The World Is Suddenly Desperate For Physical Gold & Silver | Andy Schectman
Mar 11, 2025
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Andy Schectman, CEO of Miles Franklin and expert in precious metals, shares insights into the dramatic rise in gold prices, outpacing traditional investments. He notes a significant shift towards physical gold and silver, driven by declining trust in fiat currencies. The conversation touches on the implications of gold's new status as a tier one reserve asset and the importance of secure storage for these investments. Andy emphasizes personal relationships and trustworthy service as keys to success in the evolving precious metals market.
The recent surge in gold demand has led the U.S. to become a net importer of gold and silver for the first time in decades.
A significant discrepancy between the number of paper contracts and physical supply signals potential systemic risks in the precious metals market.
Central banks are repatriating gold, revealing a growing distrust in fiat currencies and underscoring gold's importance as a reserve asset.
Deep dives
Unprecedented Gold Market Activity
Recent developments in the gold market represent unprecedented activity, with the United States becoming a net importer of gold and silver for the first time in several decades. Since November, estimates suggest that over 15 to 20 million ounces of gold have been imported, dramatically exceeding previous import levels. In February alone, the COMEX market experienced the largest delivery in its history, with nearly 30,000 contracts delivered. This surge in demand and importation has raised questions about the motivations behind such significant purchases, especially from large institutional players.
Shifting Dynamics in Precious Metals Regulation
There has been a notable shift in the dynamics of the precious metals market, particularly concerning the rehypothecation of paper contracts. With an inflated number of outstanding contracts compared to the actual supply of deliverable silver, the situation highlights a significant discrepancy known as a short position. The increasing delivery requests, particularly from non-bullion banks, indicate a departure from previous market behavior, where major players rarely stood for physical delivery. This shift raises concerns about potential systemic failures in the gold and silver markets.
The Role of Central Banks in Gold Accumulation
Central banks are actively repatriating gold and accumulating significant reserves, signaling a loss of trust in fiat currencies and Western financial systems. Countries like India, the Netherlands, and others have undertaken substantial efforts to bring their gold holdings back home from the Western financial hubs. This trend reflects a broader acknowledgment of gold's status as a top-tier reserve asset, especially following its reclassification by the Bank of International Settlements. Such actions suggest that global powers see gold as a crucial safeguard against economic instability.
Market Manipulation and Supply Concerns
The silver market, in particular, is characterized by significant manipulation, evidenced by the concentrated short positions held by major banks. The disconnection between actual supply and reported inventory levels, alongside rising global demand for silver, points towards an unsustainable situation. With the total drawdown of silver stockpiles from the LBMA reaching alarming rates, the risk of a market collapse becomes more pronounced. This scenario could potentially lead to a liquidity crisis for those banks heavily short on paper silver contracts.
Strategic Value of Gold and Silver
Gold and silver are not merely investments; they are viewed as enduring forms of wealth with intrinsic value. In times of economic uncertainty, such assets provide a hedge against inflation and counterparty risk. The interest in precious metals is growing, highlighted by the potential for massive reevaluations in a crisis scenario. As pressure on the Western financial systems intensifies, the appeal of gold and silver as safe-haven assets reinforces their necessity in a diversified portfolio.
Gold has experienced a major upwards repricing in recent years.It's up nearly $1,000/oz over the past two years.And in just the past year alone, it's up 35%, handily outperforming the S&P's return of just 13%.Some say gold is quite overbought after this big run. Others say it's just getting started, and that far higher prices lie ahead due to the ongoing loss of purchasing power of the US dollar and other world fiat currencies.Which is more likely?For a "boots on the ground" report on all things gold, we welcome Andy Schectman to the program for the first time. Andy is the CEO and co-founder of Miles Franklin -- a full-service precious metals broker with a mission to educate the masses on the benefits & principles of sound money and to deliver fair pricing. It has an A+ rating from the Better Business Bureau.Andy reports that amidst the current wild action in the gold market, he's seeing some developments he's never witnessed before in his decades-long career.READ OUR FREE GUIDE TO BUYING GOLD & SILVER at https://thoughtfulmoney.com/gold
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