This morning spot markets are trading at the lower end of their yearly range. Gold is in the mid $1,700’s, Silver is in the mid $22’s and platinum is below $1,000. Be aware, physical demand is way up and physical availability of the most common precious metal items is tightening with delays becoming common, especially for gold Maples. Premiums are beginning to rise with modest increases on some items this week.
People are asking me “Why are the metals prices lagging when physical demand is so high?” Please remember that only about 10% (some would argue 5% or less) of the dollar volume in the market is for the physical metals products. Fully 90% plus of the trade in metals are for some form of derivative of the underlying asset – ETF’s, leveraged ETF’s, futures, options, options on futures, leases, straddles, swaps, etc. – you name it. If the global trading market can devise a way to create a derivative of an asset, and thus be able to leverage it, or even short it or long it without owing the underlying asset, they will take full advantage.
If you want to own sound money, diversify out of a declining fiat dollar, and enjoy the privacy that precious metals offer, now is a good time to get started or to add. But please manage expectations for short time appreciation and maintain a longer term time horizon.
