Large sectors of the global economy have been shut down throughout 2020, with some being affected more than others, creating pockets of scarcity and price increases as a ramification to these forced shutdowns.
These shortages were incredibly noticeable throughout this summer season, with many leisure and sporting goods simply being unavailable for purchase, whereas there would typically be no problem at all.
For some areas of the economy, these higher prices have helped offset some of the losses in production, while other areas of the economy have simply had to grin and bear the pain, experiencing losses that they are never going to be able to recover from.
One area of the economy that was affected and of which was noticeably affected was within the precious metals space, as many of the worlds largest mints were forced to shut down production, taking supply off the market just as demand was skyrocketing.
Silver Bullion Sales Vastly Outperform 2019 in First Half of the Year
As the COVID-19 driven panic began to set in, some people fled to safe haven assets such as precious metals, fearing that the forced shutdowns could cripple the global economy.
Meanwhile governments around the world went into money printing hyper-drive, bailing out individuals and businesses alike, with some of the largest increases to national debts that this world has ever seen.
The ramification of these actions are yet to be fully witnessed and are going to be felt for years to come.
Regardless, this led to an initial sharp increase and move higher in both gold and silver bullion, which for a time looked as if they were going to finally break free of their shackles and surge to ungodly new highs.
Although this parabolic rise was slowed down, I believe that the gains we have witnessed over the past couple of months are only the beginning and just the start of a truly historic new bull market for the precious metals market.
(Chart source SRS Rocco Report)
As the above chart shows, I am most certainly not alone in this assessment.
Silver bullion sales, despite mints being forced to a grind early during the COVID-19 breakout, have vastly outperformed their 2019 sales, with the three major mints all reporting starkly higher numbers.
In the first half of 2020, the U.S. Mint, Canadian Mint and Perth Mint sold a collective 34.9 Moz, compared to 24.1 Moz during the same time period in 2019.
This amounts to an impressive 10.8 Moz sold in 2020, during a time period in which the mints were suffering from temporary closures.
Despite these closures, the mints were able to increase sales by a stunning 45% year over year!
Imagine what these numbers would of looked like, if business was allowed to run unhindered and imagine how much more silver would now be out in the open market.
The Trend Continues and Will Only Get Better
Many people will write this increase in sales off as only an anomaly, however, further data suggests that this couldn't be further from the truth.
Although the Canadian Mint is slower than the U.S. Mint and the Perth Mint in reporting updated sales data, as the SRS Rocco Report highlights, the trend of strong silver bullion sales is only growing in momentum.
(Chart source, SRS Rocco Report)
Collectively the three mints have now sold a total of 40.4 Moz year to date, while during this time period in 2019, they had a total sales of 27.3 Moz.
This results in an increase of total sales YoY of 13.1 Moz.
As previously mentioned, the first half of the year saw a total increase of 45% in YoY sales, while the updated numbers now show a 48% increase YoY, meaning that momentum is still growing within the precious metals space.
This is heartening as an advocate of physical precious metals and the safety that they can offer in a time of increased uncertainty, turmoil and unrest.
In Conclusion
As we move through the remainder of 2020 and into 2021, I believe that there are going to be challenging times ahead for the world both financially and politically that are going to threaten the system in a way many of us have never experienced before.
People continue to go deeper into debt as this crisis worsens, as too do governments around the world.
Fiat money is thus going to be continued to be printed in an ever increasing quantity, as officials attempt to "dig" themselves out of this crisis, just as the Fed has recently indicated they are hoping will happen.
This is going to result in a continued demand for precious metals as more and more people wake up and smell the roses, realizing what is happening to the fiat based system that they find themselves living within.
The trend is your friend until the end and the trend for precious metals is positive indeed.
Stay safe and keep stacking.
- Source, Nathan McDonald via the Sprott Money Blog