The financial crisis has already hit the US and the World, as evidenced by Fed & central bank monetary policies, but INVESTOR PSYCHOLOGY hasn’t…
If investors are waiting for much lower premiums to purchase silver bullion products, they may be waiting for quite some time. Due to the global contagion, investors have bought a record amount of silver bullion. However, as supply disruptions and lack of availability impacted the market, premiums on many silver bars and coins surged higher and continue to remain elevated.
While the Federal Reserve and central banks have propped up the markets and financial system with trillions of digital and printed Dollars, at some point, the situation will get out-of-hand. It’s hard to know when this will take place, but I got my SILVER DOLLAR bet on “Sooner” rather than much “Later.”
There seems to be some ERRIE CALM in the markets, even though there are all these protests taking place across the United States. During the stock market collapse during February and March (38% from High to Low), Americans were beginning to really Panic. When the silver price fell below $12, along with the broader markets, precious metals investors pulled the TRIGGER in purchasing silver, and in doing so, wiped out the inventory of most precious metals dealers and wholesalers.
This pushed up the premiums on silver bullion products virtually overnight. Here is GoldChartsRUs.com chart on MONEX’s Silver Eagle Premium in percentage terms:
While the percentage of MONEX’s Silver Eagle’s premium declined over the past several months, the premium PRICE PAID per coin has gone up. MONEX’s Silver Eagle premium started at about $5.25 and is now $5.82.
IMPORTANT NOTE: I am using MONEX’s premium data as a form of reference. I would not recommend this company as it has been sued by the CFTC for “Alleged Fraud” upon many of its clients. You can read more about it here: Ninth Circuit Rules in Favor of CFTC in Fraud Case Against Monex Deposit Company and its Principals (July 26, 2019). Furthermore, I called up MONEX a few weeks back to ask why their Silver Eagle Premiums were so low. First, they were low because they only quote Random Years, not 2020 coins. Secondly, after I hung up the phone, the salesmen called back several times. I have heard, MONEX uses the HARD SALES approach on their clients or would-be clients. I can’t tell you how much I cannot stand that type of business model. No wonder MONEX is now dealing with this FRAUD CASE.
However, the overwhelming majority of online dealers were charging $11-$13 premium on Silver Eagles early on, but these have now fallen to the $7-$10 range. Regardless, I believe the silver market will continue to suffer from high premiums due to surging investor demand during the next FINANCIAL CRISIS that will make the 2008-2009 Financial Crisis seem quite DULL and BORING.
Investors Purchased A Stunning Amount of Silver Coins & Bars After the 2008-2009 Financial Crisis
According to the data I received from a GFMS Analyst, the GFMS World Silver Surveys, and the new Metals Focus 2020 World Silver Survey, investors purchased a total of 2,272 million oz or nearly 2.3 billion oz of Silver Coins & Bars over the past ten years.
After the great silver price run-up during the 1970s and early 1980s, investors became net sellers of silver during the 1990s when prices remained low. However, this changed during the early 2000s, as investors starting acquiring more silver bullion as prices began to rise. Then, after the 2008-2009 Financial Crisis, investors started buying 200-300 million oz of silver coins and bars a year.
As we can see in the chart above, investors sold a net 598 million oz of silver bullion into the market during the 1990s. Then they became net buyers during the following decade as global silver bullion demand totaled 692 million oz. But, all that changed after the Financial Crisis as investors purchased a record 2.27 billion oz of silver, more than triple the previous decade.
So, here’s the real question… What happens when the next MAJOR FINANCIAL CRISIS hits?? While it can be stated that the financial crisis has already hit the United States and World, evidenced by the Fed and central bank monetary policy, INVESTOR PSYCHOLOGY hasn’t digested it yet. But, it will.
This is when I believe investors will finally get PRECIOUS METALS RELIGION. Unfortunately, the world is still worshiping their HIGH-TECH GOD, but that won’t last much longer as the world begins to head further over the ENERGY CLIFF. Without growing global oil production (demand), the entire world economy and the financial system begins to implode.
Please look carefully at the IMPORTANT CHART BELOW. Yes, it also holds true for Silver.
This was received quite well on my Twitter feed earlier today:
Gold Demand & Price Will Explode when the world heads over the ENERGY CLIFF.— SRSrocco Report (@SRSroccoReport) June 4, 2020
Why? #Gold (and #Silver) are MONEY because they are STORES OF ENERGY EQUIVALENT VALUE
Federal Reserve Notes are claims on FUTURE ENERGY CONSUMPTION. pic.twitter.com/dXx6TzpiyO
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