EDITOR NOTE: The basic principle behind diversification is that it provides both a potential hedge against the decline in certain asset values plus an additional return source to your portfolio. Physical gold and silver are two precious meals traditionally viewed as safe havens against inflation, dollar weakness, and, in many cases, a crashing market. Silver, however, has the added value of being an industrial metal in addition to being a monetary safe haven. In today’s context, with inflation rising amid the global “green” agenda via expensive renewable energy tech and EV technology, silver’s demand just bumped up to the next level. Its use as a monetary hedge against the increasing global electrification agenda and tech-driven demand is poised to cause the white metal to surge in the coming years--making physical non-CUSIP silver one of the best investment prospects in the decades to come. And given the years of under-investment in silver mining contributing to the current shortage, there will likely not be enough silver to satisfy demand on both ends of the market.
Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.
Precious metals markets are making modest advances in this final trading week of May. U.S. markets will be closed on Monday in observance of Memorial Day.
During the extended weekend, millions more Americans compared to last year are expected to hit the road for travel. They will be confronted with pain at the pump as gasoline prices have risen to over $3.00 per gallon in most parts of the country.
Other signs of a serious inflation problem are building following the massive cash injections into the economy by the Federal Reserve and the Joe Biden administration.
Former President Donald Trump weighed in on America’s current inflation and energy predicament in a recent interview with Newsmax.
Donald Trump: And the lumber's gone through the roof. The lumber, I guess as much as anything, but everything. Steel. You look at what's going on with pricing. And obviously, you're going to have inflation. Gasoline is going to stop at $6, $7, I think, based on what I'm seeing. We were energy independent when I left. And right now, I would have to say, we are no longer energy independent. We're putting windmills all over the place, which cost a fortune. Which by the way, if you're a believer in the carbon footprint and all of the other things, when they make these windmills, which are all made in China and Germany, by the way. They're all made in China, Germany, we don't do them here. They put them together. We put them together here. We don't make them here. What goes into the air when they make them is more than anything that can ever be saved.
Whether Trump’s gas price forecast comes true remains to be seen, but he has a point about so-called green energy. The amounts of metals and other materials that go into things like wind turbines and solar panels is enormous. Not to mention the vast amount of land they take up or the mountains of waste they generate when they have to be torn down and replaced every 25 years or so.
The power source with the greatest efficiency and smallest environmental footprint is one that few people are enthusiastic about these days. But economic realities may soon force the U.S. and other industrialized countries to re-embrace nuclear power.
If environmentalists want their dream of replacing coal, oil, and gas to come true, their best chance may be to champion nuclear. Modern reactors emit nothing into the air other than water vapor and can generate steady, reliable power for several decades before having to be de-commissioned.
Opponents say it’s not worth risking another Chernobyl or Fukushima type disaster. But the long-term safety record of nuclear remains stellar compared to, say, coal. Even green energy sources – with all the mining, manufacturing, and transportation activity that goes into them – claim more lives every year than nuclear plants.
The fuel for a nuclear reactor is uranium. And uranium prices could go skyward if a nuclear renaissance commences.
In the meantime, the electrification agenda is rapidly proceeding. The Biden administration and major car companies are setting ambitious goals for transitioning to electric vehicles over the next few years.
That means more demand for conductive metals including copper and silver. While there are potential alternatives to uranium and other energy input fuels, there is really no practical alternative to copper when it comes to carrying electricity or silver when it comes to high-tech electronic components. Silver is also essential in solar panels.
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. Although higher spot prices could certainly translate into hefty profit growth for miners and bullion investors alike.
Gold prices currently come in at $1,903 an ounce after rising 0.8% since last Friday’s close. The silver market shows a weekly gain of 0.9% to trade at $27.92 an ounce. Platinum is essentially unchanged for the week to trade at $1,188. And finally, palladium prices check in at $2,291 per ounce up a slight 0.3% for the week as of this Friday morning recording.
Metals markets have been advancing over the past few weeks as inflation fears continue to rise. Trillions in newly created dollars by the Federal Reserve at the behest of the Biden administration are causing price spikes in various sectors of the economy.
The Fed insists the inflation surge is just transitory, but central bankers are giving no indication that their inflationary policies will let up anytime soon. The deficit spending that politicians in Washington are offloading to the Fed certainly isn’t transitory.
President Joe Biden just released his budget proposal for next year. It calls for a whopping $6 trillion in spending and projects a deficit of $1.8 trillion.
Despite assuming controversial new tax hikes on corporations and investors are enacted by Congress to raise revenues, the administration’s plan is still charting an endless river of multi-trillion dollar deficits ahead – on top of a record $3.1 trillion budget gap this year alone.
It adds up to a dreadful outlook for the Federal Reserve Note dollar and more monetary fuel for higher precious metals prices.
In other news out of Washington, America’s gold reserves would be audited for the first time in more than 60 years if a measure introduced this week by U.S. Representative Alex Mooney becomes law.
The Gold Reserve Transparency Act of 2021 – backed by the Sound Money Defense League, Money Metals Exchange, and free-market activists – calls for the first true and complete audit of United States gold reserves since the Eisenhower administration.
The bill would require the Comptroller General to immediately conduct a full assay, inventory, and audit of the United States’ gold reserves and repeat the process every five years.
Meanwhile, there is evidence the U.S. Treasury may have sold, swapped, leased, or otherwise placed encumbrances upon some of America’s gold over time. However, federal government officials have strongly resisted disclosure of these activities for decades.
To address these concerns, the Gold Reserve Transparency Act also requires a full accounting of any and all sales, purchases, disbursements, receipts, and encumbrances and an analysis of the measures taken to ensure the physical security of gold reserves.
Obviously, it will be an uphill battle to get the Audit the Gold bill passed, but we can be encouraged that there are a few elected officials like Rep. Mooney who are willing to shine a spotlight on fundamental questions impacting our nation’s financial security, such as the management and true status of America’s gold holdings.
Well, that will do it for this week. Be sure to check back next Friday for our next Weekly Market Wrap Podcast. Until then this has been Mike Gleason with Money Metals Exchange, thanks for listening and have a great Memorial Day weekend everybody.
Original post from SilverSeek