Silver Goes Higher Regardless if BRICS & Friends Conspire

This week leaders in nations such as Saudi Arabia, Argentina, Indonesia, Iran, Kazakhstan and over ten other additional nations intend to join the BRICS. BRICS are of course Brazil, Russia, India, China, and South Africa.

This new trading bloc would have over half of the world's population, 60%+ global gas reserves and 45%+ of global oil reserves, and often half or more of most raw physical global commodity market demand. Not taking this ongoing trend towards a more shared multipolar world order seriously, would be a mistake for long term investors especially in the western world.

More developed G7 nations that include Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States should take note.

Over the last three decades, just the five BRICS nations alone have surpassed the formerly dominant developed G7 nations in total GDP or Gross Domestic Product economic output.

I have near no doubt that collective central banks have been buying this recent gold spot price dip, and this week my belief was confirmed by a survey which showed that about 1 in 4 central banks fully admit that they are actively acquiring more gold bullion for their nation's long term reserves.

Specifically in this World Gold Council survey it is the emerging market nation central banks, many of which are BRICS or 'friends' of the growing BRICS trading alliance, that are likely actively buying the current gold spot price dip.

Over seven of ten central banks stated in this recent survey that central bank gold reserves will increase over the next 12 months. And this would be of course building on last year, which produced a record size of official gold bullion buying in size and volume over the year, never before recorded in history prior.

The first quarter of this year 2023, it was already admitted to being 34% higher than the previous record-sized cumulative central bank gold bullion buying spree during the Q1 2013 spot price crash.

Meanwhile globally speaking, institutional investors remain asleep at their collective wheel, as they have collectively sold off much of their unsecured gold ETF holdings and are thus being actively front-run by record sized central bank gold bullion buying since the start of last year 2022.

To better understand where the world is headed, I strongly suggest watching what global central banks are doing in their collective actions. 

They have been and will likely continue going for gold bullion in historic size as time progresses.

You can bet they are taking advantage of recent gold spot price weakness by acquiring more gold bullion in volumes only to perhaps be admitted later on, officially so.

The silver and gold spot price markets staged a rally just past the middle part of this week's spot price trading, only to algorithmically sell off on more phony official jobs report data from this morning. We'll get into conflicting data points to back that statement in one minute but first.

The spot silver price closed this week 23.59 oz bid while the spot gold price finished just under $1950 oz bid.

The spot gold silver ratio fell slightly closing at 82.

Conflicting jobs related data this morning as the official U.S. unemployment rate rose to 3.7% in May. And while the US economy supposedly added 339,000 jobs, according to official reports which will likely be adjusted downwards later on. A US Household survey showed a loss or a decline of 310,000 jobs.

Spot prices sold off on the news allowing spot price dip buyers more time to acquire more bullion at a discount to more recent relatively higher spot price levels.

Surprise not surprised, the played out debt ceiling distraction has been finally finalized. 

Put off until 2025, the US government is now free to borrow and create the next rounds of ∞QE∞ ad infinitum.

Two years from now I expect the total US Federal debt level will be closer to $40 trillion, if course never pays off in real value terms which is why world central banks are moving in record size into gold bullion currently.

Willem Middelkoop reminds us what followed right after the last US debt limit suspension in August 2019 was the fiat Federal Reserve REPO loan ramp fiasco bailouts which front ran the COVID US Treasury looting on about 6 to 7 months after in March and April of 2020.

Based on the US government's own debt fueled projections, it is only a matter of time before mandated US debt buying by the public becomes the law of the debt saturated land.

The FDIC just updated their admitted banking system's unrealized losses through Q1 2023, just over a half trillion and we still have persistent price inflation abound regardless of much higher interest rates currently.

Total global debt levels have also increased to now over $305 trillion with over half of that debt load held by corporations, many of which will fail before those debts get paid off in respectable real value terms.

Bankruptcies amongst large companies are on the rise drafting just behind 2010 levels thus far in 2023.

But we are nowhere near where corporate bankruptcy levels might be heading if we are indeed heading into the second yet to be completed half of the cheap debt covered Global Financial Crisis 2.0 second half. Something akin to more than 3X the levels of bankruptcy volumes or more is not out of the question given where we have been and where we are in terms of ridiculous irresponsible debt loads sitting on corporate balance sheets at the moment.

In many major US metropolitans, often more than 30% of the commercial real estate sits idle with empty office buildings galore. We have not reckoned with those losses and bankruptcies yet.

And while a bear market rally in tech fueled by AI hype has been pumping on the NASQAQ of late, layoffs of human workers already thus far in 2023 are already ahead of all of last year's layoffs in 2022.

This will be an all time year of lost jobs in the tech sector, and a sign that the bear market rally in tech is just that. AI is not ready to rationalize a new bubble with all these terrible fundamentals flying in our collective faces.

US credit card debt just passed $1 trillion and the trend of increasing delinquencies is yet another sign that the US consumer is being choked out by not having enough income to support their lifestyles.

When we look out at the next few years of US debt refinancing, I suppose one could hope for a recession and a rollback of currently high interest rate levels, but of course that means many more US workers will likely not have gainful employment in that scenario.

Turning to the bullion market.

Strange news out of Australia's Perth Mint this week, as the recently newly appointed CEO is stepping down as the Western Australian state of Perth launches a review of its ownership of this mint. 

There have been various scandals of late for the Perth Mint, but that has not stopped physical bullion buyers from buying record volumes of gold and silver bullion coins and bars over the last few years.

What is really going on behind the CEO's step down and state of Perth review of the mint is anyone's guess at the moment.

The Registered levels of silver within the fractionally backed leveraged COMEX futures contract derivative market is back down to just over 28 million troy ounces.

A low level considering over two decades of where the supposedly deliverable silver pile has been before.

Meanwhile when we take our relatively strong fiat US dollar glasses off of late, and look at where silver prices are around the world using a non-weighted 20 top GDP country fiat currency index.

We can see that the blue represents the 20 largest economic nation's local silver price averages out this 21st Century. It has been trending sideways building a base over the last 3 years of time.

As the fiat US dollar eventually rolls over into its coming secular bear market for the ages, you can expect to see record silver spot prices in all 20 of these G7, BRICS, and 'friends' of BRICS countries not long after. 

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

Keep taking advantage of recent spot price weakness, and as always.

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...