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Gold and silver prices explode

Gold and silver prices have exploded.  Gold’s up $390 since its March low, silver up $10.60.  Silver’s gain is 87% versus gold’s 26%.  This is what was supposed to happen being that the GSR (gold silver price ratio) topped 100.  Silver has still more catching up to do.

The renewed interest in the metals undoubtedly comes from recognition that all this massive money printing and distribution cannot end well.  Many former employees are now making more money not working than they were when working.

Consider these numbers: The federal budget deficit was $2.7 trillion in the first nine months of fiscal year 2020, $2.0 trillion more than the deficit recorded during the same period last year.  For March 2020, fedgov’s budget deficit was $117 billion, which was a $30 billion decrease from the $147 billion deficit recorded in March 2019.

Another stimulus program is in the works.  The House passed the CARES Act 2 in May, which calls for $3 trillion in additional spending.  The Senate did not act on it, and Senate Majority Leader McConnell has said that $1 trillion is closer to what he is thinking.  They will probably meet in the middle but with it being closer to $3 trillion than $1 trillion.

Further, we have cities and states continuing to shut down restaurants, gyms, bars, hair salons, nail salons, and other sources of tax revenues.  Those states and cities will be doing without tax revenues, and we can expect them to ask the Fed and the Treasury for assistance.

As noted, this is not going to end well.  Gold and silver prices are moving in the right direction.

8 Responses to “Gold and silver prices explode”

  1. Robert V. Williams

    Dear Mr. Haynes,
    My name is Robert Williams, and I have a question, or two, regarding spot-prices. Although this has nothing to do with the fine article you posted on the CMI BLOG today. (7-22-2020).

    Can you tell me why there is such a difference between the closing price of the NYSE on gold and silver, and the continuous changing of the spot-prices of Globex? Most of the time much higher.

    It appears that CMI uses the Globex spot-prices to determine the prices of the items they have for sale, such as gold and silver bullion bars, or when CMI advertises an item for sale, for example “Spot-Price + 1.95 an ounce.”, which “Spot-Price” are they referring to? The NYSE closing price, or the Globex changing prices?

    Thank you very much Mr. Haynes.
    Robert Williams

    Reply
    • Bill Haynes

      Thank you for commenting.

      Frankly, I don’t know of a “NYSE price for gold.” Could you please show me where you find it?

      Now, the Globex (owned by the Chicago Mercantile Exchange) is a futures exchange where contracts of gold, silver and other commodities are bought and sold. Prices can change by the minute. We use the Globex to derive prices for the products we buy and sell. Basically, we hedge our positions on the Globex, and that’s where we keep track of metals’ prices.

      Reply
      • Robert V. Williams

        Mr. Haynes,
        Thank you for your quick response and the information regarding Globex. I was referring to the Daily Spot Prices that CMI sends to me every day. It states “Spot prices as of close of trading in New York”. I assumed it meant the spot prices of gold and silver at the close of trading at the New York Stock Exchange (NYSE). Evidently I misunderstood it. Again, thank you.
        Robert Williams

        Reply
  2. Yaser Abbasi

    Gold has stability and is non-political. The amount of gold mined and stored has increased over the centuries at about the same rate as the increase as the population of humans, which means gold has a stable relationship with the real stuff money is used to buy.

    We have not used gold in everyday transactions for a long time, as we have had paper currency representing the gold in storage. Today with technology using and spending gold would be even easier. A credit card can be used all over the world in any currency. Why not also use it to spend milligrams of gold?

    The economy can still be very strong if we also have a reasonable fractional reserve banking system. That would multiply the actual currency in circulation based on total debts in the system, but when it becomes too leveraged for comfort people will start to prefer holding their own gold instead of depositing in a highly leveraged bank, so that system would also have a natural stability. Banks would emerge which offer zero or minimal leverage, which would be very popular during economic downturns.

    Unfortunately, all these reasons (based on stability) are really, really bad news for governments. They need to slowly debase their currency to make their economy appear stronger than it is.

    Thanks for your article that make me to write this

    Reply
  3. Stuart Sussman

    Hi,
    Where would I find a portion of your website for selling coins back.

    Thank you

    Reply
    • Bill Haynes

      Easiest way to get selling price is to call 800-528-1380, Mondays through Thursdays 7:00 am to 5:00 pm, Fridays 7:00 am to 3:00 pm.

      Reply
  4. Betsy Shulman

    Hello Mr, Haynes,
    I bought a large quantity of silver in 2010 just before it shot up in 2011. I didn’t sell it at that time because I was new to investing in precious metals and didn’t know it would be such a short-lived event. Recently the price of silver is the highest it’s been since 2011, and I’m inclined to sell sell a large portion, yet you indicated at the beginning of your blog that silver prices still have a ways to go to reflect their “normal” ratio with gold. Meanwhile, the government is printing money madly, just like it did in 2009-2010, which was why I bought precious metals back then. I’m still plan to sell a portion of the silver I own, and wondered if you could be more specific, or provide examples to give an idea how much”catching up” silver still has to do after languishing next to gold for so many years. Since it’s been a month since your blog was posted, maybe that time has come and gone!

    Thanks very much,
    Betsy Shulman

    Reply
    • Bill Haynes

      Betty,

      Deciding when to sell is much more difficult than deciding when to sell, especially in this time of “loose money.”

      I still believe that silver has a long way to go in price and relative to the price of gold. However, as silver approaches $50 we have a difficult decision. Silver hit $50 in 1980 and in 2011. When it approaches $50 in this move — and I’m certain it will — there will be lots of articles and broadcasts about it “forming a triple top.”

      Yet I believe that the loose monetary policies will continue, regardless of which candidate is in the White House. So, do we sell as silver approaches $50 or hold? As for me, I will sell only if I have a good use for the proceeds.

      Frankly, I believe that eventually the dollar will be destroyed by excessive money creation. That is the history of

    • fiat
    • paper money. When (if) that happens, you will want to own some physical silver (and gold).
      paper

      Reply

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