How Strong Is Physical Demand For Precious Metals?

Physical demand for gold and silver has been incredibly robust in the past year. Investors are once again flocking to precious metals, as gold just had its best quarter in the last 30 years! This occurred despite the dreaded Fed rate hike that so many gold investors had feared.

Demand for gold has been nothing less than jaw-dropping. Even JPMorgan made the bold claim that gold has entered a new bull market. And hedge fund manager Paul Singer has believes we are at the beginning of a rebound in the gold market.

“It makes a great deal of sense to own gold. Other investors may be finally starting to agree,” Singer told clients in an April 28 note. “Investors have increasingly started processing the fact that the world’s central bankers are completely focused on debasing their currencies.”

The crowd is starting to realize the poor situation the economies globally are in which has been masked by the Central Bankers’ liquidity. But one should never replace long term solvency with short term liquidity.

Here are some problems in the U.S. economy alone:

Total domestic business sales are roughly 15% lower than in 2014, a steady decline for the last 2 years.

Earnings from corporate America have fallen for 4 quarters straight – this does not occur unless during a recession.

In April alone, commercial bankruptcies jumped over 30% from April of last year.

The inventory-to-sales ratio is at levels that have not been since the 2008 Great Recession – this means all the production of goods is sitting in warehouses unsold. What does that mean for future GDP growth?

Announced planned job cuts by companies so far in 2016 are 25% higher than the same time-frame last year.

U.S. GDP in Q1 2016 was worse than expected, coming in at 0.5%, with expectations for Q2 GDP growth at an abysmal 0.8%.

The list most surely could go on. Understanding all this, the recent accumulation of gold by private investors, governments and central banks alike is intriguing.