BRICS Move to Gold August 22, 2023

There were some large spot price selloffs in precious metals this week.

Those who watched spot price action when COMEX hours began can likely verify they are human.

All this led to a mixed response by bullion market participants.

A positive portion of the crowd feels excited looking to add to their bullion positions as exceedingly lower price points, while another large and often vocal portion of the bullion buying crowd is sick and tired of fundamental realities still nowhere near reflected in real ongoing valuations for physical precious metals.

I would be lying if I said I didn't have a mix of both sentiments or feelings watching spot price selloffs this week.

That said, I didn't hesitate to buy silver and platinum bullion respectively given these recently large spot price dips.

Sure spot prices could linger lower as we head further into this summer, but bullion product availability is at the moment robust and there is near immediate delivery in most bullion products at the moment. As well, price premiums relative to ongoing spot prices have slimmed down considerably over the last few months. 

Given that and some of the following factors at play, I chose not to wait around gambling on what might happen next. Trigger pulled.

Let me remind you and myself of a few of the major contributing factors on the physical silver fundamental side of my decision to buy now and not wait for later.

First, the highly leveraged COMEX silver futures market, where most of the current day to day silver spot price is dictated for now. Its inventory is at historically low levels, not merely in the "Registered" up for potential delivery or paper warrant swap category. But also in the COMEX eligible pile when one considers that nearly half of it is unsecured SLV silver ETF holdings supposedly sitting in New York. 

All in, COMES silver might only have about 1/5th of annual silver demand as float in their highly leveraged but mere fractionally backed silver futures warehouses.

The silver supposedly sitting in London for safekeeping has not been replenished since India raided much of it last year with its collective record silver bullion buying demand in 2022. Very little of this reported 800 million oz of silver in London is not spoken for by either unsecured silver ETFs, private investors, or financial institutions.

SRSRocco Report also pointed out this week that silver solar demand is on pace to potentially double by 2025, while reports out of China continue to show that solar panel demand there is exploding and silver input loads per panel are ramping for better efficiency in the new solar panels being manufactured there for critical future energy needs of that large economy.

SRSRocco also pointed out their current estimate for all in costs for silver at the end of 2022 was $20.50 oz and thus my belief is when you can get silver bullion near the cost of production especially all other contributing factors at hand, you just pony up and pull the trigger adding to prudent positions.

Finally just look at our reckless leadership and imagine what they will have done by the time we get to the year 2025, given that there is no debt ceiling cap from here to however much higher there, eventually becomes.

Not waiting to find that nosebleed number out, rather give me my bullion now, at these relatively low price points while they last.

As mentioned, spot prices dipped strongly this week and it remains to be seen how much further they may go as we await the fiat Fed's rate hike cycle into recession and eventual rate cuts likely coupled with an eventual secular fiat US dollar bear market for the ages.

The spot silver price closed just under $22.50 oz bid while the spot gold price finished the week at $1,920 oz bid.

The spot gold silver ratio ballooned to 85.

On a technical basis, I suggest watching gold not only now in this spot price weakness but also for the eventual breakout to come. 

Gold leads typically as secular bullion bull markets go next level. I am waiting and looking forward to seeing $2,000 and $2,100 oz gold become the spot price floor.

A bit of bullion industry news as the Australian Senate is about to make a further public inquiry into a few recent scandals at the Australian Perth Mint regarding lackluster Anti-Money Launder and KYC compliance, as well as issues regarding alleged impure gold bars sold into the Shanghai Gold Exchange market. 

All these supposed scandals aside, the Perth Mint has been enjoying record sized silver and gold bullion sales over the past 3 plus years. We will keep you up to date if any unknown issues turn up in this coming inquiry.

The United State's Office of Comptroller of the Currency or OCC reported this week that Precious Metals derivatives held by three of some of the largest banks grew since their last update on that data at the end of 2022.

Ted Butler pointed out that specifically JP Morgan and Bank of America's precious metals derivative book blew out relatively larger in proportion and on a percentage basis than the relative silver and gold spot price action moved over that 3 month timeframe.

Nearly 90% of all exotic derivatives traded in the USA are traded by 4 banks and here was their reported Precious Metals derivative contract holdings at the end of March, 2023. Most of which was loaded in paper bets expiring within a one year timeframe.

Just under one year ago the OCC began having to report outsized precious metals derivatives exposure by banks within the USA.

A longtime former London gold trader spoke frankly about the global gold and precious metals market and where it eventually ends.

The video is entitled "Longtime London Gold Trader: Precious Metals Markets are Paper Derivative Shams" and I will leave a link in the comment section and show notes for you, if you somehow missed it.

Moving on to our final piece or point of tonight's SD Bullion Market update.

While US Treasury Secretary Janet Yellen is over in Paris, France basically admits that more regional bank failures or consolidations as she puts it, are coming. She is also continuing to pump for more balance sheet expansions for IMF and World Bank balance sheets ahead of the next global crisis to come. 

She knows there is an open competition coming from the east and the BRICS in terms of world persuasion and trade, and having the US dominated IMF and World Bank fully ready to flood the global system with more fiat dollar denominated debts is in her interest while likely not being in theirs.

Cut to best selling author James Rickards who has been making major headlines of late by flat out declaring that the BRICS+ contingent will be moving toward a currency trade settlement system linked to gold.

Some of you might understandably scoff at Jim Rickards' latest writings and declarations. But it takes a lot of nerve to make a claim that large with a date attached.

The good news is we are only a few months away from seeing if his claims are gold hopium or if they prove to be grounded in geo-political and macroeconomic reality or not.

Meantime, I hope you take full advantage of these summer spot price lulls. My belief is we'll look back on them a few years from now and wish we could get bullion anywhere near these current spot price points.

That is all for this week's SD Bullion Market Update.

As always to you out there, take great care of yourselves and those you love.

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James Anderson
James Anderson
Senior Market Analyst & Content

A bullion buyer years before the 2008 Global Financial Crisis, James Anderson is a grounded precious metals researcher, content creator, and physical investment grade bullion professional. He has authored several Gold & Silver Guides and has been featured on the History Channel, Zero Hedge, Gold-Eagle, Silver Seek, Value Walk and many more. You can pick up Jame's most recent, comprehensive 200+ Page book here at SD Bullion.

Given that repressed commodity values are now near 100-year low level valuations versus large US stocks, James remains convinced investors and savers should buy and maintain a prudent physical bullion position now, before more unfunded promises debase away in the coming decades...