28 Jan Coming Gold & Stock Market Disconnect
All over the world, financial markets are experiencing more and more uncertainty. Markets do not like uncertainty. Recently CNN sounded a warning from top world CEO’s giving lower guidance on future earnings.
The question for investors then arise. How do we protect ourselves from the evaporating stock market returns? I strongly believe, and have been preaching this for a while in my news letters, that the investment of choice will soon change to precious metals. A recent chart, courtesy SRSrocco Report, gives us an idea of what happened in the past when stock markets declined sharply.
As can be seen from the chart above, it is clear that the gold price disconnected from the Dow Jones in the 2008 market crash. The gold price actually went up by 157% while silver price went up by a staggering 381% over the same period.
I believe we are right now very close to this point of disconnect. We can also see the subsequent sharp rise in the gold price which makes it very costly if you move to slow. My point is, stock up on silver and gold bars right now!
Declining World Silver Supply
The world silver supply is in trouble. Recent research shows that the broader silver supply analysis might be overstated. According to the governments of the top two silver producing countries in the world, Mexico and Peru, their production fell 2.5% and 5% respectively from Jan-October 2018 relative to the same period last year. Russia is down 4%, Canada down 12% and the US down a staggering 16%.
The above graph clearly shows the under supply of silver. This is one of the main reasons I have been recommending silver bars more than gold bars. If one assumes that both gold and silver will ultimately take out their previous highest price ever, gold will go up by about 60% while silver will appreciate by about 180%.
The World Silver Survey forecasted the world silver production to be 865 Moz but calculations from the above mine supply figures suggest about 817 Moz. We must also not forget that silver is a by product of copper, zinc and lead mining and with the copper prices tanking right now, it spells more bad news for silver production.
Shrinking silver supplies are very good for the future of the silver price!
See today’s bar prices HERE!