Something Big Is About To Happen With Gold & Silver

The markets have finally cracked and things are about to become a lot more interesting.  Today, the price of gold surged more than $60 and silver $0.60 as the markets crumbled.  Even though the markets recovered after some TWO-BIT announcement by OPEC stating that they were talking about “Cutting Production” again… I believe the worst is yet to come.

It has been quite some time since the gold price shot up more than 5% in one day.  As I stated in past articles and interviews, we will continue to see a lot more days like today.

The  huge spike in the price of gold sparked a surge in demand.  According to the Zerohedge article, Lines Around The Block To Buy Gold In London; Banks Placing “Unusually Large Orders For Physical“:

BullionByPost, Britain’s biggest online gold dealer, said it has already taken record-day sales of £5.6m as traders pile into gold following fears the world is on the brink of another financial crisis.

Rob Halliday-Stein, founder and managing director of the Birmingham-based company, said takings today had already surpassed the firm’s previous one-day record of £4.4m in October 2014.

BullionByPost, which takes orders of up to £25,000 on the website but takes higher amounts over the phone, explained it had received a few hundred orders overnight and frantic numbers of phone calls this morning.

“The bullion market has been building with interest since the end of last year but this morning things have gone bananas,” said Mr Halliday-Stein. “Some London banks are placing unusually large orders for physical gold.”

London-based ATS Bullion added it had been inundated with orders for the past week. The firm has sold 4,000 gold bars and coins since February 1, a 40pc rise on the same period a year ago when it sold 1,500.

Again, I believe this is just the beginning of what will become an AVALANCHE of physical gold and silver buying.  Right now there is only a hint of fear.  Wait until the markets really start to tank as the price of oil heads below $20.

Gold Eagle Sale Surge In February

While demand for gold in Europe has spiked today, Gold Eagle sales surged this week and are already 116% higher than last year February sales:

Gold-Eagle-Sales-Feb-2015-2016-NEW

In the first week of February, the U.S. Mint sold 12,500 oz of Gold Eagles.  However, this week they sold another 29,500 oz for a total of 40,000 oz.  In less than half a month, the U.S. Mint has sold more than twice as many Gold Eagles as it sold for the entire month last year.

Silver Eagle sales are also quite robust.  Total sales of Silver Eagles (Jan-Feb) are now 8 million versus 8.5 million sold last year.  However, we must remember, the U.S. Mint has put a weekly allocation of only 1 million per week.  So, sales could not be any higher than 8 million.

If the U.S. Mint keeps the weekly allocation the same, while demand remains strong, we can see a total of 10.5+ million oz sold in the first two months of 2016.  This would be nearly 25% more than last year.

Here We Go Again… U.S. Silver Imports Surged In December

Last year, I kept track of the elevated level of U.S. silver imports.  After the spike in silver retail investment demand began to wind down in October and November, U.S. silver imports also declined.  However, something changed in December:

Total-U.S.-Silver-Imports-Nov-Dec-2015

U.S. silver imports jumped by more than 33% in December versus November.  Matter-a-fact, the 557 metric tons (mt) of total U.S. silver imports were the second highest monthly in 2015.  If we look at the data for the entire year, the U.S. imported nearly 1,000 mt more silver than it did in 2014:

Total-U.S.-Silver-Imports-Q1-Q4-2014-2015

 

Now, why did silver imports pick up in December if investment demand dropped off as well as industrial demand??  I stated in previous articles that the main driver for the increased silver imports in 2015 had to be investment demand as industrial demand trended lower throughout the year.

I believe there continues to be large entities acquiring silver off the radar.  Moreover, the silver didn’t go into the Comex inventories as stocks continued to decline in December.

Something Big Is About To Happen In Gold & Silver

It seems as if the markets finally cracked today.  While the clowns and nitwits at the Fed and on the Financial Networks continue to regurgitate that “Everything is okay”, the markets are about to take another huge noise-dive lower.

Fear is starting to enter back into the psyche of the investor.  All it would take would be the bankruptcy of a financial institution such as Deutsche Bank to push the whole thing over the cliff.  When Deutsche Bank finally goes belly up, we will see an avalanche of physical gold and silver buying.  Analyst Jim Willie believes the collapse of Deutsche Bank will be Lehman Brothers TIMES 5.

Already we are see panic buying of gold in Europe and things haven’t really gotten all that bad yet.  At some point, the situation in the markets will become so dire… available supply of the precious metals will simply dry up.

So, you wealthy investors out there who still have your net worth tied up into paper assets… you better wake up and start buying physical gold and silver before it’s too late.

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38 Comments on "Something Big Is About To Happen With Gold & Silver"

  1. Betting on an oil below in order to boost gold/silver purchases seems a little weird to me on the long run.
    Indeed, below 20 USD lots of producers will get less than 10 USD as their oil is bad quality such venezuela, shale, russian ones and so on.
    I think oil will bounce when middle east situation would have been cleared by russia (and china is back support).
    In the meantime, there should be finally default in the oil sector.

    • RD,

      LOL.. I see more failed logic here. I never said oil going below $20 will boost precious metal prices. I said, the prices of gold and silver will surge as oil heads below $20. Oil is going below $20 regardless. It is not the reason for the coming spike in gold and silver prices.

      steve

      • and dont rely on the oil:gold ratio as a constraint on either gold’s rise or oil’s drop – this historic breach of the ratio is courtesy of an unparallelled 0% interest rate for a full business cycle. That has never happened before and it facilitates a lot more uneconomic oil supply than it does gold, given the comparative scarcity and difficulty of obtaining gold visavi oil

        • carlos,

          Don’t worry, I am not all concerned with the Gold-oil Ratio. Actually, I have stated many times in interviews, that the vale of gold and silver will decouple from the historic oil ratio. I believe we are seeing the beginning stages now.

          steve

      • What I wanted to say is that oil below 20 USD will be quite short as we “need” long term physical gold/silver purchases, not couple of months strong buying like in august/september 2015.

      • Steve,

        I believe oil will rise in vengeance. Below $20? give me a break. The world is increasing consumption everyday, it is a necessity. It will rise sharply and the market will rise sharply too. Silver will go balistic. Everything will rise. You can’t have a bull market in Silver if oil is below $20.

        Silver is headed much higher and the market will experience a sharp rise. I expect Dow Jones 30,000 in 2020. Your logic about market collapse is flawed. Sovereign debt has no impact on the market, but on PM prices. I like your analysis about the fundamentals of silver, but you get it wrong about the market.

        • Joe,

          Actually, I have to disagree with you on this one. No, oil consumption has been falling due to lower global growth. However, total global oil supplies are still elevated. Do you have any idea just how close Cushing, Ok storage is from being full?? Furthermore, the greatest time for build of U.S. petroleum products is from JAN-APR.

          Moreover, the U.S. refineries start doing maintenance in March-Apr when they change over to the Summer blend. Thus, there will be shut downs. You have no idea just how much more oil will be filling U.S. and Global stocks over the next 1-2 months.

          Unless we get a REAL OPEC production cut, we are going to see sub $20 oil. MARK MY WORDS. I am not saying it will stay there, but it will likely hit $19 before it heads higher…. and it won’t jump back above $50-60 for quite some time.

          Joe, unfortunately, you don’t understand that we are heading OVER THE CLIFF due to the massive amount of debt that is no longer sustainable. The markets in the future will not resemble the past.

          So, we will have to agree to disagree on this one. Silver and Gold are going up much higher, but it won’t depend on the oil price anymore. It will occur when we finally get an avalanche of buyers totally overwhelming the market.

          steve

          • Debts will be bought by central banks and cancelled.
            Thecentral banks will also purchases everything like swiss one with stocks pruchases and more.
            Hopefully, gold/silver will succeed in this environment.

          • RD,

            Interesting plan. However, those debts are assets on other individual-institutions balance sheets. If debts are bought and cancelled, then collapse happens because the assets will also collapse. What do you think 401k’s, pension plans and Treasuries are??? They are debts on one side of the ledger and assets on the other.

            You have to think it through next time you may a statement like that.

            steve

          • Steve,

            I appreciate all the work that you do and looking forward to get your next report.

            You are assuming that governments cannot extend debt anymore, and that is where we disagree. As the US and ECB issue more QE, this is considered debt cancellation. Now foreigners will not like this, so you reset silver and gold price 10 folds higher and you start the cycle again. Essentially , the next QE will be done by raising the price of gold and silver. Eventually we will fall of the cliff, but not now, because of the EROI as you diligently study. I think this will come in 2030-2040.

            Oil surplus is temporary phenomena and will not drop oil price anymore. As the next credit cycle begins the surplus will diminish. Therefore oil will rise from here, the bottom is in and oil is headed to $50 short term. The market has bottomed too. You gonna see quick reset for silver at $100, this will bring prosperity to the rest of the underdeveloped world. In others words, money printing will go hyperbolic to stimulate growth in South America and Africa. We still have another 7 years before we become constrained by commodities.

            The Chinese build things before they need them and not after they need them. All this talk about empty cities is hawkish.

            Joe

          • Joe,

            Okay… I imagine you and I will live for another 1-2 years. So, lets check back in a while and see how things unfold. I would caution you to the ability of Central Banks to roll over debt going forward.

            steve

  2. David H. Smith | February 11, 2016 at 6:38 pm |

    Exactly!

    Oil going below $20 would be a symptom, not a cause for gold and silver to rocket upward. Crashing oil prices expose the misallocation of capital in the oil patches, which then expands outward into the financial sector in a ripple effect, dislodging other mal-investments in seemingly unrelated asset categories.

    A classic case going on right now is the precarious position Venezuela is facing “due to low oil prices”. If the government there had not so severely mismanaged the economy on numerous for years before now, the crunch might not have been so severe – indeed possibly fatal to the existing government. But as it is, low oil prices may be like the single drop that causes an overflowed cup to run over. The gentle push to an already highly-destabilized condition.

  3. Tony Nobaloney | February 11, 2016 at 8:44 pm |

    The only “BIG” thing that is coming in G & S is the next cartel big super smack down as the unlimited paper shorts wipe out the never learn longs.

    He who prints the paper makes the rules.

    • Well Tony, you keep the paper, while the rest of us hold G & S. It really boils down to what are you going to believe. Thousands of years of history, prove that gold and silver has been, and still is real money. That is why we don’t still use the Roman Denarius as money today. History has shown that ALL paper fiat money returns to it’s intrinsic value of 0. Those who put their faith in paper which can, and has been printed into the TRILLIONS, are about to learn a history lesson they won’t forget!

    • dude. 4 tonnes left in comex? Shanghai delivers 50 tonnes a week. Massive demand being reported – by big players? The comex is a sitting duck and once it has to declare force majeur, it will no longer have the authority to set the price intra-day.
      The baton will pass to the east, and even the gold manufacturers of the west will welcome that development and defect

    • He who has the goods sets the price.

  4. Good report Steve. I was following the new chemistry on photovoltaic cells for solar panels. Looks
    like solar will be the energy source going forward. Projections are for 100, 000,000 ounces for
    2016. Tag that on to a few mine closings and demand will finally be exceeding demand by a substantial margin. People can’t breathe in China or India. Clean energy for electricity is a MUST regardless of whether or not it is competitive to coal or oil.. The demand for silver for solar will be increasing each year going forward. Also at this stage, consumers will finally be the extra 1% of demand for silver needed to create the physical silver shortage. We may start to see premiums of 30%+ over spot prices
    shortly.

    • Joe,

      I recently read through an article that Steve was nice enough to send to me via email. I had asked him about the EROI of alternative energy sources like solar and wind and what I found supported my suspicions. Basically with the vast and unique infrastructure requirements and maintenance, solar is not and will not be viable until what seems like MAJOR advancements in the efficiency of solar panels. Not to mention the insane requirements for VERY scarce materials which simply don’t exist in quantities the world would need. Couple that with irregular weather and production peaks and valleys and you have a horribly inefficient system for use.

      Link: http://energyskeptic.com/2015/tilting-at-windmills-spains-solar-pv/

      • Jared,

        Yes, this is the said truth about SOLAR & WIND. IF they really made sense, we would have done them years ago. However, what we have now are major SOLAR & WIND BOONDOGGLES ready to go bankrupt.

        steve

  5. The dollar is still tied to oil. Oil down, dollar down. Dollar down, Metals up. Quit over thinking this. Buy physical and sleep well at night. Simple really.

    • The only problem with your thesis is that the dollar is anything but down. So your real thesis is oil down and dollar up. So, buy gold, buy silver, have faith. Simple really…

  6. The last time we had a financial crisis in 2008, gold and silver tanked. Sliver dropped $21 to $8.40 and gold $1032 to $681.

    Investors may pile into gold/silver but that does not mean the price will skyrocket.

    • You may be right initially. However if investors do go to precious metals this will quickly dry up any available supply thus creating a panic run on remaining and future metals production. With more “wealth” in the system and less precious metals available for investment than in 2008, I see little chance of that happening. Since there are no other “safe haven” assets like bonds (negative interest rates) and since PM’s have been beaten for so long and hard, there is little no no downside risk from here. Either way, fundamentals will benefit us in the mid-long run so what does it matter if our PM portfolios take another 30% hit in the short term.

    • Shuggy,

      Yes, it’s true gold and silver tanked in 2008… but so did everything else. If you have been keeping you eyes open over the past several months, you would have seen that when the markets crash, GOLD & SILVER rally. Watch for this to continue, especially when Deutsche Bank goes belly up.

      steve

  7. If gold and silver have little worth then both would still be used in coins. But the truth is that gold and silver are too valuable to be used for coins in a fiat Keynesian economy which should tell you that gold and silver are great investments. The problem is not with gold and silver but with printing paper money and calling it value. It takes just as much energy to make a one dollar note as a hundred dollar note but the energy to make a silver dime compared to a silver dollar is much greater. So my work paid to me in gold or silver shows me increase in value due to amount of energy used but in terms of paper notes the energy is the same for all notes. That is the big con (confidence game) that we puppets are deceived with. When we figure this out the paper will collapse due to its velocity of use for things of value.

    • One is tempted to assume that every human being with a brain just as big as the one of a moskito should be aware of what you are saying but obviously and sadly, that assumtion is false. The herd is blind, barren and absolutely distracted by the TV soaps, sports events, consumtion, facebook and stuff like that. They will all wake up, after the s**t was delivered as we call it in Switzerland.

  8. The herd will rush out of PMs as fast as they came in as soon as some fake good news is promoted. These people want to get yield and they only park their paper stuff in PMs in an emergency situation. It will take much more bad news in order to keep that money in PMs for a while.

    • I’d bet the rush is into buying ETF gold or other gold “instruments” as much or more than into physical gold in one’s personal possession [in the western world].

      Investors have been conditioned not to know the difference between a promise and something more concrete or certain.

      And those with physical gold in storage somewhere under someone else’s promise…really?

    • ManAboutDallas | February 13, 2016 at 6:53 am |

      Well, you’re in LUCK, Max m’Boy … because there’s going to be NOTHING BUT bad news from here to as far as the eye can see into the future… no “shades” will be required; no, not for a long, long, loooooooooooooooooooooooooooooooong time ……….

  9. “The huge spike in the price of gold sparked a surge in demand. According to the Zerohedge article, Lines Around The Block To Buy Gold In London; Banks Placing “Unusually Large Orders For Physical“:

    OK Steve however you are describing physical demand.

    The COMEX price of G & S is up lately, but we have seen in the past that physical demand, which should drive up the price, is met with a lower closing on the COMEX. I suspect they have the ammunition for a few more smackdowns. What do you think?

    • Despite jim wille’s claims and other clowns it appears that london is continuing years after years to deliver as much as the gold the chinindia wants to buy. There are probably several years reserves at this pace. When all the western gold available will have disappeared, maybe (far from sure as they are only copying western finance) China/russia will seek gold reevaluation compared with fiats.

  10. “Analyst Jim Willie”, do you mean a nut job who hears a voice? He was raving about how the reset was coming in 2015 and the dollar was done, the gold was going to $1,800 and silver to $500. When that didn’t happen he said: “the voice told me they have postponed it by a year” LOL.

    • ManAboutDallas | February 13, 2016 at 6:57 am |

      I think it’s obvious to anyone that “Jim Willie” is some sort of “planted Useful Idiot” propped up and trotted out so risible ridicule can be heaped on the entire hard-asset, hard-money crowd; a veritable “lightning rod” for the lot, as it were. Sure is working. Or has.

  11. Gold & Silver price may go up, so what?? You still won’t get anyone to pay you money for it. That’s what people have to learn. There is a wide river between what you pay & what you get…stay in paper, it has worked go my family since 1900.

  12. The hunt bros. bought 100 million ozs of silver back in the late 1970s….by the end of the decade they were prosecuted for market rigging….today JPMorgan is holding some 500 million ozs …..at $15 an oz if it were to go to just $45 oz ….one needs to ask themselves why? Just saying or just asking for you purists….

  13. Ray says:
    I have no idea how much silver is enough, but I do wonder what 11,000 – 12,000 ounces would buy. Just wondering. Might as well wonder since I have none. All you that have it, good luck.

  14. I’d appreciate an update on the profitability of PM miners. Thank you.

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