The Suppression Of Metal Prices
This first quarter of this year 2021 is the worst quarter in 39 years for the precious metals. Gold saw it's price dumped 10%, almost $200 and even more for silver as it fell a healthy 20% plus. All of this has taken place at a time when the global economy has shrunk a bit over 5%, the entire planet is in the middle of a pandemic, unemployment has reached depression levels and money printing creating devaluations has never been this high in history.
So why has the prices of precious metals fallen so hard. Aren't these metals suppose to be safe havens? After all there are tons of articles and reason to own gold and silver in a physical form as insurance against currency devaluation and inflation. Well, recent articles throughout the web point to the fact that these metals are being sold and that money is being pushed into the crytpo currency space such as bitcoin. I would tend to agree with that scenario because we live in very uncertain time where the only way you can make a return on your money is by speculation and crytpos seem to offer that opportunity to double, triple or more your investment. But the real issue is not that these metals are being sold. It's just the paper derivitive of these metals that is being sold off and cashed into other speculative investment. The chart below shows very well just how much physical silver is being bought at a time when the price of silver has fallen 20% this year.
There was more physical silver purchased during the first quarter of this year than all the phyical silver purchased within the last 20 years. Of course a lot of this buying is being spurred by the wall street bets crowd who have hundreds of thousands of members out buying any physical silver they can get their hands on. Infact there are stories floating around the web that the Australian mint has NO silver in stock and can not mint any new bars or rounds. All of this is totally opposite to the supply and demand logic. Usually when demand outstrips supply, prices rise. But in this case the prices have fallen on the paper side but not so much on the physical side.
Getting on with gold now we see the same sort of shit happening here. Gold prices getting whacked down but still a shortage in physical although not a bad as silver. Looking at the dynamics of mining though, concidering it takes decades to find and develope a new deposit, one would think that speculative money would be going into gold futures and not the other way around like it has. The chart below shows forward looking figures of gold over the next few decades and clearly shows a huge deficit of the metal. This is factual. If you read mining articles as much as I do you will know that there is getting to be less and less gold deposits found and the deposits that are found are smaller deposits, deeper and lower grade. The fact is the easy pickings are gone.
Let's imagine that the chart above was showing a graph of drinking water, gasoline, food or any other item of everyday use. Hell, even toilet paper. Would you not look and think, geeeze maybe I'll stock up on some of those items or maybe even buy a little more and then if I don't need it I can always sell it in the future? One would think that would be the natural response in this period in time, in the middle of a pandemic, with record high unemployment, with massive money printing and what will be rampant inflation, the answer is no.
The real issue though is that the markets have become more of a casino. Nothing has value really except how much money can be made on a trade even though the money being made is just fake money printed out of thin air. The second problem is that there are a few banks like JP Morgan that do have a lot of clout in the metals market that sell short and manuipulate the prices to their advantage all the while buying as much of th physical as they can. Countless articles point to this rampant exploitation of so called free markets. While main street media and governments turn a blind eye away it was last year that JP Morgan did get a billion dollar fine after traders were found guilty of manipulating the precious metals markets. Banks pay the fine, fire the trader and continue on. It's the old wash, rinse and repeat cycle until it isn't.
Of course these sell offs are joy to the bullion banks and refiners who love to dampen optimism by buying cheap and selling back high. It's the old classic of all trades. Also let's not forget their friends like apple or samsung or any of the huge electronic builders who need tons of silver to make cell phones and flat screen tv's. Higher silver prices is the last thing these guys want to see and with less and less silver being recycled they need to purchase TONS of this material of they plan on staying in business and remaining competative. In the end its the speculators who wreck everything by banckrupting a few silver miners and placing hundreds of workers out of a job.
In the end though I believe that gold and silver will regain their price points and even beyond. Silver even more so as it is now getting to be known more and more as an industrial metal than a precious metal. This whole new scheme of the green new deal will only increase the value of silver in it's uses for solar panel, battery systems etc. so owning silver either is quality silver stocks or physical, your investment turn a profit or at least hold it's value. Gold on the other hand will always be gold. Tested throughout time of thousands of years, it became the metal of kings and now central bankers. I'm thinking the remaining part of 2021 and beyond will be good for gold and silver and the miners.
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