Chris Marcus of Acadia Economics hosts James Anderson of SD Bullion in part two of a three-part discussion.
Are People Actually Buying Gold and Silver? - James Anderson says yes, especially this summer 2019.
The bullion industry has not seen this much secondary bullion leaving weak hands selling, moving to strong hands buying.
This phenomenon has been playing out for many years, but the volume in this summer 2019 is a sea change worthy of note. Things are markedly changing in precious metals as we move into the 2020s.
Contrary to lackadaisical new US Mint sales figures, secondary bullion products have been flipping from weak to strong hands compressing bullion premiums for years now.
Wait until we see new nominal fiat US dollar price high points for gold again, much of the weak hand selling will dry up in gold. For silver, the same will occur as we get back to the $40 oz range likely next decade.
See here how silly future silver prices might get considering past as prelude and more importantly how real price inflation has bee compounding for many decades since the 1980 inflation data rigging began. If you have time, perhaps mull over too, "When to Sell some Silver?".
Talked about briefly in the video above is a recent conversation James had with Chris Powell of GATA.org in regards to commodity price and financial market rigging with the legal precedent set in the 1934 Gold Reserve Act.
Yes, indeed WikiLeaks cables and simple physical gold flow data show that both China and Russia are both aware of the longstanding silver, gold, and commodity price suppressions that have been taking place in the futures and derivative markets. China is the world’s number one consumer of commodities. Russia is almost completely reliant on high gas and oil prices for its economy to boom, they are not diversified and thus suffer when crude oil prices drop sharply as they did only a few years back. Both Russia and China have been stacking gold bullion for over a decade and a half each, aggressively.
Such is the world we live in today overloaded with fiat currencies and derivative bets. The leverage of the system allows the most dominate leveraged parties to move real-world prices to where it best suits their agendas. Why else would we invite foreign central banks and financial institutions like the BIS to trade at a discount in our commodity and derivative markets?
Short and even medium-term trading in gold and silver markets can thus be very tricky. Gold bullion is literally shorting or betting against an economy and fiat currency performing well. It can be a financial hedge but also outperform almost all competing asset classes (e.g. 2000 through 2011).
Often what happens with physical gold and silver markets can also be temporarily or even for many years divorced from futures exchanges and spot price convergence.
The easiest example of this was during the 2008 financial crisis where forced liquidations and margin calls were forcing leveraged futures contract longs to liquidate and sell their bets that gold and silver prices would climb, causing many waterfall declines in both precious metals over a number of months (e.g. silver prices 2008 see the Silver Eagle price premium +80% over spot explosion chart, and gold prices 2008 see Gold Bullion Shortage +25% premiums on gold spot vs bullion coins).
This was happening as major financial institutions and historic banks (e.g. Bear Sterns, Lehman Brothers) were bankrupting and average investors were buying bullion dealer shelves empty. Afraid banks were about to fail and money market funds having a run on them as if they were a bankrupting bank, bullion buyers in late 2008 were paying gargantuan premiums just to wait two months or more to get their promised bullion products from strangers they bought from online. The fear trade was very intense and both gold and silver were sought physically.
This fascinating dynamic is likely to set to repeat in the decade to come as the next financial crisis appears to be brewing. While the silver and gold spot price action can remain divorced from underlying supply and demand trends for perhaps a decade or more, at some point real-world supply and demand factors matter more than anything else in terms of price discovery. As low prices typically reduce a commodities supply, especially in the silver bullion market, as silver producing mines are have been consistently shut down and new silver mine production is not coming online any silver price action soon.
And while paper trading can and does distort silver price discovery over the short and medium terms, the physical precious metal is and has consistently been taken off the market by those playing the long game. With physical delivery of metal remaining one of the greatest threats to the current fractional reserve precious metals pricing system.
Know that even the supposed silver market maker of the world, the Comex fractional reserve silver market only holds about 1/3rd of the world’s annual silver supply in its collective warehouse.
The world's largets too big to fail bank as defined by the BIS' FSB, JP Morgan is the custodian of about half of all the silver bullion underlying the leverage Comex market.
Just over 300 million ounces may sound like a lot, but that amount would only satiate Indian silver demand for a little over 1 year of time. And the Comex still majority dictates the spot price of silver around the world.
This is why in this 3 part interview with James Anderson mentions that the US Department of Justice’s financial crime cleanup is so important. The faith in US financial markets has been thoroughly debased especially since the 2008 financial crisis and throughout this decade. The facts that have come forth confirm suspicions that the US knows commodity price discovery is a matter of national security. In other words, they do not want to lose that right empire to any other emerging empire. Some policing is mandatory before a rival like China steals market share and further pricing powers over commodities.
You can also find Part 3 (soon) or Part 1 of this 3-part discussion here at the SD Bullion blog.