Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Silver Notches Best Month Since 1979 - 12th Aug 20
Silver Shorts Get Squeezed Hard… What’s Next? - 12th Aug 20
A Tale of Two Precious Metal Bulls - 12th Aug 20
Stock Market Melt-Up Continues While Precious Metals Warn of Risks - 12th Aug 20
How Does the Gold Fit the Corona World? - 12th Aug 20
3 (free) ways to ride next big wave in EURUSD, USDJPY, gold, silver and more - 12th Aug 20
A Simple Way to Preserve Your Wealth Amid Uncertainty - 11th Aug 20
Precious Metals Complex Impulse Move : Where Is next Resistance? - 11th Aug 20
Gold Miners Junior Stcks Buying Spree - 11th Aug 20
Has the Fed Let the Inflation Genie Out of the Bottle? - 10th Aug 20
The Strange Food Trend That’s Making Investors Rich - 10th Aug 20
Supply & Demand For Money – The End of Inflation? - 10th Aug 20
Revisiting Our Silver and Gold Predictions – Get Ready For Higher Prices - 10th Aug 20
Storm Clouds Are Gathering for a Major Stock and Commodity Markets Downturn - 10th Aug 20
A 90-Year-Old Stock Market Investment Insight That's Relevant in 2020 - 10th Aug 20
Debt and Dollar Collapse Leading to Potential Stock Market Melt-Up, - 10th Aug 20
Coronavirus: UK Parents Demand ALL Schools OPEN September, 7 Million Children Abandoned by Teachers - 9th Aug 20
Computer GPU Fans Not Spinning Quick FIX - Sticky Fans Solution - 9th Aug 20
Find the Best Speech Converter for You - 9th Aug 20
Silver Bull Market Update - 7th Aug 20
This Inflation-Adjusted Silver Chart Tells An Interesting Story - 7th Aug 20
The Great American Housing Boom Has Begun - 7th Aug 20
Know About Lotteries With The Best Odds Of Winning - 7th Aug 20
Could Gold Price Reach $7,000 by 2030? - 6th Aug 20
Bananas for All! Keep Dancing… FOMC - 6th Aug 20
How to Do Bets During This Time - 6th Aug 20
How to develop your stock trading strategy - 6th Aug 20
Stock Investors What to do if Trump Bans TikTok - 5th Aug 20
Gold Trifecta of Key Signals for Gold Mining Stocks - 5th Aug 20
Stock Market Uptrend Continues? - 4th Aug 20
The Dimensions of Covid-19: The Hong Kong Flu Redux - 4th Aug 20
High Yield Junk Bonds Are Hot Again -- Despite Warning Signs - 4th Aug 20
Gold Stocks Autumn Rally - 4th Aug 20
“Government Sachs” Is Worried About the Federal Reserve Note - 4th Aug 20
Gold Miners Still Pushing That Cart of Rocks Up Hill - 4th Aug 20
UK Government to Cancel Christmas - Crazy Covid Eid 2020! - 4th Aug 20
Covid-19 Exposes NHS Institutional Racism Against Black and Asian Staff and Patients - 4th Aug 20
How Sony Is Fueling the Computer Vision Boom - 3rd Aug 20
Computer Gaming System Rig Top Tips For 6 Years Future Proofing Build Spec - 3rd Aug 20
Cornwwall Bude Caravan Park Holidays 2020 - Look Inside Holiday Resort Caravan - 3rd Aug 20
UK Caravan Park Holidays 2020 Review - Hoseasons Cayton Bay North East England - 3rd Aug 20
Best Travel Bags for 2020 Summer Holidays , Back Sling packs, water proof, money belt and tactical - 3rd Aug 20
Precious Metals Warn Of Increased Volatility Ahead - 2nd Aug 20
The Key USDX Sign for Gold and Silver - 2nd Aug 20
Corona Crisis Will Have Lasting Impact on Gold Market - 2nd Aug 20
Gold & Silver: Two Pictures - 1st Aug 20
The Bullish Case for Stocks Isn't Over Yet - 1st Aug 20
Is Gold Price Action Warning Of Imminent Monetary Collapse - Part 2? - 1st Aug 20
Will America Accept the World's Worst Pandemic Response Government - 1st Aug 20
Stock Market Technical Patterns, Future Expectations and More – Part II - 1st Aug 20
Trump White House Accelerating Toward a US Dollar Crisis - 31st Jul 20
Why US Commercial Real Estate is Set to Get Slammed - 31st Jul 20
Gold Price Blows Through Upside Resistance - The Chase Is On - 31st Jul 20
Is Crude Oil Price Setting Up for a Waterfall Decline? - 31st Jul 20
Stock Market Technical Patterns, Future Expectations and More - 30th Jul 20
Why Big Money Is Already Pouring Into Edge Computing Tech Stocks - 30th Jul 20
Economic and Geopolitical Worries Fuel Gold’s Rally - 30th Jul 20
How to Finance an Investment Property - 30th Jul 20
I Hate Banks - Including Goldman Sachs - 29th Jul 20
NASDAQ Stock Market Double Top & Price Channels Suggest Pending Price Correction - 29th Jul 20
Silver Price Surge Leaves Naysayers in the Dust - 29th Jul 20
UK Supermarket Covid-19 Shop - Few Masks, Lack of Social Distancing (Tesco) - 29th Jul 20
Budgie Clipped Wings, How Long Before it Can Fly Again? - 29th Jul 20
How To Take Advantage Of Tesla's 400% Stock Surge - 29th Jul 20
Gold Makes Record High and Targets $6,000 in New Bull Cycle - 28th Jul 20
Gold Strong Signal For A Secular Bull Market - 28th Jul 20
Anatomy of a Gold and Silver Precious Metals Bull Market - 28th Jul 20
Shopify Is Seizing an $80 Billion Pot of Gold - 28th Jul 20
Stock Market Minor Correction Underway - 28th Jul 20
Why College Is Never Coming Back - 27th Jul 20
Stocks Disconnect from Economy, Gold Responds - 27th Jul 20
Silver Begins Big Upside Rally Attempt - 27th Jul 20
The Gold and Silver Markets Have Changed… What About You? - 27th Jul 20
Google, Apple And Amazon Are Leading A $30 Trillion Assault On Wall Street - 27th Jul 20
This Stock Market Indicator Reaches "Lowest Level in Nearly 20 Years" - 26th Jul 20
New Wave of Economic Stimulus Lifts Gold Price - 26th Jul 20
Stock Market Slow Grind Higher Above the Early June Stock Highs - 26th Jul 20
How High Will Silver Go? - 25th Jul 20
If You Own Gold, Look Out Below - 25th Jul 20
Crude Oil and Energy Sets Up Near Major Resistance – Breakdown Pending - 25th Jul 20
FREE Access to Premium Market Forecasts by Elliott Wave International - 25th Jul 20
The Promise of Silver as August Approaches: Accumulation and Conversation - 25th Jul 20
The Silver Bull Gateway is at Hand - 24th Jul 20
The Prospects of S&P 500 Above the Early June Highs - 24th Jul 20
How Silver Could Surpass Its All-Time High - 24th Jul 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

The Gold and Silver Markets Have Changed… What About You?

Commodities / Gold & Silver 2020 Jul 27, 2020 - 12:40 PM GMT

By: MoneyMetals


We tend to spend a lot of time looking into the rearview mirror, especially when under duress.

Connected to this is something psychologists call "recency bias." This simply means that what has happened in the near to intermediate past tends to inform and influence us as to how we should behave in the future.

The 2011 to early 2019 precious metals bear saga was broken only by a six-month bull hiatus in early 2016 – which then gave most of the rise back over the next two years!

Now, in spite of some very powerful evidence to the contrary, the general investing public still questions both the validity and upside potential of physical precious metals and the share prices of producing miners.

My premise today is that the physical gold and silver market has fundamentally changed. And if you intend to gear up for and stay on this evolving multiple-year historic run, you had best do the same.

Significant increases in demand – especially in the West – tend to begin subtly with large purchase and storage by high net-worth individuals.

Over the last year or so, gold and silver ETF share inflows (which are supposed to be backed by growing amounts of metal) have been surging, setting monthly records time after time. In just the last two years, silver bullion held in trust by these ETFs has risen from a 22-million-ounce loss in 2018, to an 81.7-million-ounce gain last year... and ETF holdings are still marching higher.

Ounces vaulted under the SLV, which holds almost one-half of the silver owned by the world's ETFs, is published daily and has become a must-follow item for speculators and investors alike. As such, the Trust's mission of mirroring the metal's price serves as a proxy for silver investment demand.

By the middle of July, as reported by Adam Hamilton, SLV held over 516 million ounces of silver! Adam believes that this current rise is caused by institutional investors, stating that this "near-vertical holdings build has been highly consistent and disciplined. It has happened whether silver is rising, falling, or grinding sideways."

There is an interesting discrepancy going on between the amount of gold going into ETFs of record, and the "implied build" taking place in other venues. These take the form of private purchases held either in non-banking vaults, private storage facilities, or (quite literally) holes in the ground.

In addition, Central Banks, probably the largest buyers of gold over the last decade (having been net sellers for a number of years prior to the switch), have become unremitting accumulators. For all their public posturing about "gold not paying interest," gold being "a barbarous relic," or a "pet rock," they certainly have been doing just the opposite!

The most profound exceptions to this have been, when at the start of the (so-far) 20 year bull run, UK bureaucrat Gordon Brown managed to sell fully half of his country's reserves at an average price of $275, which turned out to be the absolute low of the previous two decades.

Immortalized as "Brown's Bottom," his farcical action cost his countrymen billions of dollars in lost value, as gold rocked up to its current level of over $1,800. No doubt this will continue to be "the gift that keeps on taking" as gold adds more thousands of dollars per ounce.

But the top prize for "thinking backward" must go Canada, which although it is the world's 8th largest gold producer, holds next to nothing. Their puny "reserves" could probably fit on a sturdy coffee table!

The large buying build in both gold and silver have reached the stage where individual investors are starting to realize that, far from being a flash in the pan last spring, elevated premiums, long delivery delays, and difficulty in finding metal at all are becoming the norm.

My suggestion: Expect these trends to persist and become noticeably worse as we move into the fall months, typically one of the strongest time frames for both metals.

The biggest decrease in silver mine supply in recorded history – going back to the 1940's – has taken place during the last four years (2017-19, CPM Group)! And this was pre-COVID.

As Jeff Clark notes, in 2019, only a single new primary silver mine came online anywhere on the globe. 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 for your needs," then you'd better get on the stick. Decide what your acquisition plan should look like, how much you intend to budget, what you should buy, and how often you plan to do so. Then don't fail to do something about it!

Adam Hamilton's latest essay concludes with the following paragraph.

The resulting enormous SLV-holdings builds are unprecedented, forcing them vertically... unleashing a powerful virtuous circle for silver, with investment buying driving silver higher attracting in even more investors. Silver still has a long runway higher to mean revert back up to historic norms relative to gold. And the Fed’s epic monetary inflation should keep demand high.

By just about any metric, the odds overwhelmingly indicate that the historic silver (and gold) institutional and speculator demand now being witnessed, will lead in due time to a virtual "gold rush" by individuals like you and me for what's left over.

So, don't keep waiting for lower paper prices in hopes of getting some cheap metal.

As investors with this mindset found out last spring, holding out for $12 silver simply meant they had to pay $22, as opposed to being able just a few months before to get it at $17, which included only a single dollar premium over spot.

So, don't be zinc penny wise and copper pound foolish!

Real money – gold and silver – unlike the fake stuff in your wallet, holds and builds value as a counterweight to the ongoing depreciation we've all been experiencing in fiat currency purchasing power.

And oh, did I mention that just since 2000, those "paper promises" you've been collecting have declined in value by about 44%?

As for gold and silver since then? Try working the math on scratch paper with these statistics. Gold in 2000: c. $265; Today: c. $1,863. Silver in 2000: $4.75; Today $22.37. On the way for both over the next few years to __?__ (fill in the blank).

David Smith is Senior Analyst for and a regular contributor to as well as the LODE Cryptographic Silver Monetary System Project. He has investigated precious metals’ mines and exploration sites in Argentina, Chile, Peru, Mexico, Bolivia, China, Canada and the U.S. He shares resource sector observations withr eaders, the media and North American investment conference attendees.

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 - 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

6 Critical Money Making Rules