(This is an excerpt from an article written on Substack by Mark Bunting. You can read Mark's full bio below).
I have always wanted to own physical gold and silver.
I’m not a survivalist. I won’t store my precious metals with gasoline, guns, and baked beans. And I don’t expect to have to trade them in some post-apocalyptic world for my neighbour’s two-headed goat.
So what’s the point?
Do I really need to own physical gold and siIver? Can’t I just own exchange-traded funds GLD and SLV that hold bullion bars in a vault for me? I could and sometimes do.
I just like the idea of having some gold and silver bars and coins on my desk and in a safe.
- For the ascetics of it,
- admiring them,
- touching them (but not the silver too much because it will tarnish).
- To diversify my portfolio of assets.
- To give coins as gifts to family members so they can say, “What am I supposed to do with these?”
Oh yeah, and for the reason all precious metals’ bulls and bugs cite - to own hard money as a store of value.
Silver is a currency and has been for millennia but is not exactly widely used in corner stores these days.
And silver has over 10,000 industrial applications, increasingly in the solar industry, with the average solar panel requiring about 20 grams of silver, according to The Silver Institute.
But Silver also makes up a tiny portion of the commodities market and is notoriously volatile and tricky to trade.
I plan to hold my physical silver for years. There are only a few circumstances that would prompt me to sell. One would be if the price of silver soared to, say, US$150 an ounce. That would be about a ~4.5x increase from the current ~$34 an ounce.
During that scenario, assuming gold at the same time has risen to about $4,500 an ounce*, that would put the gold/silver ratio around 30. The ratio currently sits at historically high 84 (84 ounces of silver to buy one ounce of gold).
(*The annual and free In Gold We Trust Report, co-authored by Incrementum AG fund manager and Managing Partner Ronald-Peter Stoferle, whom I interviewed recently, forecasts gold to hit $4,800 by 2030.)
There are many people who live in the world of clickbait who will tout what appear to be outrageous price targets for silver like $300 an ounce. Maybe it hits levels like that someday.
Until then, let’s see if it can breach $50 an ounce (non-inflation adjusted) as a start as it nearly did in 2011 and in 1980 when the Hunt brothers were trying to corner the market.
Another circumstance that would cause me to sell my silver would be if there was a significant change of some sort, such as a future Fed Chair hiking interest rates aggressively similar to Paul Volcker that could cause a multi-decade winter for gold and silver like 1980 to 2000.
But that scenario is unlikely given the ~$35 trillion debt pile of the U.S. The country’s interest payments on that debt already exceed $1 trillion annually, more than its military spending, so rates can only go so high before becoming untenable.
I’m buying physical silver because I am finally comfortable doing so. In the past, it wasn’t a priority to own it and when I would consider buying gold or silver, I would always assume that if I went to a bank or a dealer that I would get ripped off on the premium because I was a neophyte.
But after Hedgeye Risk Management thoroughly vetted McAlvany Precious Metals, a unit of McAlvany Financial Group in Durango, Colorado, and gave the over 50-year-old company its stamp of approval, I was ready to pull the trigger.
McAlvany sponsored Hedgeye’s recent Investing Summit and Hedgeye Founder and CEO Keith McCullough has bought silver from the company because he wants to own hard money along with his physical gold and he said he doesn’t plan to sell.
Silver also back tests well in Quad 3, along with other hard assets such as gold, platinum and palladium, when inflation is rising. Silver also continues to signal bullish trade and trend.
McCullough showed a bag of “junk silver” worth about $10,000 on The Macro Show.
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ABOUT MARK BUNTING This is a Hedgeye guest contributor piece written by Mark Bunting and reposted from his Substack publication. Mark is a seasoned financial journalist with 25 years of experience in the industry. His career includes 15 years as an anchor and reporter for Business News Network (BNN Bloomberg), where he also served as London Bureau Chief for three years. He currently is the host of RCTV for Red Cloud Financial Services, focusing on interviews with CEOs and leaders in the metals and mining sector. Mark also plays a significant role at Red Cloud’s conferences, where he conducts keynote interviews and moderates panels. Additionally, he is an on-air host of sponsored content for BNN Bloomberg Brand Studio and has previously been the publisher and host of Uncommon Sense Investor and Capital Ideas Media. Mark started his career with The Sports Network (TSN). He has been a Hedgeye subscriber for three years.. View all posts by Bunting on his Substack. X (Twitter) handle: @MarkBunting_ LinkedIn: Mark Bunting |
