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Coronavirus weighs on recession fears but Silver plummets.
Spot price tumbles, where is this thing heading?
Today, Silver opened at the lowest price it has in a decade bottoming out at $12.18 per troy ounce. Over the weekend grocery store shelves emptied as the unknown near-term implications of COVID-19 remain unclear. Amidst a controversial upcoming election, many blame the mainstream media for heightened fears that have now led to panic buying of basic items such as toilet paper, canned goods and bottled water. Is this an extreme overreaction or is there a valid need to worry?
First and foremost, the amount of conflicting information on the internet is something you should write off completely. The CDC should be the only source of information regarding the Coronavirus that you should consume. Practice impeccable hygiene and follow recommendations on CDC.gov and, limit one's exposure to large groups of people. Avoid conspiracy theories that try to downplay or overplay the severity of this situation and remain calm. Be wary of people trying to take advantage of the situation. (11 out of 10 doctors say subscribing to Investor Crate prevents the spread of the disease.) Just kidding. FEMA.gov is another excellent resource at your disposal with plenty of tips on how you can prepare in the event things get any worse.
Gold and Silver Prices
Yesterday (Sunday, March 15th) the Fed announced a slash to interest rates for borrowing to nearly zero percent. It also announced it would increase its Bond holdings to nearly 700 billion dollars yet again increasing the M2 money supply and there is speculation that even more tax money may be dumped into the markets to prevent another freefall. Despite the demand being ever-present and the U.S. Mint selling completely out of their 2020 American Silver Eagles the whales who had Gold and Silver as a safe haven are selling their Precious Metal holdings to recover losses in the market. Most investors are liquidating much of their portfolio as they keep a close eye on news headlines and stock tickers to try and figure out what is going on.
If the stock market is an indication of things being good or bad, then things are bad. Investors are selling everything before the opening bell future trading bottomed out and not more than an hour into trading the markets have come to a screeching halt as the NYSE suspends trading. I think most people are thinking it and no one is saying it but, no one actually knows what’s going on or what to do about it.
APMEX, JM Bullion, Provident Metals, BGASC, Bullion Exchanges, KITCO, and SD Bullion.
Bullion retailers such as JM Bullion, APMEX, Provident Metals as well as here at Investor Crate are experiencing massive volume in orders causing delays and shortages of inventory. Some of the big retailers have massive inventories and this is why prices and premiums do not seem to correlate with spot price. Many of the big retailers (despite being direct competitors) helped Investor Crate get off the ground in the early days. In fact, they have shown us nothing but love and for that, we always will carry deep admiration for these companies, so we feel obligated to come to their defense as an increase in negative comments across the internet is surfacing regarding the ‘high premiums.’
Over the years I have noticed a lag of a few weeks (LCS seems to be a bit longer) for inventories to clear out and premiums to become lower and reflect more closely with the market ticker. Go easy on these folks, they do deal in our most beloved commodities (so they should be good in your book) and employ thousands of good people. They are a business and have to keep the lights on and selling inventory for 25% less than what they bought it for is not a good way to achieve this. Investor Crate largely pools and pre-sales inventory hedges so we are not AS susceptible to this but are still affected by volatility in the Precious Metal market.
Not an excuse for predatory marketing tactics.
As for the misinformation, some bullion retailers have been notorious in using less than honest sales tactics many of which come under fire for. If you have been in the industry long enough, you know who these guys are and they are largely small resellers that most of you avoid anyway. As always guys, do your own risk assessment, due diligence and ALWAYS seek financial advice from a certified financial advisor. It would behoove of you to take Precious Metal investing advice from someone who doesn’t sell Precious Metals or otherwise has some huge interest in it. Though, we see you guys filling up our social media comment sections with the ‘yahoos and hip hip hoorays’ for lower prices which we are excited about as well! 😊
Stock Market
The stock market over the weekend posted the cap rate for future sell-offs, despite the interest cuts. The stock market opened and hit a sell-off circuit breaker and was paused within an hour of its opening. Trading resumed with the next closure set if the DOW and S&P lost an additional 13%. Volatile trading continues throughout the day with a second trade suspension looming. Sell-offs such as these have not happened since the 2008 financial crisis.
Coronavirus Closures
To further panic in the stock market, mandatory closures around the nation bring into question the future of the otherwise strong U.S. economy. Public schools and Universities are closing (or moving to online classes) in 31 states within the union. Venues and gatherings of more than 50 people are being canceled and in some cases banned. Bars and restaurants around the nation are closing their doors and “social distancing” is being urged by the Government officials. Las Vegas casinos announce they too may close as other industries such as gyms, movie theatres and retailers begin shutting their doors.
Flag flying outside of the IC facility in Provo, UT.
Panic buying and empty shelves
Late last week and over the weekend panic buying set in as folks rushed to stock up on cases of water, canned goods, toilet paper and a multitude of cleaning supplies and over the counter medicine. In some rare instances, fights broke out as tensions ran high to stock up on supplies. Retailers such as Costco, BJ’s, Wal Mart and other wholesalers and grocery store chains began placing quantity restrictions on some of the more popular items. Pictures and videos are circulating social media of empty shelves which are furthering fears of possible food shortages and supply chain disruptions.
What should you do?
FEMA and other emergency preparedness websites suggest having at least 3 days’ worth of supplies on hand but survivalists and preppers across social media have always urged much more than this. It is recommended that you have access to at least a month of clean water, food and basic essentials.
What comes next?
There seem to be two schools of thought as we are faced with this pandemic and both seem far-reaching. That is the folks overreacting and the folks under-reacting. There seems to be only a fine line of people who aren’t either arrogantly underestimating the severity and scope of this crisis or are quickly overreacting, stockpiling unnecessary amounts of Toilet Paper and perishable food, both of which seem to be poor choices in the event that the current state of things worsen.
Unfortunately, there is no real clear answer or guidance as to what the near term or long term effects of this virus might be. For now, it would be best to stay calm, stay polite and help your fellow Americans out when you can. Prepare for the worst but still plan to enjoy your summer.
As always guys, thanks for reading and feel free to let us know your thoughts on the situation on our Facebook page.
This article is in no way, shape or form to be considered investment advice. No Investor Crate employee or agent will ever advise you on any asset. It is in your sole discretion to understand the liabilities of investing and you should ALWAYS seek financial advice from a certified financial advisor before making any decision to invest.
I didn’t understand the panic sell in precious metals and commodities during this time. I mean, gold and silver alone have many centuries of holding value. A short term thing like a pandemic was not going to change this. Already now prices have gone up and above where they were before the pandemic
I am glad I rode out the panic!