There’s a coming Perfect Storm in silver as surging demand will overwhelm falling supply. The beginning stages of this storm are already forming, getting ready to converge when the conditions are right. The timing of this storm will occur as the Fed and Central Banks lose control over the massive debt propping up the entire system.
I sat down with Mike Gleason at Money Metals Exchange and discussed how 2016 could turn out to be a horrible year for the broader stock markets and a final bottoming and turnaround of the precious metals. However, this will depend upon what the Fed and Central Bank will do in response to the upcoming U.S. and Global recession.
Here is part of the interview below:
Mike Gleason: Well Steve, we do have a lot to cover so I’ll dive right in. And I want to start out by asking you about the divergence we’re seeing between the global stock markets and the precious metals so far this year. Now, the metals haven’t necessarily taken off, but they are up a little bit, which is a positive sign given the major sell-off that’s unfolding in the equities market. So before we go any further, what do you make of the market action so far in the early part of 2016, specifically the way gold and silver have reacted to all the other market headwinds?
Steve St. Angelo: Yeah, Mike. I think the last time we spoke I said, and this was I believe in the fall, August or so, if the markets were going to really crash during the end of 2015 I thought we would see a dislocation in the market, or we would see a bifurcated market. The metals would start taking off and heading north, and then the stock market would crash. Well we saw a little bit of that. It started to happen, and then of course I think the U.S. government and the Fed came in there and propped it up, because 95% to 98% of Americans are invested in that market, so it’s in their benefit to keep that market propped up. Well we started to see that this year, and I think the reason why we haven’t seen even higher prices for the metals, and if you looked yesterday (Wednesday, January 20th), the only thing that was really up, let’s say besides Treasuries and a few stocks, gold and silver were up yesterday, where the Dow I think was off 550 points at one time. But the only 2 (things that were in the) green (were) metals.
Copper and zinc were down, but I think because the price of oil has been plummeting, it’s kept gold and silver from going higher. But I think going forward, when we start to see more red in the broader markets, the Dow Jones, the S&P, I think we will start seeing higher prices in the metals and we’re seeing that now. When the Dow goes down and the broader stock markets go down, the metals have been going up, not significantly, but they’re not going down, and I think the reason for that is the deflation of the metals has already taken place. Silver, Mike, is down 71% from its high in May of 2011. The stock markets, even though everyone’s worried, there’s blood in the streets, they’re only down like 10% or 11% from their highs. The metals have actually seen most, I think, of their down side, (although) I’m not saying they can’t go lower. So I think going forward it will depend on what the Fed and central banks do, but once we start seeing more declines in the broader stock markets, I do think the metals will decouple and you’ll see their prices move much higher.