Econ 101 Makes the Basic Argument for Gold and Silver's Future

When it comes to analyzing gold and silver, many so-called “experts” try to over-complicate matters. But the case for physical precious metals today couldn’t be more simple: Demand is UP. Supply is DOWN. That’s all you should have to know about where gold and silver are likely headed. Read more in this week’s market update.

If you (like most Americans) believe in the free market, then you are well aware of the most simple of economic indicators: supply and demand.

When there's more demand than supply, prices go up. And when there's more supply than demand, prices go down. It's basic Economics 101.

When it comes to gold and silver, many so-called "experts" overlook this simplest of concepts and instead make claims such as... Gold and silver were on a bubble!... Look at the stock market go higher and higher!... Inflation is well within the Fed's target! (If you take any of these claims at face value, then we have a bridge to sell you!) You'll hear this from many in the media, and even from Goldman Sachs, who have called on gold to drop even further.

Back in the real world...

...the Fed reaffirmed its commitment to its ultra-accommodative monetary policy this past week...
...real interest rates are below zero...
...the ratio of debt to the GDP continues to rise...
...demand for physical gold and silver continues to spike...
...supply of physical gold and silver continues to drop.

Who are you going to believe about the economy and gold? Mainstream news? Ben Bernanke and the Fed?

Or how about two basic, inarguable facts... Demand is UP. Supply is DOWN.

This doesn't need to be difficult; the case for gold and silver today, more so than ever, is so obviously clear.

And those folks over at Goldman Sachs who have called for gold to drop further? They have not sold off a single ounce of their own gold; in other words, they haven't put their money (literally) where their mouth is. And we've already covered that central banks aren't selling gold either; in fact, they're buying!

Look past the hype, and instead at what is actually happening in the markets today. The banks love physical gold and silver. People around the world love physical gold and silver (many are going on waiting lists for it!). You should too. Call us today to take possession.

Precious metals on the move

London Fix PM price at week's end, and change over previous Friday:

  • Gold: $1,469.25, down 0.2%
  • Silver: $24.25, up 1.0%
  • Platinum: $1,501.00, up 1.2%
  • Palladium: $694.00, up 1.9%

In the news

Gold price crash unleashed frenzy of physical demand
"Some investors feel much safer having gold within their reach and their hands." – Jonathan Potts, managing director of Delaware Depository (link)

Rickards: The fundamentals will prevail in the long run
"With any trading activity, there's some combination of fundamentals and technicals. In the long run, the fundamentals usually prevail, but in the short run the technicals can dominate. That's what happened." – Jim Rickards (link)

The bull case for gold hasn’t changed one iota
"I don't see any material change for the reasons why I've owned gold in a huge portion of my portfolio since 2001. And those reasons are static... deficit as a percentage of GDP continues to be higher than nominal GDP growth... we've had four years in a row of trillion dollar deficits... real interest rates are still negative... and [the Fed is printing] $85 billion per month... What piece of economic data can you point to of late that would make Bernanke say, 'Now is the time to slam on the QE brakes'?" – Michael Pento, president of Pento Portfolio Strategies (link)

Precious metals sales soar following gold price slump
"Having closely monitored gold’s performance over 40 years I can safely say that the media and gold skeptics have got it wrong on this occasion: it is not bad news. Gold is smart money at a time when currencies have never been so volatile. We only have to look at the Eurozone or America’s $16 trillion dollar debt to know that gold is the one tangible currency which can be used against depleted cash reserves which are liable to devalue further. While the gold price has temporarily lulled, we need to remember it has maintained a high price in the past decade and it’s has never been put to better use than it has now." – Alan Demby, international bullion expert (link)

CME president admits people don't want paper gold
"People don't want certificates, they don't want anything else. They want the real product." – Terrence Duffy, President and Executive Chairman of CME Group (link)

The week ahead

  • Strong physical demand to continue?
  • Will ETFs continue to see outflows?
  • Physical demand to overwhelm speculations from paper traders?
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