Whats driving the prices in these metals?

[Cigarlover]

It's not inflation or industrial demand. Martin Armstrong is correct. Inflation doesn't drive up the metals prices. As I write this gold is up 1050 for the year or about 38% since Jan 1. Inflation is definitely not running at 38%. For gold there is virtually 0 industrial demand.

For silver an argument could be made that industrial demand has been a factor but silver is up over 40% for the year. Industrial demand is not up 40% for the year, not even close.

Many of us have been in the metals for a couple of decades or more. By far the most bullish cycle we have ever seen. We aren't seeing limit up days as we did in the past with Ag which was caused by a short squeeze. No short squeeze involved here, this is just a strong move that only rarely pauses along the way and doesn't even pull back much to shake out the weak hands.

In the 1970's prices may have been attempting to keep up with money printing but that's not the case today. If it were than AU would be at 140,000 and AG would be at 8750. Thats a similar GSR ratio as we had in 1980 but the Hunt's cornering the silver market is what drove prices that high in silver supposedly. Regardless neither of those metals are approaching those numbers so we can assume they are not trying to keep up with the money printing.

So what is driving this market? I'd love to say the public is waking up and it's speculation but a the dealers those post videos will tell you, the public is selling way more than they are buying.
It can only be banks and hedge funds but why? This is way more than preserving wealth, this is building wealth at this point. Preservation of purchasing power is basically a hedge against inflation and as I said, this has gone way beyond inflation protection. In 1964 an ounce of silver bought 3 gallons of gas. Today it buys almost 16 depending on where you live.

The reason for the post is to get ideas on why this is all happening. Since this is now an investment and not just protection from inflation or wealth preservation, I'd like to know the end game so I can plan an exit strategy. Also since the is now just an investment, a more prudent investment may just be the mining shares. We are already seeing some shares move 5-10% in a day versus 1% in the metals themselves. Only makes sense.

 

[KnowWhy]

I have no answers, but the same questions. Thank you for asking.

An observation is the USD dropping and metals climbing as it drops. Although, last fall(?) dollar was rising and metals were too. If day-to-day fluctuations were correlated with USD index, they were not as much recently, but at the moment, USD is pretty low and metals are pretty high.

 

[pmbug]

My $0.02 FWIW:

Gold - China has been working on a plan to internationalize the Yuan with gold via the SGE. They have accelerated the development of extrajudicial warehouses in Honk Kong (now open) and Saudi Arabia (not open yet). That's announced so far. They might open more warehouses in other locales too. China is buying gold like crazy in the SHFE/SGE system to stock these warehouses. China has also loosened gold import restrictions and pushed their insurance industries to invest in gold.

On top of this, back in Dec/Jan, the bullion banks started raiding London for gold (to stock the COMEX) presumably over fears/uncertainty of tariff policy. That caused the LBMA and BoE to technically default on delivery (T+60) obligations telling the world that London's shelves are bare. The world woke up to the reality that physical gold is scarcer than the paper markets would lead one to believe.

Silver - The paper markets for silver have not, for years, reflected the true production/demand dynamic because there was a stock of excess supply to draw upon. That stock appears to be gone now. There are indications that the LBMA vault stock liquid free float may be exhausted and the COMEX vault stock may not be liquid either. SLV may be signaling the true state of free float scarcity. Without the physical stock to draw upon, the paper markets won't be able to short like they used to.

 

[Voodoo]

Prices are ALL WRONG. They've been wrong for probably longer than most of us have lived. Take them with more and more of a grain of salt.

 

[Joe King]

Prices are ALL WRONG. They've been wrong for probably longer than most of us have lived. Take them with more and more of a grain of salt.

And now they are correcting and making up for lost time.

 

[nickndfl]

Bug is right. Gold is replacing US Treasuries and the $USD internationally. Countries along the silk road will trade in their local currencies and then be able to convery any surplus into physical gold.

The Chins might find a way to screw.it up with tungsten or impediments to delivery?

I know central banks will keep buying no matter the price because they have excess dollars they need to unload.

 

[Cigarlover]

Been hearing the same thing about China. Building vaults all along the Silk Road so gold can be stored in multiple places. China wants to go in and build up countries economies and allow them to use gold as collateral for loans. All of these countries become trading partners along the Silk Road and win win for all of the players.

Once the is fully implemented it would make sense that gold has a stable value. Up or down 40% in a year would not make it an attractive asset to hold. Of course when. it goes up we all want it but it also goes down. Then again at the end of the day an ounce of gold is an ounce of gold. I guess I could see a world where currencies are no longer measured against each other. Each country currency is valued by how much they print versus the amount of gold they own. Gold is the stable asset. For a country like the US that prints 2 trillion a year just to cover deficits the price of gold could be 10k versus a country with no debt. Of course it's much more complicated a formula if done that way. How much gold does each country own and how much currency has been printed. The picture should be much clearer as we approach 2032. I would think more details should be coming out soon as many of these countries have already been meeting.