Financial data indicates a recession is on the way and the metals are reacting this morning with gold up $38 and silver up $.88. Factory orders fell and gold took off.
But this is not the most important news.
JP Morgan’s CEO Jamie Dimon sent a letter to shareholders saying that the banking crisis is not over, and the repercussions will be felt for years. Gold surged on this news. Dimon wrote a 43-page annual message.
The failure of Silicon Valley bank and the rescue of Credit Suisse increase the odds of recession.
AND IF THAT’S NOT ENOUGH TO SCARE PEOPLE
The world is turning away from the dollar.
Brazil and China struck a deal last week to forget the dollar and trade in their own currencies.
China is taking full advantage of the weak USA and the ridiculous policies of this administration. Brazil, Russia, India, China, and Saudi Arabia have banded together to dethrone the dollar. The Saudis will soon be accepting any major currency for their oil which knocks the dollar out of being the world’s sole reserve currency.
Since The Bretton Woods agreement in 1944, the dollar was the world’s reserve currency- and was backed by gold. If you don’t know the story, you should definitely read more about it. It is the reason the dollar has always been so strong. The rest of the world had to use dollars for trade and specially to buy oil. This kept trillions of dollars “off the market” since they were held outside the country and used for trade. The dollar has been riding on its past reputation, and the reputation of the faith in the USA for a long time. Nixon cut all ties between the dollar and gold in 1971 and since then the dollar’s value was based solely on the faith of the US government.
That faith is quickly waning. Why would any country feel the need to continue to support the dollar at this point?
Saudi Arabia has been insulted and given an out by Biden. That is not speculation, it was all over the news some time ago. It’s just that no one, including the current administration, pays attention to how it affects the dollar and our lives.
The news continues to focus on domestic non-issues and never reveals how the big picture internationally will do more to crush us than what bathroom you use.
The demise of the dollar as world reserve currency would be more dangerous than the failure of a few banks.
This will mean much higher inflation as all those foreign held dollars come on the market.
I can tell you, business has never been better. Some weeks we do more business than we normally do in a month. And we are not alone. Most dealers are doing great business because people are scared.
People who never bought gold or silver before are now buying because they are afraid to keep their money in the bank and want somewhere safe to park it.
I have been in this business for well over 40 years and I have never seen anything like this. New buyers, panicky buyers, and people just worried about things they never worried about before. The past two years have seen huge numbers of sales. I keep thinking it will slow down but it doesn’t.
This demand for physical metals has caused shortages several times over the past couple of years and also high premium. There were times that delivery for silver was more than a 2 month wait. Prices were crazy because of premiums (the amount you pay above the spot price).
Currently premiums are very reasonable. Premiums on silver have not been this low in years. Premiums on gold are back to normal. Delivery times are starting to get longer. I notice that a lot of silver items are being quoted 2-4 weeks out. Gold is starting to take a little longer than normal also.
I expect the delivery times to get worse and the premiums to get higher if this demand continues.
If you are concerned about the banking crisis getting worse and the dollar losing even more value, I suggest getting started or adding to your holdings.