April 20, 2024

businessweek

Taste For Business

Beat the precious metals market

Silver Beats Gold as Precious Metal driven by Social Media

Around the world, frustration is developing among silver market participants due to price developments in the last two years (2020 – 2022).

During this period, special fiscal and monetary stimulus measures in response to the COVID-19 pandemic, supply chain disruptions and the Russian-Ukrainian war led to a sharp spike in inflation.  If ever there was a perfect time to sell silver bullion, this would be it.

As a result, the price of commodities, real estate, publicly traded stocks and cryptocurrencies saw a significant increase (in line with the wealth effect), although these assets saw a significant pullback in April- May 2022 as major central banks, such as the US Federal Reserve, began to close monetary policy by raising official interest rates. However, at the same time, the price of silver is well paid at US $ 30 per troy ounce, usually buying between US $ 22 and US $ 28 per troy ounce.

Specifically, since the beginning of the COVID-19 pandemic, when the price of silver dropped to US$ 11.63 per troy ounce on March 16, 2020, silver has reached US$ 30 per troy ounce only twice – i.e. $29.63 on August 3, 2020 in US$ 30.09 and February 1, 2021. Given:

  • current macroeconomic conditions;
  • geopolitical situation; And
  • the evolution of the price of the raw material of precious metals
  • Changes in silver prices between 2020 and 2022 strongly suggest prima facie evidence of market manipulation. As an ordinary investor, you should be able to distinguish between what is real and what is not. When you want to sell silver bullion, you should expect to get at least 2% of the spot price.

Financial market volatility

It is important to note that there are strong examples that suggest silver market manipulation occurs throughout the supply chain and price structure, including:

Settlement of a class-action lawsuit in December 2021 in the amount of US $152 million by several financial institutions (including Barclays Bank PLC, Scotiabank, Société Générale and London Gold Market Fixing Ltd) to end allegations that they have illegally price-fixed gold market equity (noting that Deutsche Bank and HSBC made similar claims in 2016);

• JP Morgan was found guilty and fined US $920 million in 2020 by the United States Department of Justice for manipulating the precious metals market through the practice of “rigging” and

• Morgan Stanley settled a US$4.4 million class action in 2007 for failing to purchase and store physical silver on behalf of client investors. Marketing – focus on research

In the English-speaking world, the discussion and analysis of the management of the precious metals market is mainly dominated by American and Canadian researchers. These analysts focus on the futures market and miss out on fraudulent behavior in the physical market. What they’re doing is artificially making silver available to people, which is causing the price to crash.

The market effect of such a system is to artificially increase the supply of silver and thus contribute to price stagnation. Also, at the core of this physical marketing scam is a lack of integrity and: product quality (e.g, counterfeit or diluted bullion (eg bullion that is less than 99.9% pure));

  • Storage services (including unclassified and mixed products); And
  • quality of audits.
  • Demand for industrial silver is the highest on record in 2021 (508.2 million troy ounces) and is expected to reach a new peak in 2022 (539.6 million troy ounces);
  • The demand for commercial silver coins in the form of bars and coins in 2021 (278.7 troy ounces) and estimates for 2022 (279.2 million troy ounces) is the highest since 2015;

The global physical silver market has an annual market deficit in terms of 2019 (63.4 million troy ounces), 2020 (258.1 troy ounces) and 2021 (116.7 million troy ounces) and is expected to will have an additional annual net loss on it. 2023 takes into account all types of corporate and investment needs. These facts provide a strong explanation of why silver prices should rise from 2020 to 2022, in line with other commodities such as base metals, energy and agricultural equipment.