Markets Gone Wild And Turmoil in Europe But Silver Demand Strong

The dollar rallied from .85 to .92 today (January 14th) as the 10 year bond yield went from 2.62% in September to 1.83% today. Gold is recovering from its early November lows at $1,140 as it almost touched $1,250 this week.

Andrew Hoffman comments on ongoing market activity in his latest video blog (see video below, courtesy of TheDailyCoin) and the meaning of the extreme readings in crude oil, bond yields, the dollar and equities.

Looking at Europe, it seems Greece is back in the news and it will probably remain in the news for some time. The Syriza Party is probably going to win the election and throw out the current regime of “technocrats.” Syriza has said they will not pay and have told the people of Greece they will simply default on the loans and leave the Euro. This is going to create disorder for the short term, but will allow Greece to regain it’s sovereignty and begin rebuilding it’s nations wealth.

That could create a “viral effect.” Spain, being one of the largest economies with the worst unemployment of the PIIGS nations, could follow and default on their loans as well. Catalonia, which comprises 25% of Spain’s GDP has already set in motion a full-fledged annex from Spain, taking all their currency, sovereignty and sanity with them.

The silver institute is claiming there will be a 27% increase in the use of industrial silver by 2018–mining operations are either slowing down or shutting down, where in the world are we going to find 27% more silver over the next 3 years? According to Andrew Hoffman, that is not entirely correct. The number of ounces required for industrial use are going to be further squeezed by the investment demand which, as Steve St. Angelo has pointed out on numerous occasions, is on the rise and will continue to rise at a much greater clip than industrial demand. 2013 and 2014 were back-to-back record years for both the American Silver Eagle and the Canadian Silver Maple Leaf. Not an easy task when you are talking about 44 million and 25 million, respectively, for the top two silver coins in the world. That is a massive amount of silver in just those two products alone. It is unlikely that the new demand will be satisfied, according to Hoffman.

The US Mint reported for their 2014 sales a gold-silver ratio of 83.9. Currently, real world ratio is 74.5 ounces of silver to ounces of gold. According to mother nature there is approximately 9.5 ounces of silver coming out of the ground for every 1 ounce of gold. There is a divergence between demand and price.

Listen to the full conversation between Andrew Hoffman and TheDailyCoin:

Receive these articles per e-mail

Subscribe for the free weekly newsletter and receive 3 papers about physical precious metals investing