As we can see over the last week or so, both Silver and Gold hardly give anyone a minute to breathe when they take off to new ranges.
With Gold hitting an all-time intraday high at $2070 this week and Silver bouncing almost over $27 Oz, both metals have since endured slight pullbacks nearing the week's end.
We are more interested in Silver as a value metal here versus Gold.
At Time of Writing (3:55 PM EST March 10, 2022)
Gold $1995 USD Spot +9.25% Year to Date
Silver $25.94 USD Spot +11.45% Year to Date
U.S. inflation rate heats up to another 40-year high at 7.9%
Today the U.S. reported yet another historical 40-year high inflation number. This increase does not account for the recent increase in oil prices; therefore, the situation is likely to worsen. Consumer inflation in the United States has risen 7.9% in the last year, the highest level since 1982 and likely simply a foreshadowing of higher prices to come.
Gold and Silver, as most readers already know, are keenly hostile to changes in inflation, especially when the threat is bigger than the actual impact, which at the current moment remains the case. Expect Canada to have a similar report and remember the reality, which is that street level inflation is already much, much higher than they report.
Factor in the cost of gas and oil and this is surely another nail in the coffin of the lest stock market cycle which is coming to a quicker than expected end.
The next big move for Silver.
For the next major Silver bull market, several elements are coming together. While the price of Silver has underperformed Gold throughout the Russian-Ukraine conflict, this will change when massive institutions and investors flock to Silver to secure their wealth as the global financial system stumbles.
We already see from the U.S. and Western sanctions against Russia that they are now erupting into various financial derivative defaults around the globe. The Dow Jones Index is having wild swings and more than a few days now of big up and down moves of 500 plus points, which is an absolute precursor to extended losses and volatility.
And although we are suffering with our gas prices, we should at least be thankful that we are not amongst the poor souls of European nations paying upwards of $3 per litre at present.
The West has also instituted more economic and financial sanctions against Russia with the continued Russian-Ukraine War. This week, the London Bullion Market Association (LBMA) & Chicago Mercantile Exchange (CME) have banned Russian Gold & Silver Refiners from their market.
Russia's annual Silver production in 2020 was over 40 million oz. They are in the top 10 producers in the world! But, if we also consider the Russian version of NATO, CSTO – Collective Security Treaty Organization that includes Russia, Kazakhstan, Armenia, Kyrgyzstan, Tajikistan, and Uzbekistan and add up the total Silver production from those countries, we are now talking about 66 million oz. If the Russian-Ukraine War continues to escalate, we could see the LBMA-CME or even CSTO Members banning Silver on either side.
If countries begin to hoard strategic commodities like Silver, this might fuel the precious metals price inferno. As I previously stated, Silver has underperformed Gold because it is an industrial metal that is impacted by a larger market selloff, which we are currently experiencing.
Patience is always significant when lining up our ducks in a row. There will be pricing pullbacks and volatility, and as an investor, we want to see these pullbacks to keep the market gains healthy. The following 36 months may be some of the best we have seen in over a decade for both Gold and Silver!
Silver and Gold availability
We continue to experience unprecedented buying across all of North America, and as many of you already know, the supply chain has faltered tremendously. Add this to the already unprecedented demand and increase in demand for almost all Silver and Gold products, and you get the current state of affairs, which is a delay in delivery.
To this end, we would like to remind all buyers that almost 100% of all products remain available for purchase but that dealing with the Royal Mint and other suppliers to acquire more inventory is an ongoing and daily endeavor. If a product is on our site, it is available for purchase. It may take more time to get it delivered right now, but it is yours once you have purchased and paid for it. That means that if the price of either metal were to go parabolic before the arrival of your shipment, you still reserve the right but not the obligation to liquidate and take home your profit should that be your wish. We thank you for your continued patience.
Click below to read a report from the Silver Institute, which is their monthly update from February. It gives us a sense of what is happening in Silver industrial demand and where Silver might be heading. Enjoy!
Yours to the penny,
Darren V. Long