From Birch Gold Group
Over the past couple of weeks, precious metals prices have been pulling back from their recent highs. For anyone taking a short-term view, it’s not a positive development. But appearances are sometimes much different from reality – especially once you allow a little bit of time to pass.
Historically, since the gold standard was removed in 1971, gold’s price has had two major “bull market” fluctuations, from 1971 to 1980 and from 1999 to 2011.
During those two bull runs, the price of gold shot up 2,100% and 650%, respectively. You can see both reflected below:
You can also see how gold’s price dropped near the start of the 2008-09 financial crisis, but then began shooting up like a rocket about halfway through.
Finally, you can see on the chart where the end of 2015 represents the most-recent “bottom” price for gold. This leaves us with the question…
Where Could Gold’s Price Go From Here?
According to Jim Rickards, when you average out the previous two bull runs, that bottom in 2015 is where the next decade-long bull run for gold could start:
Applying the average gain and average duration to the Dec. 17, 2015, bottom at $1,051 per ounce leads to a forecast that the new gold rally will hit $11,000 per ounce on Feb. 16, 2026.
Of course, Rickards notes that the sample size is small, and to take this prediction with a grain of salt.
But gold’s price could also follow the script from 2008-2011, when dropped initially but then rose sharply.
Let’s zoom in on that part of the chart above:
You can see how, after dropping between March and September of 2008, gold’s price rebounded to reach over $1,900 in 2011.
A recap article from Kitco explained why prices staged this rally:
In an October 2009 research note from Dundee Precious Metals, there were several reasons why gold prices were expected to go up in the coming years, including fiscal and monetary reflation, investment demand, the bullish price cycle in gold and geopolitical worries.
Jim Rickards explained why he thinks that happened, and why it could happen again in the near future:
If weak hands are selling, won’t the strong hands jump in to buy? The answer is yes, but not right away. The strong hands see what’s going on and are prepared to buy, but not until the last distressed party has closed out his last gold futures contract. Then the strong hands pounce like a lynx looking for breakfast. That’s when the price of gold soars and the bull market in gold gets back on track.
Rickards also explained gold’s recent drop in price, claiming it is “not unusual”:
When viewed against the background of a global pandemic from coronavirus, some of the worst single-day drops in stock prices in history, a spreading liquidity crisis and a potential worldwide recession… a decline in the price of gold is not only not unusual, but entirely to be expected.
So once you consider that the Dow has been whipsawing for the last three weeks, the recent decline in gold’s price may not last long.
That, and the “strong hands” that Rickards references may already be making a move towards physical gold.
The Demand for Physical Gold and Silver is Increasing
According to Kitco, silver sales are skyrocketing: “Data from the U.S. Mint shows that it has sold 2.32 million one-ounce silver coins so far this month, up significantly from February sales of 650,000 coins.”
And based on wholesale cost over spot price for 1 oz bullion American Eagles, premiums for physical products are soaring higher. Gold is selling at about a 6% premium and silver is selling at an 86% premium. Both of these figures are well over their averages from earlier in the year.
So even as the spot price of precious metals has dipped in recent weeks, demand for physical products has been skyrocketing.
Brandon Smith of Alt-Market.com argues, “Crash conditions will likely inspire more and more people to demand physical delivery on precious metals over the course of 2020, as fears of paper market shutdowns due to the pandemic grow.”
If that comes to fruition, we may likely see a complete decoupling of paper and physical gold prices.
Now is the Time
Having a diversified portfolio with assets known for their protection during uncertain times is a strategic way to diversify your retirement.
Holding assets such as physical gold and silver could prevent your retirement savings from suffering the consequences of being overexposed to equities.
With global tensions spiking, thousands of Americans are moving their IRA or 401(k) into an IRA backed by physical gold. Now, thanks to a little-known IRS Tax Law, you can too. Learn how with a free info kit on gold from Birch Gold Group. It reveals how physical precious metals can protect your savings, and how to open a Gold IRA. Click here to get your free Info Kit on Gold.
It is my sincere desire to provide readers of this site with the best unbiased information available, and a forum where it can be discussed openly, as our Founders intended. But it is not easy nor inexpensive to do so, especially when those who wish to prevent us from making the truth known, attack us without mercy on all fronts on a daily basis. So each time you visit the site, I would ask that you consider the value that you receive and have received from The Burning Platform and the community of which you are a vital part. I can't do it all alone, and I need your help and support to keep it alive. Please consider contributing an amount commensurate to the value that you receive from this site and community, or even by becoming a sustaining supporter through periodic contributions. [Burning Platform LLC - PO Box 1520 Kulpsville, PA 19443] or Paypal
-----------------------------------------------------
To donate via Stripe, click here.
-----------------------------------------------------
Use promo code ILMF2, and save up to 66% on all MyPillow purchases. (The Burning Platform benefits when you use this promo code.)
Those who stayed in the paper market are beginning to see why that wasn’t a good idea. Knowing the markets were incredibly overvalued should have given pause in light of the fall in 2010. Buy precious metals now or you will find there is none to be had in the near future. I’m not concerned about the high premium on silver. Its future price will demolish the current total cost. Previous metals will be known as Unaffordium and Unobtanium per Mike Maloney.
Where can silver be bought?
JM or SD bullion. Delivery will take time and they have a 300.00 minimum but as steve said, the premium or cost over spot market will not matter at these prices. The trick is to have it in hand and not in promisary notes. The dollars in hand will soon become Zimbawe bucks. Expect to be arrested for using PM’s in the future but people like us will be in danger of arrest anyway.
Over the past ten years or so, I got my bullion and numi from a local Jersey coin dealer. Always bought my share in discreet amounts personally, never through the mail or from an online business.
Every purchase was all about the spreads and premiums. At one point a several years past, I even liquidated a 401k and risked the wrath of the wife and tax collector. That’s OK, I got a tough hide, hard head, and lotsa patience.
Right now there’s a huge gap in the physical to paper pricing that’s squeezing a small secondary market as dealers try to make a profit off their stock. They don’t want to deal with unrealistic idiots who ignore the retail spreads and insist on spot prices. The Covid virus and ETF prices are killing producer profit margin. Many small to medium miners are going to reduce production due to negative profit margins. This is going to cause a scarcity of bullion as the mints shut down.
At some point in the future the prices will increase. Gold to silver ratio is the highest in years and the Fed has gone Full Retard with money printing. Metals prices are coiled like a spring, be patient.
Ott
Few are talking about all the mines that have shut down due to suppressed prices and why that affects later supply.
Ebay.
Is there any particular preference to buying minted coins versus bars of silver (other than the obvious that you might use coinage for purchasing). It seems that you can buy bars for far less premium (a couple $ over spot) than coins. More silver/$ for your purchase.
The problem with bars is that there will always be the concern of fraud, or that the bar is actually lead or similar metal surrounded by silver. That will not prevent future sales when needed, but might decrease the number of folks willing to drill test holes, etc. to confirm all is ok (saw them do this on “Pawn Stars” when someone brought in a 1Kilo bar). Generally minted coins are much harder to counterfeit and thereby more accepted. That didn’t stop me from buying some, but they make up just a portion, rather than everything. There are also 10oz minted bars that come sealed, etc. from mints that are generally at lower premiums than the coins….for a bit more bang for the buck and probably far more “accepted” down the road.
It appears the price of 90%’s are about the same as what I paid for them back in 2013.