Ignore the Price Drop: Gold and Silver Fundamentals are Strong

Common Sense Finance

22 Apr 202406:29

Summary

TLDRIn the latest episode of Common Sense Finance, the host addresses the recent price drops for gold and silver that occurred on Monday. Despite speculation about the reasons behind the drop, the host believes it to be an overreaction and maintains that the fundamentals for both precious metals remain strong. They argue that gold and silver serve as excellent hedges against the current economic issue of massive debt, which is often underreported by mainstream media. The host criticizes the paper market for not accurately reflecting the true value of these metals and calls for a free and fair market where each ounce of gold or silver traded is backed by the actual metal. They also discuss market manipulation techniques such as naked short selling and spoofing, which they believe distort the true supply and demand. The host concludes by expressing optimism for the performance of gold and silver in the coming year, encouraging viewers to consider buying and preparing for potential future gains.

Takeaways

📉 The recent price drops for gold and silver are being discussed, with gold dropping to around $1,320 an ounce and silver to about $17.50 an ounce.
🤔 The speaker doesn't believe the drop is due to easing geopolitical tensions, as there's still significant tension in the Middle East with a high probability of conflict.
📈 A personal opinion is expressed that the market overreacted to the price drops, and the speaker anticipates a price increase in the near future.
💼 Fundamentals for gold and silver remain strong, serving as a hedge against the economy's massive debt problem, which is not often covered by mainstream media.
👶 The burden of massive debt will likely be felt by future generations, not the current one.
🚫 The true value of gold and silver is not expected to be realized until there is significant progress in resolving the debt situation.
📊 The speaker criticizes the paper markets for not accurately reflecting the supply and demand for gold and silver, suggesting a need for a free and fair market.
🛍️ The physical market for gold and silver, as evidenced by premiums on coins like the American Eagle, shows high demand despite spot price fluctuations.
🧐 Market manipulation techniques such as naked short selling and spoofing are mentioned, which artificially drive down prices and are deemed corrupt.
⏳ The speaker advises that the physical market, not the paper market, should be setting the price for gold and silver, suggesting a need for dealer competition.
💰 Despite the current situation, the speaker still expects gold and silver to have a good year and recommends that it's a good time to buy and prepare.

Q & A

What recent price drops were discussed in the video?
-The video discusses the recent price drops for gold and silver that occurred on Monday, with gold falling to around $2,320.80 an ounce and silver dropping to about $27.50 an ounce.
What was the speculation regarding the price drops?
-There was speculation as to whether the price drops were a temporary blip or the start of a trend towards lower prices for gold and silver.
What does the speaker think is driving the price drops?
-The speaker believes that the price drops are not due to easing geopolitical tensions, but rather an overreaction in the gold and silver markets, which tend to overreact on both uptrends and downtrends.
Why does the speaker think the fundamentals for gold and silver are still strong?
-The speaker argues that the fundamentals for gold and silver are strong because they are one of the best hedges against the current economy's biggest problem, which is massive debt.
What is the speaker's opinion on the current debt situation?
-The speaker believes that the debt situation is not being adequately addressed by the mainstream media and that it is unacceptable, as future generations will bear the burden of this debt.
How does the speaker view the current market for gold and silver?
-The speaker is critical of the current market, stating that it is not free and fair, and that the prices of gold and silver do not accurately reflect supply and demand due to manipulation techniques like naked short selling and spoofing.
What does the speaker suggest about the relationship between the paper market and the physical market for gold and silver?
-The speaker suggests that the physical market for gold and silver should be setting the price, not the paper market, and that dealers should be competing with each other to offer better prices.
What historical price points for silver does the speaker mention?
-The speaker mentions that in 2022, silver was in the range of $20 to $25 per ounce for most of the year, and that American Eagles were selling for over $40.
What is the speaker's prediction for the year of the video?
-The speaker predicts that gold and silver will have a great year, although they do not expect the big breakout that they believe should happen.
What does the speaker recommend for viewers regarding gold and silver?
-The speaker recommends that it is still a good time to buy gold and silver and to prepare for the future, despite the recent price drops.
What evidence does the speaker provide to support the discrepancy between spot prices and physical market premiums?
-The speaker points out that with a spot price of $27-28, American Eagles can be bought for around $34-$35, which is cheaper than when the spot price was higher, indicating a discrepancy between the physical market demand and the spot price.
Why does the speaker believe that the current generation will not feel the full burden of the debt?
-The speaker believes that the current generation will not feel the full burden of the debt because it is being passed on to future generations, such as children and grandchildren.

Outlines

00:00

📉 Recent Gold and Silver Price Drops: An Analysis

The speaker begins by addressing the audience and setting the context for the video, which is to discuss the recent price drops for gold and silver that occurred on a Monday. The speaker shares their thoughts on the price drop, speculating on the driving factors behind it, and emphasizes that despite the drop, the fundamentals for gold and silver remain strong. They refute the idea that geopolitical tensions have eased, citing ongoing conflicts in the Middle East and the potential for further escalation. The speaker suggests that the price drops might be an overreaction by the market, which is known to overreact in both uptrends and downtrends. They express a strong belief that the prices will increase again soon and that gold and silver are still excellent hedges against the current economic problem of massive debt. The speaker also criticizes the mainstream media for not covering the debt issue adequately and expresses concern about the burden this will place on future generations. They argue that the true value of gold and silver will not be realized until there is significant progress in resolving the debt situation. The speaker also touches on market manipulation techniques such as naked short selling and spoofing, which they believe artificially drive down the prices of these precious metals.

05:01

💰 The Disconnect Between Physical and Paper Markets for Gold and Silver

The speaker continues by discussing the discrepancy between the physical market and the paper market for gold and silver. They note that despite a higher spot price for silver, American Eagles are cheaper to buy now compared to a previous period when the spot price was lower. This, according to the speaker, defies fundamental economic logic and suggests that the physical market should be setting the price for these metals, not the paper market. The speaker advocates for competition among dealers, which would benefit both the dealers and consumers by driving down premiums. They conclude by expressing optimism that gold and silver will have a strong year, even though they do not expect the significant breakout that some might hope for. The speaker encourages viewers to buy gold and silver and to prepare for the future, inviting feedback and discussion on the topic.

Mindmap

Keywords

💡Price Drops

Price drops refer to a decrease in the market value of a commodity or asset. In the video, the speaker discusses the recent decline in the prices of gold and silver, which is a central theme of the discussion. The speaker suggests that the drops were possibly an overreaction by the market.

💡Geopolitical Tension

Geopolitical tension refers to the strain and uncertainty in international relations that can affect economic markets. The video mentions that despite speculation, tensions in the Middle East have not eased and are likely to worsen, which is contrary to the idea that easing tensions could be a reason for the price drops in precious metals.

💡Fundamentals

Fundamentals in finance refer to the intrinsic qualities or financial health of an asset that determine its value. The speaker argues that despite the price drops, the fundamentals for gold and silver remain strong, particularly as a hedge against economic problems like massive debt.

💡Hedge

A hedge is an investment strategy used to offset potential losses in one area by making an investment in another. In the context of the video, gold and silver are described as hedges against the economic issue of massive debt, suggesting that they retain value even when broader economic conditions are unstable.

💡Debt

Debt refers to an obligation to pay a sum or a series of sums of money. The video emphasizes that the current economic situation is characterized by massive debt, which is a significant problem that gold and silver can protect against due to their historical value retention.

💡Naked Short Selling

Naked short selling is a controversial trading practice where a seller sells shares of a stock they do not own and have not borrowed. The video suggests that such practices, along with spoofing, contribute to market manipulation and artificially lower the prices of precious metals like gold and silver.

💡Spoofing

Spoofing is a type of market manipulation where traders place large orders with no intention to execute them, creating a false impression of demand or supply. The video mentions spoofing as one of the manipulation techniques that affect the prices of gold and silver in the market.

💡Open Interest

Open interest refers to the total number of outstanding contracts that have not been settled. In the context of the video, the speaker suggests that by examining open interest and volume reports, one can see that the current prices of silver and gold do not accurately reflect the true supply and demand dynamics.

💡Physical Market

The physical market refers to the trading of actual physical commodities as opposed to financial instruments or derivatives. The video argues that the physical market for gold and silver should be the one setting the prices of these metals, rather than the paper market, which is subject to manipulation.

💡American Eagles

American Eagles are a series of official gold and silver bullion coins issued by the United States. In the video, the speaker uses the price of American Eagles as an example to illustrate the discrepancy between the physical and paper market prices of silver, noting that the premium on these coins has decreased despite a lower spot price.

💡Market Manipulation

Market manipulation refers to the act of artificially inflating or deflating the price of a security or commodity. The video discusses how practices like naked short selling and spoofing are forms of market manipulation that can distort the true value of assets like gold and silver.

Highlights

The recent price drops for gold and silver were discussed, with gold dropping to around $1,320 and silver to $17.50 per ounce.

Speculation arose as to whether this was a temporary blip or the start of a trend of lower prices for gold and silver.

Geopolitical tensions, particularly in the Middle East, were highlighted as a factor, with the potential for conflict escalating rather than easing.

The speaker believes the price drops were an overreaction in the gold and silver markets, which tend to overreact in both uptrends and downtrends.

A strong belief is expressed that gold and silver prices will increase again in the near future.

The fundamentals for gold and silver are still strong, serving as one of the best hedges against the massive debt problem facing the economy.

The lack of mainstream media coverage on the debt issue is criticized as unacceptable, with future generations bearing the burden.

Gold and silver are not expected to realize their true value until significant progress is made in resolving the debt situation.

The speaker argues that the paper markets do not accurately reflect the true value and supply/demand dynamics of gold and silver.

Manipulation techniques like naked short selling and spoofing in the markets are criticized for driving down prices artificially.

An observation is made that physical demand for gold and silver was high in 2022 despite lower spot prices.

The current spot price of silver does not align with the lower premiums and cheaper physical silver available today, indicating a disconnect.

The speaker advocates for the physical market, rather than the paper market, to set the price for gold and silver.

Competition among dealers and dropping premiums would be beneficial for both dealers and consumers if demand wanes.

Despite the current challenges, the speaker still expects gold and silver to have a strong year ahead.

The fundamentals for gold and silver remain strong, making it a good time to buy and prepare for the future.