02/02/2024
So last year's numbers have begun coming in, and the outlook for metals is pretty strong! While the opinions of the wise folks who are always on Kitco News prophesying the end of the world - no to to say that they're wrong, necessarily: at some point in the future, the world will end...BUT in the meantime, we are all still here, stuck on this big rock with each other, and generally trying our best to take care of business and have a bit of fun. Part of that lies in collecting a few things that enhance our knowledge and wealth. Gold and silver -especially silver- are always a good way to do that.
Investment demand for silver has dropped a bit from the breakneck pace of the last few years. Unlike gold, it has bumped up only slightly. The numbers that caught my eye: Silver production from mining operations around the world went to a bit over 800 million ounces in 2022, with the projections for 2023 showing more shrinkage likely. Historical production of silver has been a bit over 1 billion ounces annually. At the same time, industrial demand exceeded 600 million ounces in 2023! That is a record - it wasn't long ago that 450 million ounces was the new record. I would not be the least bit surprised to see a serious deficit in available silver in the next 2-3 years. The US Mint ran out of silver more than once in the past few years, so it may be that we start seeing shortages more often and in more places than we have in the past.THAT will move the price!
What this means: SILVER IS CHEAP. Go buy some!
Well, then, what about gold? "It's so expensive..." People who were buying readily at 1950 an ounce are suddenly afraid to keep adding more. I have no doubt that, at some poing in the future, gold will go back down. Meaningfully. Personally, I hope so. It will mean that the world has calmed down, that times are good, and I can dollar-cost-average my "losses" by buying more gold at a lower price. In the meantime, losses in gold are not the same as losses in stocks, furniture, groceries, cars and heavy equipment. The price of gold will never go to zero. Unlike a new sofa or car, it will still be worth 94-95% of what I paid for it when I walk out the door.
The most basic function of gold is to preserve your spending power, or as a hedge against inflation. One ounce of gold has pretty much always paid for a nice suit, whether it was $30 and ounce in the 1930's or $2000 an ounce now. Over the years since 1947, gold has shot the moon and shows no sign of stopping. $33-$2000 in 70 years. That is impressive - especially for an asset that "...doesn't pay dividends." And whether I am looking at a five year chart or a fifty year chart, the message is the same: BUY GOLD. "When are you going to sell gold?" people ask. Well, every day of course - it's what we do asyt Cottage Coins. The real answer, though, is: When central banks start selling again, I will too. The last two years have seen record purchases, from already inflated buying for the past ten+ years, all coming from the folks who tell all the other bankers how it is. Think they know something?
