Stefan Gleason: Silver, Gold Wakeup — Price Drivers and Next Triggers

TLDR;

This video features an interview with Stephan Gleason, CEO of Money Metals, who provides an overview of the current state of the gold and silver markets, recent volatility, and factors influencing price movements. He also discusses the impact of these market dynamics on refiners and retail investors, as well as sound money policies and initiatives.

Gold and silver markets experiencing volatility, especially silver with significant price swings.
US retail market seeing increased interest in precious metals, particularly silver.
Refiners facing backlogs and challenges due to high demand and limited refining capacity in the US.
China plays a significant role in the silver market as a major refiner and consumer.
Sound money initiatives are gaining momentum at the state level, but some proposals raise concerns about government involvement in the gold market.

Intro [0:00]

Charlotte Mloud from investingnews.com introduces Stephan Gleason, CEO of Money Metals, to discuss the current state of gold and silver markets. They acknowledge the significant events and price fluctuations that have occurred since their last conversation six months prior, setting the stage for an in-depth analysis of the precious metals market.

Repair period for gold, silver [0:18]

Stephan Gleason reports that silver prices had a significant run-up, especially in December and January, reaching $120 before a massive correction. While still higher for the year, the big question is whether the low of this correction has been reached. He notes the volatility in the market, particularly in silver, which experienced its largest one-day drop in history on January 31st. Despite the volatility, Gleason remains very bullish on both silver and gold, suggesting that the market is currently in a repair period and anticipating higher prices later in the year, possibly by summer.

US retail market waking up [2:47]

The US retail market saw increased activity starting in the late fall, driven by headlines and excitement around silver. This influx of retail interest led to higher sales of both silver and gold, with many new people entering the market. December and January were particularly intense, with high demand causing delays and pressure on bullion dealers. Despite the increased buying, there was also significant selling as people took advantage of the higher prices, creating a very active two-way market.

Impact of refiner backups [6:34]

Refiners are experiencing delays and backups due to low refining capacity in the US, with over 50% of silver refining capacity located in China. This backlog has worsened, leading many refiners to limit or stop accepting refining from new customers. The increased value of metal and hedging costs have put pressure on refiners' financing and hedging practices, affecting local dealers and scrap collectors who rely on these refineries. This situation has caused bids to drop, creating discounts and dislocations in the market, making it challenging for smaller businesses to operate.

China's role in silver market [13:20]

China plays a significant role in the silver market, with demand often driving prices higher when the market opens on Sunday nights. There is a premium for silver in China, although the exact amount is debated. The appetite for metal to be shipped to China for refining is high, and it is unlikely to be shipped back due to the premium there. Overall, there is tightness in the silver market in London, India, and China, while the US may have a slight glut due to refining capacity issues.

Comex silver inventories [15:52]

Comex silver inventories have been decreasing, with the registered category dipping under 100 million ounces, which is worth watching carefully. Metal is being taken off the exchange, and much of it is moving out of the country to areas with higher premiums. This arbitrage is causing a drain on Comex inventories, but a collapse is not considered imminent.

Next leg higher for gold, silver [18:10]

The stock market could be a trigger for the next leg higher for gold, while silver's strong demand and supply situation may help it perform well even in a stock market downturn. The de-dollarization trend and decreasing trade with the US are also factors that could drive gold prices higher. Being short on gold or silver in the current environment is not advisable.

Hawkish Fed is a fiction [19:31]

The idea of a hawkish Federal Reserve is a fiction, as the Fed is designed to be an inflation-creating machine. The new Fed chair, Worsh, is likely to implement lower interest rates, aligning with Trump's desires. Worsh has acknowledged the US government's involvement in the gold market, indicating a willingness to stabilize currency markets.

Gov't should stay out of gold [21:36]

Money Metals has been promoting sound money policies, such as removing taxes on gold and silver, which are impediments to remonetization. While there has been success in this area, with many states removing sales and income taxes on precious metals, some concerning proposals have emerged. These proposals involve government partnerships with private businesses, putting the government in the middle of holding and selling gold, and even running a government-managed payment system. This is seen as a negative development, as it picks winners and losers and involves the government in people's assets, which is undesirable.

Fort Knox audit, other initiatives [26:06]

Several sound money initiatives are being pursued at the state and federal levels. These include removing the last few sales tax laws involving gold and silver in states like Maryland, Vermont, and Washington, as well as income tax bills in Oklahoma, Iowa, and Mississippi. At the federal level, there is a bill to audit the gold, looking at whether the government has encumbered it. The bill would also refine the US gold reserves into 49's pure gold. Additionally, there is a bill called the Silver Act, which aims to prompt the exchange to admit other depositories outside of the New York area to reduce systemic risk and increase competitiveness.

It's time to buckle up [32:42]

The speaker advises listeners to "buckle up" as they believe we are in an exciting time for the gold and silver market. The breaching of the $50 level in silver after 45 years suggests a potential new reality for silver. While there may be volatility, these assets are gaining attention, and the rest of the world seems to understand what's happening. The US is a little behind, but that is expected to change.