The Third Bull Run For Precious Metals Is Here As Physical Demand Soars

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Via Birch Gold Group,

Over the previous number of weeks, rare-earth elements rates have actually been pulling back from their current highs. For anybody taking a short-term view, it’s not a positive advancement. However appearances are in some cases much different from reality– specifically when you permit a bit of time to pass.

Historically, since the gold standard was gotten rid of in 1971, gold’s price has had two significant “bull market” fluctuations, from 1971 to 1980 and from 1999 to 2011.

During those two bull runs, the cost of gold shot up 2,100% and 650%, respectively. You can see both reflected listed below:

You can also see how gold’s price dropped near the start of the 2008-09 monetary crisis, but then began soaring like a rocket about halfway through.

Lastly, you can see on the chart where the end of 2015 represents the most-recent “bottom” rate for gold. This leaves us with the concern …

Where Could Gold’s Rate Go From Here?

According to Jim Rickards, when you balance out the previous 2 bull runs, that bottom in 2015 is where the next decade-long bull run for gold could begin:

Applying the typical gain and average duration to the Dec. 17, 2015, bottom at $1,051 per ounce leads to a projection that the new gold rally will hit $11,000 per ounce on Feb. 16, 2026

Naturally, Rickards notes that the sample size is little, and to take this prediction with a grain of salt.

But gold’s price might likewise follow the script from 2008-2011, when dropped initially but then increased greatly.

Let’s zoom in on that part of the chart above:

You can see how, after dropping between March and September of 2008, gold’s cost rebounded to reach over $1,900 in 2011.

A recap post from Kitco described why prices staged this rally:

In an October 2009 research study note from Dundee Precious Metals, there were a number of reasons why gold prices were expected to go up in the coming years, consisting of fiscal and financial reflation, investment demand, the bullish price cycle in gold and geopolitical worries.

Jim Rickards described why he thinks that happened, and why it could happen again in the near future:

If weak hands are selling, won’t the strong hands jump in to purchase? That’s when the cost of gold soars and the bull market in gold gets back on track.

Rickards likewise discussed gold’s current drop in cost, claiming it is “not unusual”:

When viewed against the background of a worldwide pandemic from coronavirus, a few of the worst single-day drops in stock prices in history, a spreading liquidity crisis and a possible worldwide recession … a decrease in the price of gold is not only not unusual, but totally to be expected.

So as soon as you consider that the Dow has been whipsawing for the last 3 weeks, the recent decrease in gold’s price might not last long.

That, and the “strong hands” that Rickards referrals may already be making a relocation towards physical gold.

The Need for Physical Gold and Silver is Increasing

According to Kitco, silver sales are increasing: “Information from the U.S. Mint reveals that it has offered 2.32 million one-ounce silver coins up until now this month, up significantly from February sales of 650,000 coins.”

Gold is offering at about a 6% premium and silver is selling at an 86% premium.

So even as the area cost of rare-earth elements has dipped in recent weeks, demand for physical products has been increasing.

Brandon Smith of Alt-Market. com argues,” Crash conditions will likely inspire increasingly more individuals to require physical delivery on rare-earth elements throughout 2020, as worries of paper market shutdowns due to the pandemic grow.”

If that pertains to fulfillment, we might likely see a complete decoupling of paper and physical gold costs.

Now is the Time

Having a varied portfolio with assets known for their security during uncertain times is a tactical way to diversify your retirement.

Holding assets such as physical gold and silver might avoid your retirement savings from suffering the effects of being overexposed to equities.

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