WHAT’S HAPPENING WITH THE GOLD & SILVER MARKET: My Conversation With Precious Metals Dealer Tom Cloud

I was finally able to spend some time today talking with precious metals dealer, Tom Cloud this morning.  Tom Cloud, like all precious metals dealers, has been busier this past week than in the last 30-40 years.  The response I’ve seen by many of these dealers, they haven’t seen anything like this in the past.

Tom told me that business has been so busy, the office was still returning calls and processing orders until late in the evening.  He says, there is now a long line of people, in the queue, waiting to purchase precious metals when they become available…. especially silver bullion. According to Tom, 75% of the volume buying is in silver bullion while 25% is for gold:

This ratio is probably true for most precious metals dealers due to the larger silver paper price sell-off versus gold.  Silver is down 31% from just a few weeks ago, while gold is only down 13%.  Thus, precious metals investors are taking advantage of the much lower silver price to stock up silver bullion.  Unfortunately, available silver bullion dealer stocks have been wiped out, and broker-wholesalers are now severely backlogged.

Tom also told me that during the past week, there’s been an enormous surge in BRAND NEW FIRST-TIME BUYERS of precious metals.  These are likely individuals who have friends and family that have spoken to them about precious metals in the past. But now, with the rapid disintegration of the economic and financial system, many are finally PULLING THE TRIGGER to purchase physical gold and silver.

I emailed Tom’s associate Dan, this morning about their prices OVER SPOT for various silver bullion.  I wanted to get an idea of what their clients were paying for silver bullion coins, rounds, and junk silver.  Dan replied with these following prices OVER SPOT as of this morning, March 19th:

I looked at some of the larger online precious metals dealers and saw that some of their prices were higher than what Dan posted this morning. However, we can see just how high the JUNK SILVER price is now above spot… $6.85!!  Tom told me that Junk Silver was only 20 cents over spot about three weeks ago.  How quickly things change.

Junk Silver refers to pre-1965 U.S. silver Dimes, Quarters and Half Dollars.

As for Silver Eagles and Maples, Cloud Hard Assets are selling them for $17.75 based upon a $12.15 spot price.  Of course, any Silver Eagles and Maples are going to take weeks or a month-plus to receive the product. And, if the global contagion continues to impact the financial markets negatively, increased silver bullion demand will make the BACKLOG period even longer… possibly 2-3+ months. Although, some dealers may not provide any quotes for bullion products if availability extends more than two months.

Tom also shared that he can still acquire gold bullion from his brokers, but there aren’t any silver bullion stocks available… only at much longer wait times.  If you have any questions about precious metals or bullion prices, you can contact Tom or Dan here at the following page: Precious Metals Investing:  Cloud Hard Assets

Will The Precious Metals Market Get Even More Crazier In the Future?

One of the questions I get asked the most recently is… What will happen with the precious metals in the future?

The best way for me to reply to that depends on how much this “Global Contagion” impacts the economic and financial markets in the next 2-4 months.  There are many different opinions on the spread of the virus and how it will affect the global economy and financial system.  Even if the pandemic comes under control in the next 1-2 months, I believe the DAMAGE to the Supply Chain, Small-Large Businesses, Employees, Credit Markets, etc. will only continue to get worse into the Q2 2020.

According to the Reuters article, JP Morgan economist says U.S. GDP could drop 14% in second-quarter:

SAN FRANCISCO (Reuters) – The U.S. economy could shrink 14% next quarter, a JP Morgan economist said on Wednesday, one of the most dire calls yet on the potential hit to the United States from the coronavirus epidemic.

A drop of that size would be steeper than in the fourth quarter of 2008 – the worst of the Great Recession – when the economy shrank 8.4%.

Thus, JP Morgan is forecasting that U.S. GDP Growth would fall 14% in Q2 2020, nearly double the 8.4% for Q4 2008.  Now, think about this for a minute.  During the 2008-2009 financial crisis, U.S. GDP growth fell 8.4% in Q4 2008, but the Dow Jones Index was already down 43% from its 2007 highs. Currently, the Dow Jones Index is only down 32% from its high.  So, if JP Morgan is forecasting that U.S. GDP Growth will fall 14% in Q2 2020, that would suggest the Dow Jones Index has at least another 15-20% more to fall.

But, what if U.S. GDP Growth falls even further in Q2 2020… to say, 18-20%??  Do you see how UGLY things could get?  Also, during the Great Depression in 1932, the annual decline of GDP was 12.9%.  The United States could be heading towards a serious ECONOMIC DEPRESSION.

If we see that much damage to the U.S. economy and financial system, the demand for precious metals will surge even higher.  This means the current backlog will only get worse, likely propelling prices higher.

On the subject matter that there is no SHORTAGE of 1,000 oz Silver Bars, that might be true.  I imagine the demand for silver via industrial fabrication and jewelry has dropped considerably.  So… yes, likely surpluses are coming from the large wholesale-refining silver market that supplies the entire silver market. BUT… if the situation continues to deteriorate in the global markets, demand for 1,000 oz bars will likely be the NEXT STEP for Larger Investors, Hedge Funds and Institutions.

I will be putting out a NEW VIDEO shortly on the precious metals on my SRSrocco Report Youtube Channel