Global Shifts: An Expert’s Take on Metal Market Trends and BRICS Influence”
Global Shifts: An Expert’s Take on Metal Market Trends and BRICS Influence”
Sprott interviews Chris Marcus
Contents:
Sprott Intro
Video
GoldFix Transcription
Interview by Craig Hemke for Sprott Money
In this episode, Craig Hemke sits down with Chris Marcus of Arcadia Economics to discuss the banks' record-breaking short positions in gold and silver. Are we heading for a significant price decline, or is this the ultimate buying opportunity? They discuss the global silver deficit, how supply issues could impact prices, and what it means for silver investors in the long term. Find out how the BRICS nations' growing influence on the gold market could impact prices and global reserves. Will this reshape the world economy?
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GoldFix Transcription
Intro: It’s good to see Chris, who knows as much (or more) about these markets than some he interviews get a chance to air it out , no BS.
Introduction
Chris, it's always a pleasure to have you on the show. There’s certainly a lot happening in the world right now, including the recent presidential debate. But let’s shift our focus to gold and silver, which have been buzzing with activity lately. It’s crucial for people in this space to find reliable sources of information since these topics are often overlooked by mainstream financial media.
Chris Marcus' Work and Insights
Chris, tell us about your work and where people can find you. At Arcadia Economics, you cover a wide range of topics related to gold and silver, providing valuable insights, especially during these transformative times. You’ve been tracking the evolution of financial systems and the implications for precious metals, which makes your perspective particularly relevant.
Chris Marcus: "Thanks, Craig. I’ve been focusing on guiding people through the complexities of gold and silver markets, especially as we’ve seen historic changes this year. The short positions in gold and silver are at unprecedented levels, which typically precedes a price decline. There’s been significant short covering recently, but the positions remain large. This year’s situation is unique, and we’re waiting to see how it plays out."
Market Dynamics and BRICS Influence
Silver has had a decent year, but not as strong as gold. What do you think is driving this divergence?
Chris Marcus: "I believe part of gold's performance this year is connected to the BRICS. I had a conversation with Matt Riley from EF Bullion, who mentioned some proposals back in February before the rally in metals. Since then, we’ve seen increased buying from China, India, and even some recent activities in Russia. This suggests a possible connection between these events and the movement in gold prices."
Short Positions and Market Expectations
Could you delve a bit more into the recent record short positions?
Chris Marcus: "Sure. We recently set a record for the largest bank gold short position. The short covering in gold above $2,500 was notable, but it’s unclear if prices will drop enough for more covering at lower levels. In silver, the situation mirrors gold, with historic short positions, particularly as silver approached $20."
Impact of Technology and Supply Dynamics
With the recent advancements in electric vehicle batteries, specifically Samsung's new battery technology, how do you see this affecting silver demand?
Chris Marcus: "If this technology becomes the new industry standard, it could significantly increase silver demand. Our friend Craig Francis estimated that even a 10% adoption of this new battery technology could result in 288 million ounces of additional silver demand. This aligns with other trends like solar energy and the ongoing silver deficit."
Industry Costs and Production Challenges
Discussing production costs, Chris Richie from Silver Crest mentioned that when all costs are accounted for, their true production cost is over $25 per silver equivalent ounce. How do you see this affecting the market?
Chris Marcus: "It’s a crucial point. Many projects, even with lower initial costs, would find it challenging to bring new silver online under $25 per ounce, especially with inflation and other economic factors. This could limit supply and support higher prices, aligning with ongoing demand."
Retail Silver and Market Behavior
You mentioned that retail silver has been coming back to the market recently. What’s driving this?
Chris Marcus: "Yes, much of the silver coming back into the market is from people raising cash, not from long-term holders looking to exit. This suggests that economic pressures are prompting people to liquidate assets, which could be a short-term supply factor but isn’t sustainable long-term."
BRICS and the Unit Proposal
Let’s touch on the upcoming BRICS conference in October. There have been rumors about a new currency unit. What’s your take?
Chris Marcus: "The proposed ‘Unit’ with a 40% gold basket is intriguing. While it's uncertain if it will be implemented, the concept is being seriously discussed. If adopted, it could influence global currency dynamics, particularly if countries start favoring gold-backed systems over traditional reserves."
Conclusion
Thank you, Chris, for sharing your insights.
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Good ole Chris 🤗