Gold & Silver Shortages – Unprecedented Demand

“There seems to be a scarcity of available stocks in both gold and silver.”

Bullion.Directory precious metals analysis 22 January, 2024
By Peter Reagan
Financial Market Strategist at Birch Gold Group

Although Ed Steer says the current activity in regards to gold deliveries isn’t comparable to that, he still mentions that instance, calling the activity the “wildest” he’s ever seen, October of last year included.

Indeed, he points out that 1,028,659 troy ounces of gold were received from London by COMEX as of latest report.

When was the last time we’ve seen such activity? The lockdowns-induced mania during the pandemic panic.

1,937,177 troy ounces of silver were also reported received, several times the figure shipped out.

In one week, funds added 2.677 million troy ounces of gold and 11,170 million troy ounces of silver, again mostly into COMEX warehouses.

Analyst Nick Laird reports net 6.238 million troy ounces of gold added to depositories around the world, and net 24.815 million troy ounces of silver, in four weeks.

In other words, a lot of physical gold and silver is coming in. But what does it all mean?

Steer moves this discussion more so towards silver, as its numbers are more tantalizing. He says that we are already seeing signs of big institutional buying of silver, which these numbers are probably a reference to.

“But the really big buying lies ahead of us when the silver price is finally allowed to rise substantially, which I’m sure is something that the powers-that-be in the silver world are keenly aware of, and why they’re desperate in their attempts to keep it from rising. Their efforts were on full display once again this past week… particularly yesterday… but can’t last forever.”

He says that JP Morgan’s warehouse is almost empty of silver relative to the need to cover its offers, and harkens back to a warning by BlackRock several years ago to silver short-sellers could find themselves in a spot where they’re unable to cover positions.

His analysis features many other interesting points worth a read. And leaves us with a question.

Is this it for silver? The thing everyone seems to be waiting for a move to $40, $50, even $100?

Eventually, price suppression through shorting and excessive leveraging must come to a reckoning. Whether that, or any other of a multitude of fundamentals, launch silver’s price to the sky, is something we’ll watch with curiosity and excitement.

The case to dismantle the Federal Reserve heats up – what does that mean for gold?

The deeper one gets into the Federal Reserve business, the murkier things become.

Anyone familiar with our monetary history will know that until the Federal Reserve showed up, we had a very solid run of sound money based on gold and silver.

The introduction of the Federal Reserve in 1913 coincided with a massive loss of purchasing power in the U.S. dollar. For that matter, the dollar was reinvented as a paper currency, a “banknote.” A piece of paper backed by nothing tangible.

This was one of the main scenarios the Founding Fathers wanted to avoid! They specifically wrote in the Constitution that nothing but gold and silver bullion could be money.

The Constitution, once a set of laws to exist above all laws, is too often considered an obsolete document. Something to be worked around rather than obeyed…

Not everyone is buying the whole “progression” past the Constitution, though.

This brings us back to the issue of the Federal Reserve. You may or may not know that the Fed is not a central bank, but rather a private entity.

It should concern everyone that even the Fed’s own websites can’t seem to agree on whether this is the case: for example, the main one fully claims that they are a regular central bank, which is then contradicted on the San Francisco Fed page:

The 12 regional Reserve Banks: Located around the country, the 12 Federal Reserve Banks are chartered as private corporations. Employees are not civil service.

Come on, guys, get your stories straight!

How this happened, why it came to be, and why it’s still the case is a rabbit hole too deep to go into now. We were most intrigued when we saw the Sound Money League, websites like the Tenth Amendment Center, and even those like Constitutional tender expert Professor William Greene basically question the need for the Fed’s existence.

These are not necessarily opinions one would easily run into in 2014. They existed going back to the Fed’s formation, but to hear them in the mainstream? Not likely.

So that we are hearing them now could mean big things for gold down the line, or it could translate to more and more people turning to optimism and activism. Which could also mean big things for gold down the line.

In the latest entry of this series, Peter St Onge, an economist at the Heritage Foundation, told Kitco that ending the Fed is easier than it seems.

He called them a “licensed counterfeiter”, saying: “The Fed is the only cause of inflation because it prints money.”

St Onge wants to close the doors of the Fed, correctly pointing out that they are the cause of boom and bust cycles that they claim are beneficial, but that leave more and more destitute every time.

He says this is to happen in a simple and straightforward manner, through the Treasury selling fixed price gold, almost as in reference to Greene’s paper above.

Other important points St Onge raises is that we are being presented inaccurate and underwhelming economic gauges, namely stating that we’re already in a recession. He further points to the Fed’s statements, which often come off as confused, as a sign of incompetence or worse.

It’s an interesting interview, and worth a watch:

What St Onge says about ending the Fed being easy is true, but also not. It might be easy in the sense that the mechanism to do it might be.

But lobbying exists. Interests exist. For every thousand American citizens that the Fed’s policies leave worse for wear, there is probably one who is a direct beneficiary of them, and they are influential.

But is this actually another argument to back St Onge’s, showing that we only need to raise monetary awareness regarding gold and silver for this to happen?

That’s a lot of optimism for just one story, but we don’t mind.

Argentina’s gold will decide the country’s financial future

Just in case you missed it, here’s a quick primer on our story from last week from Argentina involving their gold lawsuit:

• The country is being sued massively for damages by creditors
• It’s to come out of the $16.1 billion gold stockpile
• The gold stockpile is supposedly being held abroad, and Argentina’s central bank claims independence from the state

What was so far being reported as a curious story is now turning into something more. As we mentioned, the lawsuit is being run through a New York court, and the judge has ruled harshly in the favor of the creditors.

Curiously, the ruling appeared to be harsher than even the creditors demanded, as Argentina has been given four weeks to disclose the location of its gold bullion stockpile.

From there, the creditors are essentially to be treated to the stockpile to their desires, covering their expenses how they and the judge sees fit.

This story is getting bigger and bigger for several reasons. If you’re unfamiliar, Argentina’s president Javier Milei is supposed to be the hip guy.

Anti-globalism, minimal government, civil liberties, you name it, he touts it.

Since his election in 2023, his conspicuous stance for government immediately placed a big red “planned to fail” sticker on his forehead.

It seemed logical to any onlooker that globalism will use him as an example, attached with a note saying: “Told you we needed government!”

It was only the question of what will be the event that shows us all things can’t work as freely as Milei intends them to, and this looks like it could be it.

It’s a little weird, because the lawsuit goes back more than a decade, back when he was not on anyone’s radar yet. But if it works, right?

You see, Milei now finds himself with one of two options, both of which doom him and possibly the country he is supposedly running.

If he gives up the location, or rather access to, Argentina’s gold, he will be called bad names and viewed as someone who sold out the nation’s wealth. And Argentina’s inflation rate alone tells you it’s not a country that can be flip-flopping with its gold stockpile.

Its history of mismanagement, monetary and not, go back decades, and as commenters on the source above have pointed out, it now needs some sound money patriotism more than ever.

So Milei can just let the four weeks run, in theory, and not disclose the location of the gold reserves. Like we said last week, the gold is probably in the central bank anyways, and it’s not like the creditors and the courts will do a military raid for it.

But, as we have seen in the case of Russia and more appropriately compared Venezuela, they don’t need to. Should it not comply, Argentina could be deemed uncooperative, sanctioned off from the West, and turn into another Venezuela.

We have covered so many stories of notable experts saying that central banks are buying gold due to protectionism after Russia’s blocking from SWIFT, and we now see why.

Though threats haven’t been made yet, Argentina faces a similar thing. If its gold is abroad, London or whoever will almost certainly give it up, so the only sound choice is to keep it inside borders, which is why we’ve seen repatriation after repatriation in recent times.

If it opts for that, it will have to follow Russia’s model. Russia was hoped to implode due to sanctions, but hasn’t mostly due to its gold stockpile, along with oil exports.

Will Argentina feel emboldened by this example and follow suit? It’s a big step, and one that will put Milei in exactly the kind of spot many have been eager to see him in.

But not taking it is just as risky, as all that big talk about liberty and independence will probably go out the window, and he will be seen as yet another in a long line of presidents who utterly failed to deliver on their promises.

Interesting development, perhaps mostly because it is gold bullion that is fully powering the story and deciding how it unfolds.

This article was originally published here

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