It's been several weeks since my last market update. I felt the time was right to share the latest industry news.
The gold price is up another 2% since my last update on May 1st, trading today at $1736/oz USD. Analysts are making bullish predictions for the price almost daily and the ETF inflows have been net positive for the last 20 trading sessions, two positive indicators that the market's sentiment for gold is highly favorable at the moment. Combine that with the abysmal earnings reports that are starting to come out (and not reflected accurately by the stock market's misleading performances), things are setting up very nicely for the gold price to keep rising steadily towards $1800 and beyond. I personally believe we will test record highs within the next 12 months.
Silver has also decided to join the party of late. Prices have climbed from $14.97/oz on May 1st to $17.20/oz at the time of writing. We've all been waiting for silver's move; the metal is known to be volatile during times of crisis, most often to the upside. My understanding is that silver's price is being suppressed by declining industrial demand for the metal, as a result of the global economic downturn, which is countering the benefits of strong investment demand.
Supply Chain and Product Availability
We're definitely seeing some improvements on the supply and order fulfillment side of things. More and more products are becoming available as the producers catch up with demand and implement workarounds for the effects of COVID on their production lines. Perhaps the most significant development is that we are seeing products from the Royal Canadian Mint come back online.
Suppliers are now able to fulfill orders for certain products within 1-2 weeks, which is a noticeable improvement. However, select products, especially 100 oz silver bars, remain on back-order up to as long as 8-10 weeks.
Please speak with our traders about your best options.
Product premiums remain high, but continue to show signs of improving. On one hand, you have more products back on the market as producers ramp up, helping push premiums down. However, on the other hand, demand remains very high (SWP is still rolling at 300% of our average volumes), offsetting the additional products available to the market.
Deal hunters will continue to be disappointed. If you are thinking about making a purchase, I suggest you bite the bullet on the premium and get in while the market price is still in your favor.
A General Market Overview and the Effects of COVID on Gold and Silver
I recently did a casual video interview with a colleague in Cayman. He asked me a number of questions about the market and how SWP was coping with the constraints of the current situation. The sound quality isn't great, but the video's content provides a solid high-level market overview. It ends with a funny story about how I got started in the gold business ...
Enjoy the Memorial Day long weekend!