murphy metal monday

A sound banker, alas, is not one who foresees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that no one can really blame him.
–John Maynard Keynes
When confidence in the system collapses people that are paying attention start to look for ways to conserve what they have worked so hard for. Add to this fact that central banks, major banks and countries are all buying physical precious metals in record amounts, and it is quite shocking that gold and silver have not shot to the moon – YET.
–Mike Savage

Gold and silver prices have moved sideways for 2 ½ years but now are on the cusp of something remarkable. Why now? At a time of high inflation and bullish supply and demand fundamentals, gold and silver prices have “only” been moving sideways, so why is today any different? Because the Fed, which has been trying to stem inflation with higher interest rates, now must change its policy due to the banking crisis, which is just in its early stages. The Fed knows it can no longer stem inflation without causing more damage, and it is believed that, ultimately, “Quantitative Easing” will have to come back into play as the year progresses.

In addition, as gold and silver prices have been manipulated continuously over the years, central banks and big money have taken advantage by purchasing as much physical gold and silver as possible, creating shallow inventory levels worldwide. Adding to the supply shortages is the fact that silver annual worldwide demand exceeds annual supply by 200,000 ounces. Because gold and silver prices have been kept in check, the public has lost most of its interest, especially in silver, confirmed by the all-time low Open Interest figures reported by the Commodity Exchange. So, history will once again prove that the public is generally out of the market at significant bottoms and generally all in at major tops.

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Also gaining momentum is the move away from using the US Dollar in trade by many countries, primarily the BRIC nations, Brazil, Russia, India, China, and now Saudi Arabia. The Petrodollar is dying at an alarming rate, which of course is awful news for the dollar. The only question remains: What will replace the US Dollar as the world reserve currency? Well, many believe we are headed towards a Central Bank Digital Currency (CBDC), and if that’s the case, you will see all remaining privacy fly right out the window.

As mentioned last week, there are now just too many mitigating factors favoring sharply higher precious metal prices:

  • A 31 trillion trade deficit and the added cost of financing it due to higher interest rates
  • The devastating effects of COVID
  • High inflation (which is here to stay)
  • The onset of a banking crisis, that may wind up being the straw that breaks the camel’s back
  • And through it all, tens of billions of dollars appearing from thin air have been printed and will be printed in the years to come.

It doesn’t take a rocket scientist to see the handwriting on the wall. The recent banking crisis has demoralized the public’s faith in the safety of its money. It’s only a matter of time before our economy plunges into a significant recession, which bodes poorly for the stock market (and real estate, to an extent). I’m throwing my hands in the air if you don’t own sufficient physical gold and silver by now. Gold and silver are on the cusp, and it’s only a matter of time.