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Are the primary economic factors that have driven gold and silver over the past ten years still present and how is this affecting investors?

January 6, 2016
Video Transcript

All of those economic conditions and problems that have caused all the problems and crisis' over the last 15 years, let's be honest it goes back to 2000 at least, are still in place. Some have gotten worse and some are marginally better, but they're all still there. The probability of further spasms and crisis' is 100%. It's just a matter of how severe they'll be, when they'll occur, and where they'll appear in the financial system. So investors remain interested. They've pulled back a little bit, but they're waiting to see how low the price goes. Once the gold price starts rising, you'll start seeing a tremendous growth in investment demand, because there are a lot of investors who are waiting to see that.

The same is true in the second most important fundamental area, which is central banks. You have a handful of central banks, which have been buying significant amounts of gold, since 2009. Central banks, those central banks that were selling gold from 1965 until 2005, basically stopped selling. They sold what they wanted to sell. The price is rising. They've pretty much stopped selling. Those other central banks that have large currency inflows have been diversifying a small portion of their currencies into gold, but they pulled back in the second half of last year because the price was falling. In the first half of 2013, those central banks were still buying significant amounts of gold, but as the gold price fell they stopped. They said, "Let's see how low the price gold goes before we start buying." So you have a lot of central bank interest in buying and waiting to see that the price is stabilized and starts moving up. The rule of thumb for a lot of institutions, including central banks, is... I'll give up the last 10% or the first 10%. So they may not buy when the price stabilizes, but when the price starts rising 5 or 10%, they'll start significantly increasing.

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