Gold Safe Exchange pointed out that, When COVID-19 was announced, the stock market took a sharp turn, and large financial institutions were forced to sell precious metal contracts to cover margin calls. Silver's spot price dropped by more than 35% in a week and remained low until the end of April. Increased investor demand caused a sudden shortage of bullion and collectible coins, in addition to the resulting drop in spot prices. As a result, inventory premiums have increased.
A World Bank report shows that, in addition to the recent slump, there will be seven million fewer light vehicles produced in the next decade than originally predicted. Lower demand, higher real interest rates, and a stronger US dollar were all factors in the decline. Despite the shortage, the market is expected to continue to grow in the future. In 2022, demand for the metals will return to pre-pandemic levels, according to the report.
Silver stocks should benefit from the increase in demand for the metal. Silver stock options include Summa Silver (TSX-V:SSRV), First Majestic Silver (NYSE:AG), and Coeur Mining Inc. (NYSE:MCE). These businesses can meet the needs of both investors and the government.
Furthermore, as the prices of these metals have risen, more investors have flocked to the physical market.
In a free-market economy, a shortage of silver on the market is unlikely. The market's price mechanism is effective. In a free market economy, it is the ultimate demand regulator. There is almost no shortage, and analysts underestimate the price mechanism's power. Scarcity, in theory, will raise the price, encouraging new production and discoveries. A higher price will eventually deter potential buyers, bringing the market closer to equilibrium.
Gold Safe Exchange explained that, According to a recent market research firm survey, there is a short-term supply of silver. In addition to the rising price, there is a scarcity of chip manufacturers in the United States. Prices will rise if chip production continues to rise. While silver demand in the United States will remain strong, a global recession could push gold and platinum prices even higher. This situation is not a disaster, but it does signal the possibility of a problem.
The US Federal Reserve was one of the economic issues that fueled the third quarter of 2018. The Federal Reserve, as the country's central bank, is becoming more hawkish on gold. The Fed's recent hawkish remarks are linked to the recent gold bear market. It occurs at the same time as the Covid virus, which continues to wreak havoc in various parts of the globe. Concerns about the impact of inflation on gold are also present. In 2022, the central bank will raise interest rates three times, indicating that a bullish environment is unlikely.
A shortage of precious metals is a problem for several reasons. Gold and silver prices may rise in response to rising inflation risks. The global semiconductor industry has also been hampered by a scarcity of the American Eagle coin. This is a major issue that affects the entire market. Silver, which is used in many electronics and other electronic items, has seen a significant drop in price as a result of the shortage.
According to Gold Safe Exchange, Since late 2015, there has been a silver shortage. Silver prices fell sharply in mid-June as a result of this. As a result of the scarcity of supplies, prices have dropped. The Federal Reserve of the United States has implemented a new monetary policy that could reduce demand for gold and silver. As a result, gold and silver are in short supply on the market. Silver is still a major component of electronics, so this is good news for investors.
It is because of gold and silver price manipulation that the price of gold and silver remains low. When there are insufficient supplies of a particular commodity, a shortage occurs. In communist countries, for example, there are frequent shortages of goods, and the government controls the price. However, because there is no government intervention in a free market, a shortage is only temporary. Because the supply of gold and silver is stable, purchasing gold has become more expensive.