Tim Murphy
Precious Metals Advisor
Tim Murphy is a Precious Metals Advisor with over 15 years of experience. He started on the New York Commodity Exchange floor before founding his own brokerage firm. Tim joined Scottsdale Bullion & Coin to leverage the small-company feel with national exposure, focusing on personalized, client-first service and fostering long-term relationships.
[The banking system] is sound and resilient.–The Federal Reserve Chair Jerome Powell, before the Stock Market close on May 3, 2023
Just after yesterday’s stock market close, look at how just a few of the bank stocks cratered:
- PacWest dropped -60%
- Western Alliance dropped -30%
- Metropolitan Bank dropped -20%
And these banks are supposed to be the good and solid ones! Plus, as soon as the collapsed prices were reported, the gold spot price rallied in the after-hour market briefly to $2,074 an ounce, another $35 an ounce on top of its earlier day gain! So, so much for the banking system being sound and resilient. And, so much for Jerome Powell being straight up with the country.
Now, let’s backtrack to earlier in the day. The Fed minutes were announced at 11:00 am PST on May 3rd, 2023, and as expected, the Fed confirmed raising interest rates by another quarter-point. Additionally, Powell mentioned putting further rate hikes on hold for the time being. Of course, this comment fueled gold and silver prices, rallying sharply while the dollar fell even further.
Clearly, the banking system is in trouble, and we are still only in the infant stage of a crisis to come. J.P. Morgan, one of a handful of bullion banks constantly knocking down the price of gold on the NY COMEX and London Exchange[1], I believe, is also in trouble. The reason is that every time they hit the gold price lower, it bounces back. Gold is just a hair away from all-time highs, which currently is in the range of $2,070 an ounce to $2,089 an ounce. When the gold price breaches these levels, and I believe it will, J.P. Morgan and the other bullion banks will have to cover their paper shorts at some point. But, when the price of gold reaches new all-time high levels, we will see the beginning of a buying frenzy from the public – at the same time, the bullion banks will be buying back their short positions.
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Now, let me backtrack even further. For some time, everything has been in place for gold and silver to explode in price:
- A massive trade deficit.
- Covid related disruptions.
- Tens of trillions of dollars were printed out of thin air.
- De-Dollarization from some of the largest trading countries in the world.
- The highest inflation we’ve seen in 40 years.
- And the (not over) banking crisis.
Yet, despite all these calamities, the prices of gold and silver have been held down in check by J.P. Morgan and its bank partners. Their ability to sit on the metal prices is coming to an end.
Why?
The reason is that it requires a certain amount of physical gold and silver to keep the scheme going. We have solid evidence that the available physical supplies are running out. You see, for years, the Central Banks have been taking advantage of the artificially low prices by buying gold bullion in record amounts. At the same time, the low gold and silver prices have discouraged the mining companies into producing less metal. As a result, gold inventories, and silver supply, are bone dry at all levels, from Exchange inventories to wholesale supply. (No wonder the public has not been excited about the “stagnated” price of gold and silver. However, that is all changing now and changing fast).
👉 Related: Why Silver Eagles Are So Expensive Right Now & Better Buys
The Inevitable Surge in Gold and Silver Prices: Be Prepared
Are gold and silver prices guaranteed to explode higher this week? Of course not. However, it’s only a matter of time. If not this week, then next month or maybe in the fall. What is critical to understand, though, is that if you don’t own enough physical gold and silver right now or don’t own any at all, you could be out of luck very quickly. By that, I mean you might have to pay up handsomely soon, AND there is a risk of running out of available supply altogether, which would increase physical gold and silver premiums further. Our country has been living “high off the hog” for the last four decades, but that is about to change. And the change could be sustained and painful. If you are unwilling to change with the times, you could ask for a heap of trouble.