In a recent episode of the Money Metals podcast, host Mike Maharrey interviewed Ed Steer, a seasoned analyst with nearly 30 years of experience in the gold and silver markets.
Steer, the publisher of the Gold and Silver Digest and a member of the Gold Antitrust Action Committee, shared his expert insights on the current dynamics in precious metals, particularly focusing on market manipulations, supply-demand fundamentals, and future price projections.
(Interview Begins Around 7:04 Mark)
Who is Ed Steer?
Ed Steer is a veteran analyst with nearly three decades of experience in the gold and silver precious metals market. He is the publisher of the Gold and Silver Digest and a member of the Board of Directors of the Gold Antitrust Action Committee (GATA).
Steer is well-known for his expertise in the dynamics of the precious metals market, particularly regarding market manipulations, supply-demand fundamentals, and the pricing of gold and silver. His insights are frequently sought after by investors and enthusiasts in the precious metals community.
Market Manipulation and Interest Rate Dynamics
The conversation began with Maharrey noting the recent trajectory of gold prices, which reached new record highs. Steer attributed this surge to signals from Federal Reserve officials, including Jerome Powell, suggesting an imminent interest rate cut.
Steer acknowledged that the news of potential easing contributed to the price increase but emphasized that the price action primarily occurred in the COMEX futures market.
He highlighted the significant role of the paper market in setting prices, asserting that the suppression of silver prices was evident, as silver remained significantly below its 2011 highs, despite gold’s breakout.
“The gold price was certainly came on the news, on that news that there was going to be an easing of interest rates in September. But the fact of the matter is that all the price action that was of importance took place in the COMEX futures market, and it’s the paper market where the price is set.”
Silver Market Suppression
The discussion moved to the silver market, where Steer explained the ongoing suppression in the paper market, a practice dating back to the early 1970s when President Nixon took the U.S. off the gold standard. Steer noted that silver prices have been manipulated since then, primarily through COMEX futures contracts.
He pointed out that despite a structural deficit in silver supply, prices remain suppressed due to aggressive paper trading. The Silver Institute reports a four-year structural deficit in silver, exacerbated by the physical market dynamics where demand consistently outstrips supply.
“The prices of all precious metals have been actively suppressed almost since that time, and it’s reached the point now that it’s a hundred percent paper market driven, the silver price. And the Silver Institute, as everybody knows, we’re in the fourth year of a structural deficit in silver, which is only getting worse as every day goes by.”
Supply-Demand Fundamentals and Physical Shortages
Steer underscored the frantic movement of silver in and out of COMEX, SLV, and various ETFs worldwide. He highlighted that the physical market’s activity indicates a severe shortage, with thousand-ounce Good Delivery bars being rapidly moved to cover deficits.
Ted Butler’s research showed that JP Morgan accumulated about a billion ounces of silver by 2011 to meet these shortages, but they have already divested more than half of that stockpile.
Steer predicted that once JP Morgan exhausts its silver reserves, the price management scheme will collapse, leading to significantly higher prices.
“I follow the amount of silver that’s moving in and out of the COMEX and SLV and the other various silver ETFs and mutual funds everywhere on Planet Earth on a daily basis. And the amount of metal that’s being shipped in and shipped out and being delivered, is issued and stopped, it’s just amazing.”
Investment Strategies in Precious Metals
Addressing skepticism from investors wary of market manipulation, Steer recommended a balanced approach. He advised splitting investments between physical silver and precious metal equities, emphasizing the importance of holding physical commodities.
Steer suggested that even with market suppression, the supply-demand fundamentals will eventually dictate much higher prices, making current investments in silver a strategic move.
Steer recommended mutual funds like the VanEck Gold Fund and SILJ for those preferring equity investments, providing diversification and reducing individual stock risks.
“For the average investor, basically, all they need to know is that it’s the only commodity that hasn’t had a new record high. It hasn’t broken through its new record high and setting new record high prices in the last 13 or last 40 years.”
Global Dynamics and Central Bank Accumulations
Steer discussed the global competition for gold, particularly in East Asia, where countries like China, India, and Vietnam have been accumulating significant quantities.
He noted that while silver does not see the same level of state-backed accumulation, there is heavy demand from countries like India and, previously, Turkey. He highlighted that central banks, such as the Russian Federation, hold silver reserves, although they do not actively announce their accumulations.
“The Silver Institute has stated categorically that, for the last four years, we’re in this structural supply-demand deficit. And that’s really all you need to know about the silver market. And at the moment, JP Morgan is the only entity on Planet Earth with the physical silver in-house to satisfy this deficit.”
Future Outlook and Repricing of Commodities
Steer emphasized that commercial traders, including major bullion banks, are acutely aware of the supply-demand imbalances. He predicted that the eventual repricing of silver and other commodities is inevitable, driven by the fundamental shortages and increasing demand.
He referenced Keith Neumeyer’s prediction of three-digit silver prices, aligning with his view that the current suppression is unsustainable.
“They’ve painted themselves into a corner, and there’s no way out of this thing, except for a massive repricing of silver in particular and all commodities in general.”
Conclusion
Ed Steer’s insights on the Money Metals podcast provided a comprehensive analysis of the precious metals market. He highlighted the persistent market manipulation, the critical supply-demand dynamics, and the eventual repricing of silver and gold.
Steer’s advice for investors to hold physical silver and diversify through precious metal mutual funds offers a strategic approach to navigating the manipulated market and positioning for future gains.
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