing to begin breaking the promise of tax-deferred retirement accounts by capping the dollar amount that IRA balances can grow to, and reducing options of IRA owners to hold assets that are not managed by Wall Street.
All these threats to wealth accumulation and financial privacy point to the advantages of holding physical precious metals outside of the banking system. Smart investors are taking the opportunity brought by recent market weakness to do just that.
In a bull market for precious metals, the most important factors driving your total returns are the number of ounces of gold and silver you own and the price you paid for them—it’s that simple
So when opportunities exist to buy on the cheap, make sure you’re taking full advantage of them by sticking with low-premium bullion products offered by a reputable dealer.
