The larger rationale for holding precious metals is even better – when times are good and people have more disposable income, as literally hundreds of millions of “Chindians” are in the process of achieving right now – the buy-and-hold demand for precious metals looks destined to rise in a big way and continue doing so in the foreseeable future.
The first one of the QE Central Banks that attempts to exit QE will be flooded with capital inflows with the accompanying strong currency appreciation. Indeed, such currency appreciation will crush the economy via the export sector, whilst it will import price disinflation. This falling inflation will in turn give the central bank the cover to renew again any QE policies. This is the so-called boom and boost inflation-deflation cycle that central bankers create with their bias towards expansionary policies.
If one thing became clear, it is that the establishment and government have been very scared. The “anti-gold” camp has been firmly reproaching the “pro-gold” camp that they do not understand the economy because it is too complex. In two days, the world will learn whether the “anti-gold” propaganda has worked or whether the Swiss citizens had been able to figure out there were sufficient benefits for their own future to vote “yes.”
With photovoltaic installations on the rise, silver demand is ready for a major surge. About 80 metric tons of the metal are needed to generate one gigawatt, or 1 million kilowatts, of electricity, enough to power a little over 90 typical American homes annually. In 2016, close to a million and a half metric tons of silver are expected to be needed to meet solar demand in the United States alone.
The problem of central bank overreach is certainly not isolated to Switzerland. Since the financial crisis 6 years ago, central banks around the world have interfered in and manipulated bond, foreign exchange, and equity markets on an unprecedented scale. These unelected institutions have actively redistributed wealth from one group to another and compete against one another to adjust the purchasing power of their national currency downwards relative to other nations without the knowledge of their populations. For over 3 years the SNB has been operating opaquely behind the scenes substituting another currency for its own, converted its citizen’s savings into EUR, and imposing a stealth tax on European imports without public consent.
This infographic summarizes the upcoming Gold Referendum in Switzerland: Why is it important, what is at stake, why it could be a game changer and trend change. It also puts the Swiss gold reserves into perspective and compares, in relative terms, how Switzerland has much more gold per capita than any other country. However, it used to be an even bigger holder of the yellow metal. In 2000, the SNB held 2,500 tonnes of gold and it has also been the biggest national seller since.
Taking all this together, it is clear that the Eastern gold demand is largely offsetting the Western disinterest. The real effects of this evolution will become clear once the interest from the West will heat up.
The chart of foreign central bank gold holdings at the Fed over the past fifteen years shows little activity except for 2007 and 2008, when just under 410 tonnes was withdrawn – big sellers during that period included Switzerland (250 tonnes) and France (227 tonnes). It would seem that the remaining central banks holding around 6,000 tonnes are generally happy with the Fed’s free custodial storage service.
“The only thing a silver miner must be careful about in adopting an approach of openly petitioning the regulators to address the goings on in COMEX dealings is to stick to the facts and don’t say anything wrong. Unfortunately, there are an incredible amount of misstatements of fact regarding the COMEX’s role in setting silver prices that a miner repeating them will reduce any petition to a fool’s errand. I would assist any miner desiring to petition the regulators.”
Based on these data, except for the Perth Mint in Australia, all other sources are reporting a huge increase in demand for coins and bars across the globe. Retail investors primarily are looking taking advantage of these bargain prices. The price setting in the COMEX futures market has its effect on real world demand. The question is, when will wholesale demand start piling up on precious metals to trigger a supply shortage? That would be fun to observe … but we are unfortunately not there yet … prices should go even lower to trigger such a situation.
It turns out that silver nanoparticles are not as solid as initially thought, making their use in electronic components and circuits a bit challenging as gadgets become increasingly smaller. Fortunately, there is a solution.
Gold prices climbed to their highest level since Sept. 10 last week, breaking above the $1,250 an ounce level. Gold’s outlook this week will depend largely on the Federal Reserve policy meeting, when the U.S. central bank is widely expected to end its bond-buying stimulus. The Fed’s two-day meeting, which begins today will also be watched for clues on whether any slowdown in Europe or elsewhere could affect the central bank’s monetary policy. On Monday, October 27, some of the biggest financial news of the year made huge waves all over Asia. Yet in the Western press, this hugely important event was barely even been mentioned.
Investors are likely to increase their net silver purchases in the years ahead, largely due to an ongoing weak global economy, for capital preservation and silver’s pedigree as a leading industrial metal, according to a report released today by the Silver Institute. The report, entitled “Silver Investment Demand,” suggests that investors may accumulate as much as one billion additional ounces of silver in various investment instruments over the next decade. This is on top of the more than 860 million ounces of silver purchased as an investment since 2006.