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This Ask Andrew Sleigh episode explores gold and silver’s future as central banks buy more. Andrew reveals why the dollar is weakening, how geopolitics boost gold, and how to protect your wealth. Other topics covered:
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Central banks' record gold purchases
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Silver’s industrial demand surge
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How to hedge against financial collapse
Let Andrew’s expertise guide you in building a robust portfolio.
Contact him at asleigh@sprottmoney.com today!
Kellen:
Hi everyone and welcome back to Ask Andrew. My name is Kellen, and once again, I'm joined by Andrew Sleigh to discuss what is happening in the political and economic climates and how it impacts precious metal investing. Welcome back, Andrew. How have you been?
Andrew Sleigh:
Great, Kellen. Thank you very much for having me back.
Kellen:
Well, it's a pleasure, always. A lot of our clients and audience are very curious about your opinion on what's been happening over the winter break. It's been very, very interesting since the election. Why don’t we jump right into it with some of the questions we have for you?
To begin, how have central bank gold purchases in the last five years influenced the global gold market?
Andrew Sleigh:
Well, I don't know the exact percentage of what's pushed the value up as a result of central banks buying, but we know that gold and silver have moved up. Purchases by central banks around the world have been at the highest levels on record in the last few years. So you can't have one without the other. The percentage? I don't know. But obviously, we're in a higher position now than we were.
Kellen:
That makes sense. Given the impacts that these central banks have, what trends or opportunities do you foresee for the average gold investor, considering gold prices, scarcity, and so on?
Andrew Sleigh:
For the average investor, they should be looking at gold and silver—perhaps more silver—because it’s a better buy and better value. There’s going to come a time when the amount of gold and silver being bought by central banks, countries, and other entities is going to cause a supply squeeze. Once it's bought out, you can’t just snap your fingers and have it show up at the mints. It takes time to get it smelted and out of the ground.
China is buying metals directly from miners in places like Peru, just like India is doing. That means they are securing supply at the source before it even reaches the smelters or mints. They could be front-running the shortage. One day, we’re going to wake up in the West, and there will be a dry spell where no metal is available.
Kellen:
With these banks making major purchases, what role do their policies and geopolitical tensions play in the recent rally in gold and silver prices?
Andrew Sleigh:
Historically, every time you have tensions, uncertainty, conflict, or economic distress, people flee traditional financial markets—stocks, bonds—and move into gold as a hedge to preserve wealth.
On the central bank side, they are buying gold and silver with their national currency while they still can. Before their currency loses purchasing power, they are exchanging it for tangible assets. Banks like JP Morgan, Goldman Sachs, Bank of America, and even Canadian and European banks are moving away from cash and into gold and silver. That’s a strong indicator of positioning for the end of fiat currency.
Kellen:
Okay, so you kind of just took my next question. What do you think they’re preparing for?
Andrew Sleigh:
The end of currencies, in my opinion.
Kellen:
Shifting from central banks to silver and industrial demand—how might the industrial demand for silver and the gold-to-silver ratio influence future trends in the precious metal market?
Andrew Sleigh:
Silver has a drastically larger commercial use than gold—gold is almost exclusively a monetary metal, with less than 1% industrial use. Meanwhile, about 50% of all mined silver goes into industrial applications.
With advancing technology, military applications, and renewable energy needs, silver demand is only going to increase. Solar panels, space exploration, and global military investments require significant amounts of silver. Even though people focus on solar panels, it’s much more than that.
Kellen:
I remember reading in the 2024 Sprott Silver Report that industrial demand for silver was projected to rise by about 5%. That’s a significant shift.
How have recent tariffs on industrial metals impacted silver demand and pricing, particularly in sectors like solar energy and EV production?
Andrew Sleigh:
I don’t see tariffs having a major negative impact. Are tariffs on solar panels from China already in place? If so, it just means Americans will pay higher prices, but they will still buy solar. If a panel costs $300 and there's a 25% tariff, now it’s $375—people will still buy it.
Kellen:
Given silver’s dual role as both an industrial metal and a store of value, how might trade tensions and supply chain disruptions influence market performance?
Andrew Sleigh:
If supply chain issues make it harder to get refined silver into the market, prices will spike. Simple supply and demand—if there's less available, prices go up. Right now, demand in North America has softened, so premiums have come down. But once demand surges again, prices will rise significantly.
Kellen:
Shifting focus to Canada—how might political instability following Prime Minister Trudeau’s resignation affect investor confidence in the precious metals sector?
Andrew Sleigh:
Well, Trudeau hasn’t fully resigned. He’s just said he’ll step aside after a leadership race. But investor confidence in Canada is already in decline. Foreign investment used to bring in $1 billion a month, but now $48 billion is leaving the country annually. Money is fleeing Canada, just like it did from Hong Kong before China took over.
Precious metals are the safe haven in such situations. Our national debt is beyond repayment. When a country is insolvent, its currency eventually becomes worthless. People who understand this are moving their wealth into gold and silver.
Kellen:
When you talk about fiat currency failure, do you mean just the Canadian dollar, or does this apply to the US dollar too?
Andrew Sleigh:
I’m mainly referencing the Canadian dollar, but this applies to any fiat currency. Every time a currency is removed from a gold standard, it eventually collapses. The US dollar is still the global reserve currency, but even it’s in decline.
Kellen:
Can you give an example of a modern currency collapse?
Andrew Sleigh:
Sure. Israel’s currency collapsed in 1985. Venezuela’s bolívar is another well-known example—an ounce of silver there can feed a family for a month. The German Weimar Republic hyperinflated its currency into oblivion in the 1920s.
It starts gradually—groceries that cost $800 go to $1,000, then $1,500, then $3,000. Then hyperinflation accelerates. In Turkey recently, people had to pay for their meals before eating, because by the time they finished, prices had already risen.
Kellen:
Let’s talk about the US dollar’s role in the global economy. How did the strength of the US dollar during Trump’s presidency impact precious metals?
Andrew Sleigh:
Gold and silver are priced in US dollars. If the dollar strengthens relative to other currencies, gold appears more expensive in those currencies. But the US dollar is also losing purchasing power internally—people are paying $12 for a dozen eggs in some places.
Kellen:
What drove the 5% increase in gold demand and 35% rise in value to over $100 billion in Q3 2024?
Andrew Sleigh:
Central bank demand is the main factor. They're buying gold aggressively. Additionally, gold is reacting to reckless money printing. The US is adding $1 trillion in debt every 100 days. Interest payments alone are over $1.2 trillion annually. Gold acts as a hedge against this monetary dilution.
Kellen:
Well, that wraps it up. Andrew, where can people reach you?
Andrew Sleigh:
You can call me at 1-888-861-0775, ext. 230.
Kellen:
Thanks, Andrew, and thanks to our audience. See you next time!
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