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Unprecedented demand for physical Gold and Silver.
Many bullion dealers are reporting an unprecedented demand for physical Gold and Silver as it seems the precious metals market is becoming more and more popular among investors.
Recently, The Royal Mint has reported that ‘Soaring Demand for Precious Metals Affects Stock Levels’, going on to say:
“investing in gold, silver and platinum has never been more popular and we are experiencing unprecedented demand for our bullion coins and bars.”
The Royal Mint states that, “stock is depleted across most bullion retailers at the moment and we are working hard to improve our product availability as quickly as possible. We still have certain core products available to purchase and we hope to replenish many lines in the next few days.”
Gold and Silver UK contacted the Royal Mint to find out more about the recent surge in precious metals sales.
Q: What kind of demographic/age group is predominantly buying both gold and silver at the moment?
A: “ We’ve seen a significant increase in purchases from older age groups since the spike in sales (customers aged 55+ to be specific), whereas typically the precious metals audience age ranges from late 20’s to early late 50’s.”
“Gender split seems relatively unaffected by the surge in sales”.
“Marked increase in sales from customers overseas, although the majority of customer base remains from the UK”.
Q: What is your most popular silver bullion product?
A: “Our flagship silver bullion product is the 1oz Silver Britannia”.
Recently, The Royal Mint also saw fourteen times the usual demand for its silver products as investors flocked towards physical bars and coins as well as digital silver.
Andrew Dickey, Divisional Director of Precious Metals for The Royal Mint, said:
“We have seen record demand for silver over the past few days and a surge in new customers looking for precious metals. The price of silver has increased by around 19% to its highest level in eight years, and our silver bullion products have proved extremely popular.
The spike in demand has resulted in an increase in new precious metals investors, many of whom are opting to buy via our digital precious metals platform, ‘DigiGold’.”
Many bullion dealers are experiencing high demand.
Other bullion dealers are also experiencing an increase in demand.
BullionByPost, which is a popular UK online bullion dealer, is reporting ‘high demand’ and all new orders are being be dispatched within 5 – 10 working days.
This is after a recent surge in demand for silver actually resulted in BullionByPost briefly halting sales of silver over a previous weekend, until markets opened again.
‘Gen Z’ Investors are getting involved using online bullion services.
BullionVault has also seen a new wave of ‘Gen Z’ investors. (Generation Z refers to the generation that was born between 1996-2010, following millennials. This generation has been raised on the internet and social media), adding that this demographic has tripled at BullionVault.
Young investors, especially in Germany, are turning to precious metals at a phenomenal rate according to the highly-respected Frankfurter Allgemeine Zeitung newspaper, citing figures from BullionVault.
“Latest data from the international online trading platform show a remarkable change in the age group,” says the FAZ report online.
“The number of 18 to 25 year olds from Germany who traded precious metals on the platform rose by 209% in 2020 compared to the previous year.”
Read the full report at FAZ in German here:
BullionVault is seeing unprecedented new account openings adding:
“2020 was a record year, last month was a record January, we just had a record weekend, and today has already brought almost as many new users as the whole of February last year.” Source.
The Silver Squeeze.
However you feel about the recent Silver Squeeze news, it is hard to deny that it has brought mainstream attention to gold and silver, as well as introducing the precious metals market to a whole new mass audience.
BullionStar is Singapore’s premier bullion dealer and they are very active within the precious metals community.
They have indicated that they are currently experiencing high demand for physical silver products.
BullionStar have been very vocal about the disconnect between the paper and physical market, where paper issuance of gold and silver exceeds the physical availability.
They state that there is a price disconnect between paper silver price and physical silver price.
“The silver short squeeze in physical silver at present is unprecedented. Even so, the spot price of paper silver is not even close to the real physical equilibrium price of silver. BullionStar may soon have no option but to abandon setting prices based on silver spot price altogether and move to fixed prices.”
“Over the last few days, we have seen unprecedented demand for silver bars and silver coins at BullionStar. We currently have about 25 customers buying silver from us for every 1 customer selling. Typically, this ratio is about 2-3 customers buying for every customer selling.”
“As the spot price does not match the demand on the physical market, we have had to significantly increase price premiums for silver.”
As the unprecedented demand for physical gold and silver seems to be rising this is adding larger premiums by dealers to the physical metals. This trend seems to be increasing as supply and demand forces take effect.
Many experts are predicting that the silver squeeze isn’t going anywhere.
In a interview with precious metals expert Willem Middelkoop, he tells Daniela Cambone of Stansberry Research, “While central banks can solve many crises they can’t print more silver.” Noting that the popular iShares Silver Trust ($SLV) needs to source metal to meet the demand, he warns, “Tricks are being played – the amount of silver they need to fund is physically impossible.” Source.
Fundamentals are adding to the demand for gold and silver.
Interest rates are almost at zero and this is likely to be the case through all of 2021 and beyond.
This is particularly bullish for both gold and silver, because they compete with interest-bearing instruments for investors cash savings.
Lower interest rates means that gold and silver become instantly more appealing to investors looking for a safe haven for their money that will increase in value over time with minimal risk. Gold and silver tick those boxes.
Weak economic growth.
It is fair to say that not only the UK, but the world is reporting weak economic growth, especially due to ongoing restrictions and uncertainty.
SMEs (small and medium-sized enterprises) across many sectors of business are simply being destroyed, this could lead to a credit crisis.
Precious metals such as gold and silver become safe-haven assets for many investors in this environment of weak economic growth.
Unemployment is rising.
Calls of a V shape recovery, or ‘pent up demand’, is becoming unrealistic as businesses are simply unable to survive ongoing lockdowns.
Not only that, but as businesses such as restaurants and bars have been shut for so long, those sales have been lost for good.
This has caused a wave of unemployment, especially in certain sectors such as the hospitality industry.
Even if the average customer might eat out once a week at a particular restaurant, when that restaurant opens again, are they going to order 10 or 20 meals to make up for all the sales that were lost during lockdowns? No, they are going to order the same meals. Pent up demand does not work in this scenario. Those sales have been lost forever and businesses are suffering as a result.
Credit risk and defaults are becoming a major issue, which is causing a flight to safety in precious metals.
Money printer goes Brrr.
The popular meme, known as “Money Printer go Brrr”, or simply “Brrr”, shows central bankers cranking out a seemingly infinite supply of money, or more accurately currency, to prop up a battered economy.
However, the sheer amount of currency being printed is now so vast, it seems to have provided proof that monetary policy has simply spun out of control.
With trillions and trillions being printed this could lead to runaway inflation. Read more about inflation here.
Even if inflation does not emerge immediately, inflationary expectations are on the rise.
This is extremely bullish for both gold and silver.
The unprecedented demand for physical gold and silver is set to continue.
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