Summary
- Silver prices dropped significantly over a 24-hour period amid broader market volatility.
- Market expectations point to upcoming Federal Reserve interest rate cuts, which historically benefit gold and silver prices.
- Silver has shown strong performance during past rate cut cycles.
- India has reduced import duties on precious metals, boosting physical demand and impacting global markets.
- Elon Musk warned of potential hyperinflation and violence due to US dollar destruction.
- The speed of information dissemination is changing the dynamics of bullion markets.
- The US faces an unprecedented debt crisis with no clear solution.
- Central banks are actively increasing their gold holdings.
The silver spot price in fiat US dollar terms got cut down by over $2 oz within a 24 hour trading window this past Wednesday to Thursday as price volatility picked up in many major financial and commodity markets worldwide.
Later in this week's bullion market update, we'll look at how far this current silver spot price sell off might go. And the longer term bullion bull market drivers unshaken from recent spot price weakness.
Current overall US financial market players are expecting fiat Federal Reserve rate cuts to commence just over a month from now. Bloomberg is now stating the Fed is likely to signal next week on its intention to begin rate cuts in September.
Here is a look at market expectations at the moment on future rate cuts based on derivative bets.
Historically gold and silver spot prices tend to perform very well once rate cut cycles commence and play out. You can see 3 rate cut cycles versus gold in the 21st Century here.
And as for silver the percentage returns that it has achieved in the last 3 rate cut cycles in this 21st Century call for the spot price to eventually zoom in due time.
Big physical silver and precious metals news out of India this week as they slashed import duties on all four major precious metals which is already spurring physical demand in India.
This is the lowest import tax on gold and precious metals we have seen for over a decade in India.
The move has already driven local gold bullion premiums positive.
And it has also undercut the UAE silver throughout-put discount at least for the next 2-3 years and thus further importation pressure will likely return to record low London silver and diminished gold holdings.
Not only have we seen demand in India pick up, silver bullion imports into China on price weakness last month June 2024 spurred large silver deliveries on the SGE. Surely similar will be occurring now with silver's recent spot price selloff.
Further coverage on the week from India is here.
This week, the so-called richest man in the world tweeted this warning to his followers on Twitter X. Suggesting that fiat US dollar destruction is leading us to eventual hyperinflation and violence. Over 53 million people viewed his message on the website.
These are the kinds of modern day differences we see in this 2020s bullion bull market, versus bullion bull markets of the past.
The speed of information and communication on the internet and with smartphones is totally being underestimated, as an eventual widespread confidence breaking point is out there and it is going to call into question even the very stores of value many so call money these days.
Driving many more investors into the precious metals markets as the years unfold.
Stick around, on the other side of this break we look at the longer-term issues facing the USA with an insightful piece on just how unprecedented the current fiscal situation is that we are collectively facing.
The spot silver and gold markets sold off on the week.
The spot silver price finished just below $28 oz bid while the spot gold price closed the week at just under $2,400 oz bid.
The relative pronounced weakness in spot silver versus gold caused the spot gold silver ratio to rise to close the week at 85.
The current 200 day moving average for spot silver is near $26 oz. It will be interesting to see if spot silver prices see more downside weakness before the Fed begins talking rate cut timelines in public.
We have seen major selloffs like this in spot silver many times before in bullion bull markets, look back at the start of 2011 for something akin and once completed the silver spot price nearly doubled in the three months that followed that large spot price selloff.
Finally we close this week with a sobering reminder of what we are collectively facing in the USA.
An over $175 trillion hard debt and unfunded liability problem that has not yet been admitted unplayable by our so called leaders that be.
Balaji posted the following sobering info on his sub stack this week and it is worth a brief review as precious metal spot price weakness can cloud judgements short term.
Fiat financial authorities have been loaning out way more in funds in 2023 than they were in the 2008 GFC.
The US government piling on another $1 trillion in debt every 100 days is currently borrowing at the rate it was during the Covid crisis.
With interest rates near 5% still, that means interest on the debt is soon to blow beyond massive defense spending.
In just the last 4 years, the fiat US dollar has admiringly been devalued by over 25% and I would argue likely more as ongoing price inflation is often underreported.
China is increasingly dumping its US Treasury holdings as it has since the mid-2010s.
While the BRICS are piling into gold bullion reserves over bonds.
And bilateral trade deals using the fiat Chinese yuan are now larger than US dollar deals globally on net. In other words, China is now the majority number #1 trade partner of the world.
The Russian GDP has recently eclipsed Japan's regardless of US and western sanctions.
There is no end in sight for western world debt levels forecasted to balloon outward into an eventual debt crisis.
In Feb 2024 the US government admitted the net present value of what it collectively owes is over $175 trillion. In other words, not getting paid off in real value terms.
AI is not going to solve this situation as the supposed MAG 7 bubble is only a paltry $15 trillion combined.
The bottom line is more fiat currency devaluations into an eventual debt and unfunded liability crisis especially in the western world with the USA the largest debtor of the bunch.
Global central banks know this and are backing out of the theater before the fire becomes apparent to everyone.
My hope is many of you are taking advantage of this latest spot price weakness and adding to prudent bullion positions as the central banks have been doing in record size the last near 3 years of time.
That is going to be all for this week's SD Bullion Market Update.
As always to you out there.
Take great care of yourselves and those you love.
