What is the smart money doing right now? They are using cheap Dollars and Euros to buy all of the hard assets they can. They are buying farmland, commodities, monetary metals such as gold and silver.
Precious metals are not currently in favor as a speculative vehicle. Young people today don’t understand the difference between holding a silver or gold bar in your hands versus owning something electronically.
All of the talk in the gold and silver markets continues to be around Basel III. Where there’s the possibility that the banks are forced to reign in their unallocated paper gold and silver contracts.
Gold is now making a serious run at the $1900 benchmark and silver is challenging $28. I expect both metals to undergo two-way volatility around those two key technical and psychological price levels for at least a few weeks.
It's been almost two months since any silver eagles have been reported sold by the mint -- and nearly a month for any gold eagles or buffaloes. So it should be plain for all to see that the mint does not wish to exacerbate the critical shortage in either silver or gold good delivery bars.
A higher scarcity corresponding with a higher price—this is the very picture of a fundamental price move. It is not merely an increase in speculative positions in the futures market, using leverage. It is an increase in the buying of physical metal.
Yet now the US Mint is admitting that there’s actually a “global silver shortage,” which makes you wonder if this scheme is close to the end of the road.
The mining industry has little ability to ramp up silver production to meet rising demand. After years of high grading and under-investment in acquiring new reserves, gold and silver mining isn’t going to be a growth industry anytime soon.
