Clients have lots of good questions about metals and markets. From time to time, we like to publish the questions as well as our responses. If we get calls from clients with these questions, we know there are many more people out there wondering about the same topics.

Q: Where are Silver premiums headed?

A: At the moment premiums appear to be headed lower – particularly for silver. The wholesale market is more stable than it has been for much of the past three years.

Producers of privately minted rounds and bars have been ramping up production. At the same time, buying activity softened in November and December. This allowed dealer inventories to finally recover on many key products.

The lesson of the past few years is that bullion premiums are quite sensitive to physical supply and demand.

This is in contrast to the COMEX paper price of silver and gold. Extraordinary demand for physical gold and silver seemingly had no bearing on prices in the futures markets. At least not until recently.

The vaults backing the trading exchanges reported a continuous decline in inventory, and alarm bells have started to ring.

Although premiums have come down, bullion buyers may simply be taking a breather. Geopolitical turmoil and falling investor confidence in financial assets remain as major drivers.

The next wave of people seeking the safety of physical metal may not be more than one headline away.

Q: Where do you expect Gold and Silver prices to go in the months ahead?

A: The truth, of course, is we don't know. If the futures markets worked properly as a vehicle for honest price discovery and responded as expected to fundamentals like supply and demand, forecasts might be more viable.

When you add influences like market manipulation, algorithmic trading, and leverage, price direction gets much harder to predict.
It is best for investors to think in terms of probabilities. Our view is it is more likely for physical gold and silver prices to move higher over time rather than lower.

Q: Will Fed rate hikes hinder precious metals markets?

A: Metals are particularly well suited for the times in which we live. Price inflation is anything but “transitory,” as Jerome Powell had laughably claimed. This year, Powell finally acknowledged price inflation as a serious issue and the Fed responded by driving interest rates higher. That bolstered the Federal Reserve note dollar versus other major currencies.
America's current monetary policy tries to fight the inflation it creates by triggering a recession and higher unemployment. It has been ugly for real estate, stocks and bonds in 2022.

The year ahead may hold even worse for conventional markets.

The Fed spent most of the last 15 years fostering an addiction to zero interest rates in these markets.

They aren't going to fix that without inflicting a massive amount of pain on investors.

Fed watchers are waiting on Jerome Powell's every word for signs that the “pivot” is coming. Historically, the politicians and Wall Street bankers who control the Fed have a low tolerance for pain.

Therefore, the FOMC at some point can be expected to reverse and march back toward monetary easing. Perhaps Congress will resume stimulus by mailing another round of checks to everyone.

Q: What are some of the qualities that differentiate owning precious metals from investing in the stock market?

A: As a tangible asset held in your possession, bullion has no counterparty risk. It can't go bankrupt or default. It doesn't commit fraud and it doesn't make terrible decisions. It doesn't even rely on electricity or an internet connection to work.

Private, portable and enduring coins, rounds, and bars are a time-tested hedge against out-of-control central bankers, hostile politicians, ESG malinvestment, and other troubling developments that currently cloud the outlook for most conventional assets.
It is important to note the decline in confidence and unhinged monetary and fiscal policy are long-term trends with no end in sight. That is why metals have outperformed stocks over the last two decades plus.

As of this writing, the S&P 500 is up 180% since January of 2000. The gold price vastly outperformed over the same period – up 540%. Silver has gained 350%.

Money Metals Exchange and its staff do not act as personal investment advisors for any specific individual. Nor do we advocate the purchase or sale of any regulated security listed on any exchange for any specific individual. Readers and customers should be aware that, although our track record is excellent, investment markets have inherent risks and there can be no guarantee of future profits. Likewise, our past performance does not assure the same future. You are responsible for your investment decisions, and they should be made in consultation with your own advisors. By purchasing through Money Metals, you understand our company not responsible for any losses caused by your investment decisions, nor do we have any claim to any market gains you may enjoy. This Website is provided “as is,” and Money Metals disclaims all warranties (express or implied) and any and all responsibility or liability for the accuracy, legality, reliability, or availability of any content on the Website.

Recommended Content

Recommended Content

Editors’ Picks

EUR/USD retreats toward 1.0850 on modest USD recovery

EUR/USD retreats toward 1.0850 on modest USD recovery

EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.


GBP/USD holds above 1.2650 following earlier decline

GBP/USD holds above 1.2650 following earlier decline

GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.


Gold climbs to multi-week highs above $2,400

Gold climbs to multi-week highs above $2,400

Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.

Gold News

Chainlink social dominance hits six-month peak as LINK extends gains

Chainlink social dominance hits six-month peak as LINK extends gains

Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday. 

Read more

Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates

Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates

After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.

Read more