Summary
- Janet Yellen is departing as Treasury Secretary while implementing extraordinary measures to prevent a default, with Scott Bessent, who has expressed strong interest in gold investments, taking over the position.
- Gold prices have reached significant milestones, climbing to $2,725 per ounce in the spot market, with record highs also being recorded in multiple major currencies including the euro, British pound, and Japanese yen.
- A major European silver refinery reported unprecedented inflows of precious metals into COMEX and NYMEX warehouses, with over 6 million ounces of gold and 21 million ounces of silver being deposited since December, causing severe market liquidity pressures.
- The London gold market is experiencing extreme tightness, with vaults reportedly at historically low levels and short-term gold lending rates surging to 15%, an unusual situation for such a traditionally liquid asset.
- The silver market is currently in a strong contango situation, with spot prices significantly below futures prices, creating one of the widest spreads ever recorded between near and far-dated futures contracts.
- Chinese buyers are paying premiums of up to 10% above spot price for 1,000 oz silver bars, indicating strong industrial demand and competition with the London-to-US arbitrage trade.
- The spot silver price closed at $30.32 per ounce, while gold finished just above $2,702 per ounce, representing a nearly $100 increase since the start of 2025.
- The Czech National Bank has been actively building its gold reserves, aiming to reach 100 metric tonnes by 2028, despite having sold 50 tonnes at much lower prices in 1998 for around $300 per ounce.
- Industrial silver demand has reached record levels compared to 2015, driven primarily by increased use in solar panels and electronics, contributing to a supply deficit of approximately 1 billion ounces over the past 5-6 years.
- Market analysts are anticipating potential future silver price increases due to a combination of continued industrial demand and expected investment inflows, including both institutional trading and retail bullion buying, despite concerns about possible upcoming tariffs.
U.S. Treasury head Janet Yellen left today to onlooking applause as she made headlines citing extraordinary measures the Treasury will begin utilizing to avert a default this coming Tuesday, Jan 21, 2025.
These special accounting maneuvers are intended to avoid breaching the U.S. debt limit, and urged lawmakers again to take steps to increase or suspend the statutory ceiling.
Incoming U.S. Treasury head Scott Bessent in late last year spoke of a coming 'global economic reordering' confirming his biggest investment position is in gold.
The spot Gold price in fiat U.S. dollars continued its bullish trend popping nearly to 2,725 oz this week, but in the futures market the price divergence in gold has popped increasingly higher due to ongoing concerns regarding potential tariffs from the incoming Trump administration.
More on that matter in a minute.
A brief look around the world in terms of spot gold prices, and we saw fresh record high prices in large fiat currencies like the fiat euro today topping 2,645 oz spot.
We saw a pop in gold to 2,230 oz in fiat British pounds intraday today, another record nominal high.
There was a climb close to 425,000 oz in fiat JPY today, right near its all time nominal price high.
The fiat Swiss franc has devalued to its lowest level versus gold to end trading today at 2,470 oz spot.
And the fiat Chinese yuan devalued further to gold to close this week closing just under 20,000 oz to end this week's trading.
One of the oldest silver refineries in Europe wrote the following note today.
Since the beginning of December, more than 6 million ounces of gold have flowed into Comex stocks, over 21 million ounces of silver and more than 20,000 oz of platinum into NYMEX warehouses, not to mention further bullion in transit, which is putting enormous pressure on liquidity in the market. London vaults are emptier than they have been in living memory, according to RBC experts, who also reported record 1-day inflows into the COMEX in history.
Furthermore, RBC traders say that the upcoming US holiday this Monday will not improve the situation, nor will the fact that the next available collection date at the BoE (where gold is still available) is not until Feb. This current panic amongst market players was responsible for the recent short-term lending rates for gold climbing up to 15%. Such scenarios have been seen before with PGMs, but not with a high-quality, liquid asset such as gold. Here, too, it is a novelty that all 5 precious metals have such high lending rates at the same time. HSBC analysts assume that the situation is likely to remain tense until the tariffs issue for precious metals has been resolved.
Copper inflows into COMEX began late last summer as the LME vs COMEX copper price divergence incentivized physical inflows stateside September through the end of October 2024.
Following up on our report last week, Bloomberg had the following coverage today focused on gold.
Presently the silver market is in contango meaning spot prices are well below near and the furthest out dated silver futures price points. On a nominal basis the spread between near and last dated silver futures prices is about as wide as it has ever been.
The history of silver markets in the opposite market dynamic is called backwardation, when spot prices are higher than futures prices or when near futures prices are higher than outdated futures prices, this tends to occur when the market is caught short having to go out and openly bid silver higher for immediate delivery.
Warren Buffett and Berkshire Hathaway's 127 million oz silver bullion buying in the late 1990s, the start of unsecured ETF SLV in 2006, and the 2010 to 2011 short squeeze in the silver markets are all three examples of that backwardation phenomenon.
Back to the current tariff fears at hand.
To the point, the USA has been a net importer of silver over the past 100 years of data, often importing four to five times the amounts of silver we require in our economy versus what we mine internally.
Bank of America had the following notes on continued great investment fundamentals for silver in 2025.
A quick gander at premiums being paid for 1,000 oz silver bars in China suggest just that. Chinese paying upwards of spot +10% premiums to start the year in order to get industrial silver bars into China over the competing arbitrage trade from London to the United States concurrently.
Stick around on the other side of this break we will see further evidence of coming continued gold bullion reserve buying by central banks, juxtaposed by their shortsightedness not long ago versus what they will be paying now.
As well as perhaps the key remaining factor required to make silver finally run back and eventually beyond its seemingly ancient $50 nominal price high point.
The spot silver and gold markets traded slightly up on the week.
The spot silver price finished at $30.32 oz bid which is coincidentally where the COMEX silver futures market's 200 day moving price average is at the moment.
The spot gold price closed just over $2702 oz bid having now risen nearly $100 oz to start this year 2025.
The spot gold silver ratio is still gyrating between 90 and 87 finishing the week at 89.
The Czech National Bank has been adding dozens of metric tons of gold bullion reserves each of the last 3 years 2022 through 2024.
Now holding 51.2 metric tonnes just past halfway to its goal of acquiring a 5% allocation or what they estimate will be 100 metric tons by the year 2028.
The issue with this plan looking not too relatively long ago backwards is that in 1998, like many other European countries to follow, the Czech Republic went ahead and sold nearly 50 tons of gold at then spot prices just below $300 oz.
Now here they are a generation later relearning why they owned gold in the first place. Having to buy their next 50 tons at spot gold price points is more likely to be ten times the price points they got paid offloading the last 50 tons before the year 2000.
Obviously they now have the memo that to be a sound economy and sovereign you need legit gold reserve allocations. Better now than later on when Western investors finally figure this out for their own balance sheets ongoing.
Finally this silver demand graphic was floating around the internet this week, citing the stark differences in record silver industrial demand factors in 2024 versus 2015 looking backwards.
The staggering amounts of silver being now used in solar panels and electronics is not going away, so supply deficits of some 1 billion oz drawdown in the last 5 to 6 years will continue and perhaps worsen.
Reason I can say this confidently is what is still delayed but inevitably coming again is outsized investment demand in the forms of capital inflows into all investing facets silver... ranging from leveraged momentum trading COMEX and Chinese SHFE longs, to eventual further main street bullion buyers thrifting out of gold and into silver as it becomes increasingly commonplace in a bullion bull market mania phase destined in our collective futures no matter what arbitrary tariffs potentially come about in the near future.
That will be all for our weekly SD Bullion Market Update.
And as always to you out there, take great care of yourselves and those you love.
