Weekly Precious Metals Update

These have become regular weekly updates, which we will continue delivering to you until the precious metal market begins to settle back into normality. Please enjoy these nuggets of information until then.

Price Action

Gold closed last week at $1484/oz. A week later, the yellow metal is firmly positioned at $1627/oz, having experienced some of the largest single day movements in its history. Silver fared equally well, rebounding from $12.35/oz to $14.48/oz this week (prices are in USD).

The price action was reflective of continued strong demand, bordering on 'extreme', for the metals. At this point, it's safe to say that most of the required selling of metal positions to cover margin calls and other liquidity requirements has ended. The fundamentals are now setting up nicely moving forward. 

Product Availability

Product availability remains tight. Beyond the high demand caused by safe haven buying, the COVID-19 virus has forced numerous large producers of precious metal products to temporarily close their doors, including the Royal Canadian Mint and several Swiss refineries. These closures only compound the problems the supply chain was already facing.

At this point, most small formats of gold and silver products (1, 10 and 100 oz) are either sold out or on 4-6 weeks delivery.

Premiums

Premiums remain very high. SWP's cost to acquire certain brands of kilo gold bars has increased 25x from one month ago. These types of increases are not only jaw dropping for investors, but also for retailers alike.

The silver lining is (no pun intended) that some exceptions do exist, but they are becoming more exceptional by the day. Please contact our experienced traders for assistance in selecting the best available products.

Price Outlook

More conservative price outlooks have gold at $1800-$1850/oz this year. My feeling is that we're going to test $2000/oz in 2020, and if the virus continues to wreak havoc on both the health and finances of the world's population, then $2500-$3000/oz isn't impossible (I'm not saying probable, only not impossible). Prior to this event, those numbers would have seemed obscene to a conservative metals professional like myself, but at this point, everything is on the table.

COVID's Affect on SWP's Operations

Until now, SWP has not made a public statement about COVID-19. Our operations had not been impacted by the virus, except for the side affects described above and in past weeks' editions of this update. This week, Cayman's government, whom has done an excellent job of updating its citizens and taking precautions to protect their well being, announced a temporary closure of all 'non-essential' businesses, keeping workers at home to reduce the possible spread of the virus. As a result, our Cayman Islands staff will be working from home until the government feels it is safe for residents of the island to return to work. Thankfully, our company planned for such an eventuality and is structured in such a way as to allow continued operations without impacting our clients' experience or the safety of their precious metals. SWP continues to facilitate the uninterrupted buying, selling and secure storage of precious metals for its clients. The protection of their assets remains our utmost priority. Our client services staff is available by phone, email and live chat if you have any questions or wish to transact with us.

Weekend Reading

I'd like to leave you with an excellent article published by Doug Casey's International Man today highlighting the Cayman Islands: https://swpcayman.info/WhyCayman.

If you enjoy Doug Casey's work, you may wish to check out his free top investment predictions for the 2020s.

Until next week, be well.