February 2021 - Week 4 Edition
Gold Increased $30 (+1.7%) Monday morning, February 22, and Silver increased almost $1 (+3.5%), partly on a falling dollar, rising inflation and rising oil prices, but also due to the likely passage of an enormous stimulus $1.9 trillion stimulus package, which could push the 2021 budget deficit over $3 trillion again. After falling to an almost-8-month low on Friday, gold bounced smartly off its 300-day moving average, which is considered a strong bullish technical indicator that gold’s 5-year bull market is still intact. Many classic certified gold coins continue to rise in price due to increased demand. Better date $10 and $25 Gold American Eagles are also seeing increased and broader market activity and prices.
Silver Mine Production Declined 5% Last Year (and -6% in Two Years)
The Silver Institute just released its annual report (“World Silver Survey 2020”) covering silver supply and demand through 2020. Their statistics on supply revealed a shocking fact that – despite rising demand and rising prices – silver mine production declined 5% last year and 6% over the last two years. Recycling made up for part of the drop in mining production, but overall silver supply was still down 4.4% in 2020 to 978.1 million Troy ounces in 2020, vs. 1,023.1 million ounces in 2019.
Due to the COVID-19 pandemic, industrial demand was down 7%, but physical investment demand rose 16%, from 186.1 million ounces in 2019 to 215.8 million ounces in 2020. As a result, investment demand grew from 18.2% of total demand in 2019 to 22.1% in 2020. When the global economy picks up in 2021, industrial demand will likely soar, while investment demand could also increase, pushing silver prices up further.
Major Mainstream Investment Banks Predict $30 to $50 Silver in 2021
Putting aside the analysts who specialize in gold or sell gold for a living, many mainstream Wall Street and global investment banks see silver at prices at $30 to $50 in 2021. At year-end 2020, both Denmark’s Saxo Bank and Bloomberg Intelligence projected $50 an ounce for silver in 2021.
Last September, Citibank said that silver could reach $40 in the next 6-12 months and Goldman Sachs said silver could reach $40 in 2021. After the Reddit attempt to corner the silver market failed in late January, Goldman Sachs reduced their target to $33 this year, down from its previous prediction of $40.
The Canadian Imperial Bank of Commerce (CIBC) sees silver reaching $32 this year, while Bank of America analysts see the Biden “green agenda” sending silver prices to $35 this year and then up to $50 during the Biden’s administration due to the massive new production of solar panels, which use silver.
President Biden has proposed a $2 trillion plan that would require the electric grid to rely solely on green energy sources by 2035. Part of the plan would install 500 million solar panels, including eight million solar roofs and community solar energy systems, and 60,000 Made-in-America wind turbines. If such a radical restructuring of our energy grid passes, it would be a bonanza for the price of silver going forward.
Beware! The New Rush to Buy Silver Has Created Many New Silver Scams
The new 2021 Morgan Silver dollar being issued by the U.S. Mint this summer is increasing collector and investor interest in this popular series. This in turn is being noticed by counterfeiters. As a result, the Anti-Counterfeiting Educational Foundation warns of a surge in online fake “silver” coin offers.
The recent panic buying of silver bullion has sparked a significant increase in fraudulent or misleading online advertising to lure unsuspecting retail buyers to purchase counterfeit United States silver dollars, according to officials of the Anti-Counterfeiting Educational Foundation.
“The Chinese are blowing up the web selling fake silver dollars. We’ve seen suspicious ads posted on many platforms, including Amazon and Facebook,” cautioned ACEF.
“During the past couple of weeks, we received an increase in reports of counterfeits due to silver’s volatility and especially the ongoing interest in the Morgan silver dollars market. The Chinese are heavily marketing fake silver dollars via Facebook,” advised ACEF.
Remember, if you don’t know precious metals, you’d better know a reputable rare coin and bullion dealer, such as the experts affiliated with the Anti-Counterfeiting Educational Foundation. *
“Supplies of genuine, century-old Morgan silver dollars are extremely tight, but one suspicious seller on Facebook is offering to sell 28 ‘genuine’ Morgan dollars for only $199. If they actually were genuine coins, the price would be closer to $900. Even the certification holders housing their fakes appear to be counterfeits,” said ACEF.
The Anti-Counterfeiting Educational Foundation is alerting the Secret Service about the fakes as part of the foundation’s ongoing assistance to federal, state, and local law enforcement, as well as, prosecutors to fight counterfeiting and the sales of counterfeit coins.
Numismatic Guaranty Corporation is the official authentication service for the foundation and its Anti-Counterfeiting Task Force.
*I am a member of the ACEF – Mike.
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