With the U.S. heading into an economic depression, it will likely motivate more investors to protect their wealth in precious metals. Thus, we could experience a U.S. economic depression and, at the same time, a bull market in gold and silver.
Interestingly, over the past two months, the major U.S. stock indexes heading higher even as economic indicators continued to show a BLINKING RED LIGHT. How? We can thank the Federal Reserve for single-handedly propping up the entire U.S. stock market. And, the important level on the Dow Jones which couldn’t be breached, was the critical 18,000 support level. So, when the Dow Jones Index miraculously bounced off this level back in March, shouldn’t be surprised. Watch the video below to find out why this is the case.
In my newest video update, WARNING: Economic Market Depression, Precious Metals Bull Market, I explain the deteriorating economic and financial indicators that point to real trouble ahead.
In the video, I explain that the forecast for the Industrial Production Index will continue to fall to a low of 77 in August, from a high of 109 before the global contagion. If you look at the following chart, the Industrial Production Index fell parallel with the Dow Jones Index during the 2008-2009 financial and economic crisis:
How did the Dow Jones Index turn around in April when the Industrial Production Index fell another 12 points from March to April (104 to 92)? And, the forecast for May is even lower to 84.
Furthermore, if we look at the massive increase in MZM Money Supply (liquid money supply), it surged nearly $3.6 trillion in just the past two and a half months. This present rate of increase of the MZM Money Supply was more than double the $1.5 trillion increase from January 2008 to June 2009:
I believe the huge increase in MZM Money Supply will be very inflationary, especially for the precious metals. And, this is likely only the beginning. As I have stated in previous articles and videos, the second half of 2020 will bring much larger problems for the U.S. and global markets is the current negative economic indicators snowball. Thus, the Fed and central banks will have to print even more money.
Even though the demand for the precious metal will likely be strong for quite some time, I believe the SILVER PRICE WILL OUTPERFORM GOLD when investors realize there isn’t that much physical silver available—more on this in future articles and videos.
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Quote of the MONTH: “June is shaping up to be a new record delivery month for gold.” –Ed Steer
Ed Steer…
That’s a name I haven’t heard in a while. I used to read his column years ago until it became by paid subscription. At that time all he seemed to be was a mouthpiece for Ted Butler.
For me the SHTF/wake up call will be when Apple continues to post negative sales. Which means Joe and Joan Sixpack doesn’t have the money to buy a new shiny Apple toy because they either don’t have the money or a job. Those numbers should reflect the economic damage around Nov or Dec.
So, since March 12th, when I bought a 2020 Monster Box of Silver Eagles for $9327, premiums have skyrocketed, and many popular silver bullion coins and bars are not even available anymore. And the real insanity hasn’t really even begun yet. Is that about right?
Gregg,
According to my spreadsheet, the four leading online precious metals dealers’ average premium for 2020 Silver Eagles is 60%. That’s a $10.93 premium on an average spot price of $17.98 (today). Some are lower than others, while APMEX is the highest. However, CLOUD HARD ASSETS 2020 Silver Eagle Premium is only $6.90 (39%), as of today (Friday). Thus, what a large spread between these dealers and CLOUD HARD ASSETS.
I don’t believe the economic and financial situation will improve going forward. Sure, Americans are now going back to work, driving, and eating at restaurants, but the DAMAGE has already been. If you watched the video, then you will see the economic fundamentals will only get worse going forward as the current negative impacts continue to SNOWBALL.
I would be surprised to see Silver Premiums fall significantly for a while. Especially, if we get the most dreaded SECOND WAVE of the Contagion.
steve
I’ll take that as a yes.
Does CLOUD HARD ASSETS sell gold eagle coins? If not, what type gold bars would they carry? Thanks. Oh yes, what is their minimum purchase?
Call them!
Russell,
Dan from Cloud Hard Assets sent his a few days back. I don’t believe the premiums have changed:
1 oz. Gold Eagles, 2020: 6.75% over spot
1 oz. Gold Eagles, Random date: $6.5% over spot
1 oz. Gold Buffalo, 2020 or Random date: 6.75% over spot,
Most of the leading online competitors are selling 7.5%-8% over spot
steve
Gregg,
It’s easy to get monster boxes of one or more of these sovereign coins:
Britannias, Maples, Krugerrands, or kangaroos from reputable online dealers, and probably by calling Cloud Hard Assets.
When should we convert large silver bars to gold? I mean gold to silver ratio. I guess 45 is a start.
JLS,
It depends on the person. If one holds a lot of silver, then it would be wise to convert some to gold as the GOLD-SILVER RATIO falls below 45-50/1.
steve
But also to look what was ratio in the time of purchase of silver.
$1800 / 45 ratio is $40 silver so we’re looking at substantial probable gains in silver as gold hits full stride. I believe $40+ will put silver into an upper tier of assets. The premiums above spot should also follow for a good while.
Steve, you have some very creative analysis placing all the financial sectors in perspective together.
Late Next Year: GOLD: $2750+ and SILVER: $58+
Right before silver goes beyond price and it becomes illegal to own because of national security.
Sincerely doubt it is worth congressional effort to do so.
Oh yes it will. Maybe not right this second, however if investment demand eventually causes shortages like many believe, then industrial and technological society cannot function properly. People call silver an industrial metal as if that minimizes its worth somehow. Exactly the opposite in my opinion. If the military industrial complex, the drone industry, the space industry, the robotics industry, the electric vehicle industry, PV makers, iPhones, computers etc….all of sudden are facing crippling shortages, there could absolutely be action of some sort. In fact this has already been done with the 1968 enacted “Strategic and Critical Materials Stockpile”, which included 165 million oz of silver, which is now apparently all gone. I offer no opinion about how effective any confiscation efforts might be, but it would certainly not be out of the question for some edict or executive order to be passed in the name of national security.
You can be sure gold, silver and fine material assets are at the end game in this world financial drama. When the final meltdown begins in paper assets and currency, the elite (the richest) will own the finest and most valuable material treasures including real estate, gems, PM, commodities. We can see the differences in the ‘Capitol West’ and ‘Communist China’ but both are close to the point of being a feudal system with the very rich in control.
The ‘elites’ may want hoard various treasure, but they will also need to make an attempt at keeping technology running or else they’ll journey back to the middle ages alongside the rest of us. Judging by current events, it looks like people will be in the mood to use the last of the available gasoline to drag their politicians by a rope behind their SUVs
Actually, we did start to see some serious shortage of physical silver.
Good video.
Steve, Good video and information.
What do you make of the news article : Bullion banks prepare CME pullback after virus snarl
https://finance.yahoo.com/news/exclusive-bullion-banks-prepare-cme-142535151.html
A few market commentators are suggesting the bullion banks can’t get out of their short positions. Word is June could be an interesting month with an inordinately high # of positions standing for delivery
That’s why the U.S. (unnamed entity) just bought something like 111 tons of gold from Switzerland refineries; nearly their entire month’s production, when they normally buy about 1 ton.
I don’t have the link in front of me; Steve has seen the article. Reuters as I recall.
It is probably warren buffett lol
Here is the link to that article “U.S. imports record amount of gold from Switzerland as virus upends trade” [I suspect it has little to do with virus…more like patching holes in the Comex].
https://www.reuters.com/article/swiss-trade-gold/u-s-imports-record-amount-of-gold-from-switzerland-as-virus-upends-trade-idUSL8N2D8311
“The Comex Has Big Problems”
https://investmentresearchdynamics.com/the-comex-has-big-problems/
Maybe CBs try to get back gold leased out to bullion banks, or FED tries to refill empty Fort Knox vaults?
Gold Bug,
I have seen the same news stories. Indeed, this could be very interesting. However, it can impact both the LONGS & SHORTS. I look forward to seeing how this unfolds next month.
steve
In excitement & anticipation, long-suffering fans of hard assets want to know how things are going to transpire in the next 1,3,6 months or whatever.
But even insiders like the Fed don’t know.
Wait and see with as little unnecessary emotion as possible.
Yes, hold gold for purchasing power protection. Silver is more for speculation. Don’t ever value gold in FRNs. Value it against another vehicle such as the Dow, home prices, oil, etc. Look at Venezuela for history. It shot up 10x vs its currency. Some foolishly sold thinking they made a great profit only to see it continue well over 1000x the currency. I think it’s at 24,000x the currency. Holy Moly
I hope things don’t get out too out of control. I like gold and silver priced at historic lows relative to fiat based assets. A rising gold price means my labor buys less gold and silver.
Agreed. I did meet a gentleman once a few years ago though, who had to sell a bunch of silver eagles to pay the bills. The price was about $15 at the time. I listened politely while he explained all about how price manipulation worked and I felt bad for him.
When COVID-19 comes back in the not-so-distant future, silver and base metal mines will have to be closed again.
This time for much longer.
Covid-19 has been shown to be fairly harmless. All the Western governments overreacted,or (more likely) took advantage of the virus to achieve their evil intentions.
Whatever its real potency to kill humans is, this COVID-19 thing did lead to silver mine closures in Mexico and Peru, the top two miners of silver. Many mines in other parts of the world were shut too. With the nasty consequence of effective halving of global silver supply.
When COVID-19 v2.0 arrives, we will never be allowed to learn its true killing potential, as you imply. (And it’s also possible that the new virus might be stronger). Instead, waves of fear and deep anxiety will be launched. Yes, the mines will close their doors again, regardless of the menace being harmless or not.
I’m not even talking about falling ore grades and the upcoming EROI trouble.
It’ll be very interesting to watch what the silver-dependent global industry will do, when serious shortage strikes.
That will be a very hard time for paper criminals too, who have nefariously made profits by making honest people lose money.
Thanks Steve. Another great article.
Steve, US upstream is inefficient because of shale as you said, international is much better because they do NOT drill for shale?