Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Is This What Peak Market Fear Looks Like?

Stock-Markets / Financial Crisis 2020 Mar 20, 2020 - 10:56 AM GMT

By: MoneyMetals

Stock-Markets

The last few days have been like nothing most of us have ever experienced – or are likely to experience again in our lifetimes.

Panic has spread from the streets of Wuhan to the grocery stores of America’s heartland, from nursing homes to the Federal Reserve Board, from the stock market to the gold and silver markets.

Like other asset classes, the precious metals space is being rocked by rapidly accelerating developments, some of which haven’t occurred for decades and some of which haven’t occurred ever.

These unprecedented times are testing the mettle of precious metals investors like never before.



Gold and silver are meant to provide safe haven from financial turmoil. Safe haven demand for physical bullion has indeed surged. The pace of buying has been so furious in recent days that some dealers are literally running out of product to sell, and the scarcity has driven premiums are sharply higher.

So why haven’t gold prices skyrocketed? For one thing, the bullion market is relatively small compared to the highly leveraged futures market that sets spot prices. Gold can get pulled down on any given day for no other reason than panicked traders need to sell it in order to raise cash.

When comparing gold to other assets, however, the monetary metal is performing exactly as it should during a time of crisis. Gold has risen strongly when measured against a crashing stock market over the past few weeks. It has spiked to multi-decade highs versus both crude oil and silver.

The gold:silver ratio has now entered previously uncharted territory. On Monday it spiked to 116:1. Put another way, a single ounce of gold could buy a staggering 116 ounces of silver.



Never has silver been as cheap to acquire in real terms as it is today. Never has the silver market traded so wildly disconnected from its fundamentals. Never have the silver bullion and silver futures markets diverged so greatly.

Whereas shortages and premium spikes are taking hold in American Eagles and other popular silver bullion products, the opposite is occurring on the exchanges. For example, one exchange-traded silver vehicle, Sprott Physical Silver Trust (PSLV), briefly traded down to a record 10% discount to its own net asset value.

On Monday, another inexplicable trading anomaly occurred. On a day when the general stock market suffered a 13% nosedive, the Silver Miners ETF (SIL) surged higher by 13% -- and it's surged again today. Yet spot silver prices had plunged by 12% at the same time.

If silver is down double digits and the equity market is also down double digits, how in the world do silver mining equities rise by double digits?

It makes no sense, unless the markets are completely broken and totally arbitrary at this point. Or unless big money counterintuitively flowed into the mining sector because the silver spot price has lost credibility.

Perhaps mining stock investors believe the actual physical silver market is already beginning to dictate higher prices (as reflected in surging premiums for silver coins) than what are being quoted in the paper market.

Perhaps we just witnessed a capitulation bottom in silver and at least a temporary peak in investor fear more broadly. The VIX volatility index, also known as the fear index for the stock market, spiked on Monday to exceed the fear levels registered during the depths of the financial crisis in 2008.



When markets are driven by extreme fear, they don’t produce rational outcomes.

Strange, anomalous, and unprecedented price action in certain assets creates once-in-a-lifetime opportunities to profit as investors calm down and come to their senses. For example, you may never again get an opportunity to buy silver at less than 1/100th of the quoted gold price.

Unfortunately, it’s difficult to obtain physical silver at all during moments like these. Bargain hunters have cleared out coin dealers of most of their inventories.

The upshot is that a new uptrend in silver, and a corresponding narrowing of the gold:silver ratio, can be expected to extend for years. You should have plenty of opportunities to buy on the way up before the metal becomes expensive.

There is no need to panic buy in fear of missing the bottom. We don’t know whether it will be a “V”-shaped bottom or one that drags out and gets re-tested again in the weeks ahead.

The current economic crisis is much broader in scope than previous crises centered on Wall Street and the banking system. The Fed can’t fix it by cutting rates to zero and pumping more doses of Quantitative Easing into the bond market.

This is a Main Street crisis triggered by an invisible killer that will claim many more victims. President Trump and his top medical advisors now fully expect the number of infections to grow and the strain on the medical system to get worse before it gets better.

Will the carnage on Wall Street and in metals markets get worse, too? Nobody knows for sure. Nobody could have foreseen that a black swan event like a global pandemic would trigger a near total shutdown of the economy.

What we do know is that every other panic selling event in recorded history has produced fantastic buying opportunities for investors who didn’t lose their shirts or their minds. This one will likely be no different.

Stefan Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2020 Stefan Gleason - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in