Metals Monday 8/1/2022
By Mike Nottelmann
As the week draws to a close, and silver starts to rally back from a few days at under $20, the shop is kind of slow a I don’t think people know what to expect next. Can we expect more inflation? Will we head into a recession?
When the economy heads for the toilet, people tend to head for metals. But I wonder if metal is the safe haven that we have always assumed it to be. Is the metals market going to be as reliable as years past? Will metals move with inflation? Or are they already at inflated levels?
I certainly don’t know what will happen, nor do I believe that anyone else does. Here’s what I do know:
Premiums on physical silver are so high right now, (+$5 on generic rounds/bars and +$16 on Silver Eagles) that at current $20 spot, you can’t really buy any under $25 right now. But that means you have to pay a 25% premium that basically evaporates in the transaction.
Gold is not much better. Premiums on gold coins are ridiculously high right now with the US Mint raising the premium on Gold Eagle and Buffalo coins, and the Royal Canadian Mint moving to a percentage-based premium for their Maple Leaf coins. Gold is premium right now at about 10% over spot to buy, and while I understand the need for premiums in levelling demand, when does it make sense to buy at these premium levels? How much will gold have to go up from its already near historic high level for buyers to break even on their purchase?
Is precious metal the safe haven to protect yourself from coming inflation? Or is it already too late?