Let’s engage in a simple exercise in logic and arithmetic. And let’s base it on a dramatic new trend, as reported in this May 29th CNBC article.
Lots of new incremental savings.
This should not be a surprising statistic. The normal human reaction to any sudden and severe economic shock (after the initial panic) is prudence: preparing for future shocks.
Now let’s get to the logic and the arithmetic. What are Americans going to do with this new savings?
1) They can put it in a bank.
- Get paid 0% interest while the bank makes lots of money utilizing your free capital.
2) They can stuff it in their mattresses.
- Still get paid 0% but watch the purchasing power of that cash erode as food prices rise by the day due to supplychain interruptions.
3) They can gamble with it in the stock market.
- Buy stocks that are trading at alltime highs while the real economy is melting down.
4) They can invest it in gold or silver.
- Precious metals are in the early stages of what more and more analysts see as a major new bull market, after building a base for 7+ years.
Americans have always been aware of (1) and (2), but since most have been doing very little saving (for many years) few have given much thought to (3) or (4).
Anecdotally, reports suggest that significant numbers of these born-again savers are choosing to gamble their savings in the S&P500 casino.
Stock prices have long ceased to have any connection with stock values. Instead, prices are moving based entirely on which direction the wind is blowing at the Federal Reserve. Not exactly a premise upon which sober people would want to invest their life’s savings.
What about gold and silver?
Precious metals have been a shunned asset class as gold and silver prices wallowed at low levels for 7+ years. Only in the last 18 months (even before COVID-19) has the sector suddenly started showing real life again.
Given the alternatives (and bullish projections for gold and silver), significant numbers of Americans can be expected to start channeling much of their new savings into gold and silver.
That’s the logic. Now some arithmetic.
Less than 1% of Americans currently hold any gold or silver. Low tide.
What happens as American savers begin to pile (back) into gold and silver for the first time since 2009? High tide.
Americans aren’t the only people with a renewed appetite (and appreciation) for saving money. Around the world, those with disposable income are expected to “dispose” of less of it – and save much more.
Gold and silver
are savings.
But while our debauched fiat currencies pay savers no interest, rising gold and silver prices reward savers. A no-brainer.
Gold is seen to be the superior safe haven. Silver is widely viewed as being the better value. Get some of both.
The Western world is re-discovering the virtue of savings.
The Western world is re-discovering gold and silver as financial assets.
As these two trends merge, this further amplifies the upside potential in the current precious metals rally.
Most precious metals dealers have been able to re-stock bullion inventories (for now). Most gold and silver mining stocks are still cheap.
Now is the time for savers to translate their new passion for savings into gold and silver profits.
