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June 11 2018

moneymetals

Why are Gold/Silver Premiums SO Darn Low Right Now?

The bullion markets have undergone a shift in recent months. Prices may be range-bound, but there has been a transition from a seller’s market to a buyer’s market. Our goal, as always, is to keep our readers and clients apprised of developments and answer your questions.

Question: Why don’t spot prices for gold and silver respond to bullish news events or fundamentals in the physical market?

Answer: Physical supply and demand don’t necessarily impact the “spot” prices for gold and silver set in the futures markets on a day-to-day basis.

Take a hypothetical situation where some geopolitical event has investors running for safety. Lots of people decide to buy gold. Unfortunately, many of these investors will foolishly turn to gold futures.

As demand spikes in the futures markets, the bullion banks stand ready to meet the new demand with freshly printed digital contracts. This new supply of gold derivatives is scooped up by eager buyers even though not a single physical bar is added to any inventory. Their digital receipt which purports to represent gold is, in fact, almost completely unbacked.

The geopolitical event may drive plenty of demand, but the impact on price will be muted, and perhaps eliminated entirely.

Question: I noticed that premiums have fallen significantly compared to two years ago. Why has this occurred?

Extremely low prices

Answer: When demand for coins, rounds, and bars outstrips the physical inventory held by dealers, premiums will start rising as dealers bid aggressively for inventory.

This dynamic drove premiums sharply higher a number of times between 2008 and 2016. This part is telling; the futures markets can, and often do, signal the exact opposite of what is happening in the bullion markets where supply and demand are actually balanced through price. Between 2011 and 2015, spot prices were in decline, but that was a period of unprecedented demand for physical coins, rounds, and bars.

Today, this dynamic is working in reverse. Retail bullion investors in the U.S. (but not worldwide) have been more inclined to sell.

They seem optimistic that President Donald Trump and his policies will solve many problems. Some are frustrated by the returns in the metals markets and seek better performance elsewhere. Dealers are buying lots more inventory from the retail public than they did a couple years back, and this glut in supply has caused premiums to fall as a result.

We view this period of relatively low spot prices AND extraordinarily low premiums on physical gold and silver items as the best sort of environment to buy, not sell. But for those wishing to sell, Money Metals also offers the best prices.

Article Source: 
(https://www.moneymetals.com/news/2018/06/11/why-are-gold-silver-premiums-so-low-001549)

April 23 2018

moneymetals

WAITING FOR THE BUY SIGNAL: What’s Going On With Silver Investment

The Silver Market is setting up for one heck of a move higher as investors are waiting for the signal to start buying. While the silver price has shot up due recently, it still isn’t clear if this is the beginning of a longer-term uptrend. The reason for the quick spike in silver was likely due to a small short-covering rally by the Large Speculators trading on the Comex.

For the first time in a quite a while, the Large Speculators (Specs) were net short silver. For example, the Large Specs were net long by more than 100,000 contracts last year when the silver price was $18.50. However, the last COT Report showed that the Large Specs were net short silver by 17,000 contracts:

Net commercial short positions silver fell from 7,400 - 2,600

The Large Specs are shown in the Light Blue bars. Typically, the Large Specs are long, not short silver. You can see the Large Specs going short three weeks ago as their light blue bars turned down. On the other hand, the Commercials (in Red) are usually net short. However, the Commercials had the lowest net short position in years. So, to see the price of silver shoot by nearly $1.00 in a few days isn’t surprising when I have seen this setup for a few weeks.

​Continue Reading (source) ​

February 14 2018

moneymetals

Huge Market Correction Update & Silver Price Trend

While the Dow Jones Index and broader markets are recovering from their lows set on Friday, the worst is still yet to come. Investors need to realize that stock market indexes don’t fall in a straight line. Also, there is also the possibility that the Dow Jones Index could surpass its previous high of 26,600 points. Only time will tell.

However, the leverage, margin and insane valuations in the markets are still in way out of whack. Just because the Dow Jones Index has added 1,200 points from its lows in early Friday trading, it is still 2,000 points below its peak of 26,600. Furthermore, when the Dow Jones peak at 14,100 points in 2007, it took six months and three different peaks before the index started to fall off a cliff in 2008.

For example, the Dow Jones Index hit three peaks in 2007:

  1. July 2007 = 13,900
  2. Oct 2007 = 14,100
  3. Dec 2007 13,600

Over that six month period in 2007, the Dow Jones Index rose and fell three different times. The biggest percentage drop was between July 2007 and Oct 2007, at nearly 10%. However, the Dow Jones index peaks were at the most, 3.5% from their high of 14,100. Moreover, it took six months for the Dow Jones Index to finally head lower on a sustained basis and it wasn’t until nearly a year later in Oct 2008 did the market finally crash.

So, if you think the Dow Jones correction is over, then you are going to be in for a rude awakening.

Continue reading (source

December 05 2017

moneymetals

October 13 2017

moneymetals

THE UNKNOWN FUNDAMENTAL: This Will Push The Silver Price Up Much Higher

Precious metals investors need to understand the coming silver price surge will not occur due to the typical supply and demand forces. While Mainstream analysts continue to generate silver price forecasts based on supply and demand factors, they fail to include one of the most important key forces. Unfortunately, the top paid Wall Street analysts haven’t figured it out that supply and demand forces don’t impact the silver price all that much.

September 18 2017

moneymetals

Most Investors Won’t Be Buying Gold & Silver until AFTER Big Gains Occur

Physical demand for bullion rounds, coins, and bars remains somewhat soft in the U.S. This year’s run higher in prices as well as rising geopolitical tensions has whet the appetites of some investors, but it has not yet triggered broad participation.

Silver / gold demand increase

Only the contrarians have capitalized
on gold & silver's advance since 2015.

With strong gains both this year and last, metals prices have been responding to a host of issues – from unrestrained federal borrowing to the prospect of nuclear exchange. But they haven’t moved up as much as many expect.

After advancing dramatically in the prior decade, gold and silver have not responded as strongly to the explosive money creation and debt of the last few years as stocks have. And while predictions of crisis have been plentiful, the “Big One” hasn’t yet materialized.

Some honest money investors have even been drawn to Bitcoin and other cryptocurrencies. This is, in part, because of the tremendous run-up in prices in recent months (notwithstanding last week’s crash), and because cryptocurrencies might prove beyond the reach of Wall Street and central bankers to control.

Unfortunately, many investors will be sitting on the sidelines until precious metals are proven outperformers again, and in doing so, they will miss a big move up in prices. While we expect to see much higher gold and silver prices, the catalysts for that aren’t anything to root for. Serious geopolitical strife, a major correction in stock prices, or the U.S. dollar in free fall all mean hardship and pain.

Change is inevitable, and the U.S. economic expansion is getting long in the tooth. Even artificial markets must ultimately yield to actual physics.

The good news for investors with a contrarian bent is that buy premiums on bullion products are the lowest they have been in a decade – and inventory is plentiful. Down the road the opposite may be true, i.e. high premiums and shortages of the physical gold and silver in minted form.

Article Source: (https://www.moneymetals.com/news/2017/09/18/invest-after-big-gains-001160)

August 08 2017

moneymetals

August 01 2017

moneymetals

Chile’s Silver Production Down A Stunning 32%

In an interesting change of events, the world’s fifth largest silver producer saw its production plunge 32% in May versus the same month last year. Chile, a country which produced a record high of 54 million oz of silver in 2014, is forecasted to see its mine supply decline to less than 40 million oz in 2017.

According to the most recently released data by COCHILCO – Chile’s Ministry of Mines, the country’s silver production in May fell to 97.1 metric tons (3.1 million oz) versus 141.9 metric tons (4.6 million oz) in the same month last year:

Part of the reason for the decline was a union strike and shutdown at the huge by-product silver Escondida Copper Mine. However, by-product silver production at Escondida was only down 38 metric tons (1.2 million oz) during the first six months of the year (BHP Billiton). This is only a small percentage of the overall 170 metric tons (5.5 million oz) decline in Chile’s copper production in the first five months of 2017 versus the same period last year:

According to COCHILCO’s preliminary production figures, Chile produced 655 metric tons of silver Jan-May 2016 versus 485 metric tons Jan-May 2017. Again, this a difference of 170 metric tons.... or a 26% decline year to date

​Continue reading...​

July 13 2017

moneymetals

Commodity Cycle Upturn to Lift Precious Metals Prices

Safe-haven demand for physical precious metals came in soft through the first half of the year as a rising stock market reinforced investor optimism toward the economy.

U.S. stocks are expensive by just about every valuation measure you can think of – price/earnings, price/sales, dividend yield, total market capitalization as a percentage of GDP, etc. Even Fed chair Janet Yellen remarked recently that equity valuations appeared “rich.”

The inverse of the extreme overvaluation in equities is the extreme relative cheapness of hard assets. Commodity indexes entered the summer at generational lows in real terms.

Equities expensive, commodities cheap? chart

The perception has been that the world is awash in plentiful, cheap oil. Just a few years ago, with oil over $100 per barrel, the headlines blared warnings about peak oil and supply shortages. At major cyclical turning points in commodity markets, the news tends to reinforce whatever trends brought about major highs or lows in prices.

What investors need to keep in mind is that commodity markets are always cyclical in nature. No matter how bullish or bearish the outlook happens to appear at any given time, prices will eventually turn and trend in the opposite direction.

Oil and agricultural commodities perked up as summer officially began. Whether it’s the start of a major cyclical bull market remains to be seen. But the supply and demand fundamentals are setting up bullishly for commodities markets.

July 05 2017

moneymetals

6 Things Precious Metals Naysayers Get Dead Wrong

Answering the Most Common and Current Objections

Gold attracts its fair share of detractors. But the most common objections to gold as money, and as a safe-haven asset within an investment portfolio, are misplaced. Anti-gold myths are ubiquitous.

Mega billionaire Warren Buffett remarked derisively of gold that it “gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again, and pay people to stand around guarding it. It has no utility.”

That brings us to the first thing precious metals naysayers get wrong…

Myth #1: “Gold has no utility.”

Warren Buffett is without question one of the world’s greatest investors. But he is not without biases.

Buffett’s primary business interests are in banking and insurance.

Facts vs myths

He has literally made fortunes off the fiat monetary regime. He took part in (and benefited from) the government bailouts of the financial system. He (along with most other Wall Street and banking titans) supported Hillary Clinton for president.

So maybe, just maybe, Buffett’s hostility to gold has something to do with his deep, symbiotic connections to the political, banking, and monetary establishments!

In any event, the claim that gold has no utility is false. It's been chosen by the market as money because of its many useful features, including fungibility, divisibility, durability, and rarity. Gold also functions as a store of value precisely because it, unlike Federal Reserve notes, has uses beyond that of a currency.

Even if gold weren’t hoarded in vaults, people would still dig it out of the ground at great cost for its uses in electronics, jewelry, art, and architecture. In an economic sense, $50,000 in physical gold is just as useful as a $50,000 sports car – as determined by the market.

July 03 2017

moneymetals

U.S. Gold Exports Surge As Its Gold Trade Deficit Continues

It’s no secret that the East (Asians and Indians) continue to acquire a lot of gold as Western demand has weakened this year. According to the most recent data released by the USGS – United States Geological Survey, U.S. gold exports surged during the first four months of the 2017 versus the same period last year.

How much? A great deal. In the first four months of 2017, the U.S. exported a stunning 173 metric tons of gold (5.5 million oz) compared to 119 metric tons (3.8 million oz) during the same period last year.Thus, U.S. gold exports Jan-Apr 2017 surged 45% versus last year:

U.S. gold exports jan-apr 2016 vs. 2017

June 28 2017

moneymetals

WHEN THIS MASSIVE BUBBLE POPS... What Will Happen To The Precious Metals?

As the Mainstream financial media continues to promote the biggest market bubble in history, only a small fraction of investors are prepared for the disaster when it finally POPS. The markets are so insane today, it seems as if fundamentals don’t matter any more. However, they actually do if we look at the numbers closely.

In order to invest in the correct assets going forward, one must choose between those with a low RISK and high REWARD versus assets with a high RISK and low REWARD. While this may seem like common sense, I can assure you, the market makes no sense whatsoever today. And most investors are doing quite the opposite. Go figure.

If we look at the following charts in this article, we can clearly see which of the following assets, the DOW JONES, GOLD or SILVER, enjoy the lowest risk and highest reward.

Dow jones industrial average indx 6/23/17

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