What Happens To Gold And Silver Next? Look Out Below?

Demand from India and Asia is nothing new. Their interest is cultural and due to having no banking systems that can be trusted. This has been going on for ever, its just that now its one of the favorite things to point out like its new to sell more gold and silver thats getting harder to move.

India is actually aggressively trying to limit and discourage gold imports since its been destroying their economy.

Even at the height of buying weve never had an actual supply problem. When silver eagles were hard to find it was because the mint couldnt make and distribute them fast enough. Thats a production problem, more more being made. An actual supply problem would mean future production was not assured. If we ever did get to the point where the supply was running dry the mint wouldnt be wasting it on bullion coins, it would be saved for poducts that they make a lot more money on.

Coin and bar rationing

http://news.goldseek.com/GoldSeek/1389618000.php

Thanks for your input BB21. I didn't write the article lol, just contributing for the sake of moving this thread along, it's great.

Baseball, while I agree with you in general and think that PMs are still in a downtrend, I don't think you can dismiss this talking point entirely. You're right it is cultural, but what is new and pertinent is that these are countries that used to be dirt poor, but have in the past couple of decades seen an absolute explosion in population and wealth. There are hundreds of millions more people in the upper and middle class now in Asia that have enough income to allow them to buy PMs. That wasn't true a generation ago. There are still hundreds of millions who have so far been left behind, but if current trends continue should see large rises in income levels (from a very low base) in the coming decades. I do think that could bode well for PMs long-term.

The gold market discounts these articles because theres really no way to verify if these items are true for starters.

Finally, only one thing pays and that is price. IF the market knew these things to be TRUE, prices would rocket of that I am sure of. However, its not, so prices therefore correctly price this factors in.

If there is one thing I know to be TRUE about trading and financial markets, is that price and price action NEVER lies, its never wrong and has never led me wrong.

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Yes and no..... prior to 2003/4 ( my memory could be out a little. Gold and silver were just commodities.....then along came ETFs. Prior to ETfs gold, and to a lesser extent silver, was negatively correlated with the share market. Now Gold, more often than not, is positively correlated with the share market. the reason being gold now trades on the share market. I would dispute that gold price is set by supply and demand, it is set by speculators if it was truly driven by supply and demand the actual price of gold would be between US$600-$800.00 at best. Just check the gold councils stats. For at least the last five years so called investment( meaning ETFs) has accounted for most of the demand. Go back to pre EFT days and it was jewellry and Asian physical markets that set the gold price. ETF involvement is an elephant in the room. Etfs have made gold more tradable....but they now have created an environment where gold could suffer a share crash like panic


BTw any one still flashing warning signs about hyper inflation.....think again the warnings are out that we ( as we have for the last few years) are still fighting deflation.

Edit: this I had to jump on...



Asian and eastern banks are as reliable as US banks! the demand is much more cultural. In the near east( commonly middle east). Gold is the standard wedding present. Note wedding presents are given to the bride not to the happy couple. Unlike western countries property is owned separately. Marriage doesn't make it joint property so a husband can not take his wife's jewelry. Divorce, is pretty easy and very hard on women and in past times widowhood was very common. So gold is given to brides as a form of insurance.

Yes and no. Some of them may be perfectly competent, but by no means is the peoples ability to use them the same in India or South East Asia. Until not to long ago in China if you managed to make too much money you couldnt go deposit it in the bank. If you were one of the haves you could use it and they probably did a fine job keeping track of the money, but you had to be in the right social class. Japan and South Korea have good systems that people dont need to fear and you see far less demand for metals in terms of hiding wealth from the governments.

India on the other hand has a notoriously horrible banking system. A lot of rural areas dont even have banks much less ones that can be trusted. Improving their banking system is one of the ways theyre attempting to slow the gold demand.

Obviously there is more to the cultural demand for the metal especially in India, but it does play a role.




I completely agree. A lot of people blame ETFs for the falling prices when in reality they have done more to keep the price higher for longer than anything else has. I guess you could argue speculation is a form of demand, but I couldnt agree more that without the ETFs we would have much lower metal prices right now.

As I said look at the Gold council stats. the old demand levels have remained roughly the same. its the so called investment purchasing(mostly of paper representing gold) that drives the market. Now in a classic supply and demand model a product is purchased and delivered. How much gold traded on the futures exchanges actually gets delivered....more importantly how much of it actually exists! the classic Supply and demand model does not IMHO fit the gold market at the moment. I know for the purposes of your argument you were saying I was stating where the market should be. however that's your words and is not what I was communicating. With out ETFs ( which are not futures) the old and truer supply and demand equation would apply. This indicates that there is considerable downside risk in the gold market, risk that didn't exist before ETFs.


On Indian Banks. like in America there are good and bad. Like in america its the middle classes who buy gold not the very poor. In India it is the very poor who don't have access to banks( just like in America)