The current bull market cycle in the metals is far from over, and the Federal Reserve would need to reverse course on monetary policy before we see a top in prices, said Peter Hug, global trading director of Kitco Metals.
The golden silver market. I've seen prices rise just a bit today on Friday with silver up 40 cents and gold up to 60 as of 11:00 AM Eastern time. Peter hug global trading director of Keiko news is back to talk prices, sentiment, and the physical market. Peter, welcome back. Good to be here every week. We talk there's new developments.
But this week it's been kind of quiet. I, um, silver has fallen back down from $30 following the short squeeze action from a week and two weeks ago. Has this, has the focus for investors now shifted back to gold? Do you think, Peter, are you seeing that in the price action today? Uh, no. I mean, I think there's still demand, uh, from the retail side, especially in North America for both gold and silver, I think what's, uh, Quieted down this week is that, uh, you know, investors are starting to get a little, uh, price shy and, uh, you know, chasing these premiums that, uh, because of what happened a couple of weeks back, uh, uh, as I mentioned, it's going to take a while for dealers to rebuild inventories, uh, and, uh, as a result, uh, you know, premiums on, uh, silver product, uh, like.
Coins, especially, uh, you know, North, uh, in some cases, North of $10, uh, similar to where they were in March of 2020 gold premiums. Um, there's a little bit of a different story there, but the gold premiums on buffaloes and Eagles are, I've seen dealers as high as $175 over a spot. Uh, now. For the gold buffaloes and gold Eagles.
And to some extent, the silver Eagles, the U S mint is doing a switchover. And my understanding is that this is a, they stopped producing buffaloes. Uh, so there's no new minted buffaloes on the market. I mean, you might find the odd dealer has a few left in inventory. Uh, Eagles are going to be stopped by a one-ounce, uh, going to be stopped being produced today.
Uh, and then there's going to be a hiatus as the U S mint, uh, gears up production and, um, and that develops or not develops produces 2021, uh, gold legals and silver wrinkles with the new, uh, averse design. Uh, that's not anticipated from a supply perspective to hit the market probably until April. Um, so you're going to have this window here, possibly a, you know, six week, four week window.
Um, I do anticipate dealers will pre-sell it, once they know their allotment, uh, where there's going to be a considerable tightness or a continued tightness in both the golden and silver coin market in the U S um, gold maple Leafs are still somewhat readily available. Um, and even though they're trading, um, No, based on our price points about $40 below Eagles and buffaloes.
Uh, there doesn't seem to be a lot of off-take from a, from a U S uh, investors perspective. Again, that that always confuses me why you wouldn't buy a 49 school coin as opposed to a 20 team Jericho coin. But, um, so there are still some, uh, you know, gold Maples available at. We'll call them reasonable premiums, given the current situation.
Um, but overall, the market, uh, the market is tight, uh, both in gold and silver. And I don't anticipate that tightness is going to abate, uh, for probably, uh, It could be as long as three months. Okay. Yeah. I spoke to somebody from the person mint not too long ago. And he said pretty much the same thing.
Premiums will remain elevated with demand, continuing to, uh, stay elevated as well. Now let's talk about, uh, bond deals offline. We spoke briefly about that. I wonder if the U S treasury yields have anything to do with gold being stuck in a range right now. Well, we had the tenure at one Oh five at the beginning of the week, this morning and touched one 20 or just, uh, just shy of one 20.
Uh, so that created a little bit of strength in the U S dollar. Um, have to tell you I'm not impressed with the strength in the U S dollar with a BA with the tenure at 1.2. Uh, so I think it's, it's, it's a, um, a short-term event and I do believe the, uh, the dollar will continue its downtrend. There's just been a lot of, sort of mixed signals in this market over the past week.
Uh, you know, other than, uh, besides, uh, the premiums going through the roof. And, um, again, I would, if you're patient, I would, but you still want to enter this market. There are other vehicles that are offered by dealers. Um, you know, we offer one where the RC, the Royal Canadian mint is the custodian of the metal.
Uh, again, it's a matter of, uh, uh, you have comfort in, in, in that type of a position. You know, you can enter the silver market at about a 60 cent premium to spot, uh, and goal that, uh, give or take about a $30 premium to spot. As opposed to paying $170 for coins and, uh, you know, eight to $10 for coins in, in silver.
And then you have to be patient and somewhere down the road, uh, this market is going to quiet down. Um, and within that window, uh, inventories will start to build and dealers will come down with their premiums and then you can swap, uh, for your physical product, if that's your end goal. Uh, but. What's happened over the past week with this, uh, you know, the stupid, um, uh, uh, process that's going on in Washington now.
There's yeah. That's how you really feel Peter. Well, we know that the end result, uh, we know the Republicans are not going to vote to impeach Trump. Uh, I, uh, I know probably from a perspective of history, this is an important event, uh, but we know the end result. Uh, but meanwhile, the government has been shut down in essence for a week and probably for.
Couple or three days next week. And, uh, you know, the economy needs the stimulus package and you know, this morning, again, uh, there was some chatter that there's a possibly as many as five Democrats that are going to vote against it, which means now Biden. Uh, this isn't a slam dunk anymore. Now he's going to have to get those five Democrats if he loses them, uh, from the Republican side.
So now there there's a possibility the stimulus might be on hold. So, you know, there's just a lot of conflicting information, uh, in the market right now. And that's sort of causing, uh, the metal stuff to stay in a tight band or waiting for a catalyst. And then you've also got China with the new year next year, next week.
And, um, so the industrial demand side is going to be muted, uh, at least through the end of next week. So. You know, there's just a lot of noise in the market, uh, in, in, uh, you know, in the very, very short term. I'm not, I'm an expert on politics. I I'm wondering, help me understand this, Peter, what, why are they not dropping this impeachment trial?
Trump isn't even in office anymore. Well, I think, uh, I mean to a great extent, it's probably political, but, uh, they, uh, believe that, uh, Democrats, at least they say they believe, uh, that he incited violence and that he should be impeached as a president. I'm not going to argue that they don't have a case.
But it's very apparent to me that the Republicans, I mean, half of the morning, even in the, in, in, in, um, in the room yesterday, uh, listening to the evidence. So, I mean, they've made up their mind. I mean, I would be absolutely amazed. Unless for some reason they voted, uh, anonymously, uh, that the Republicans would, uh, would have 17 members vote for impeachment.
So, uh, but the problem is, you know, this is all going on when, when the economy is still on a mess. Uh, so yeah, for my understand this, the market impact here is that the fiscal stimulus debate is being postponed or delayed because of this. Well, yeah, I mean, you would think that the first thing that should have happened Monday of this week is there should have been a bill passed by the, uh, by the house, uh, uh, for the stimulus package and then voted on by the Senate by the end of this week.
Uh, so we'd have some clarity as to what's going on. Uh, and. The earliest that's going to happen is probably go through the house sometime mid next week. And the Senate votes on it the week after. And again, now it's up in the air, whether or not, uh, even though they have a majority in the house and the Senate, whether the Democrats can push this through without Republican support.
And that's a big question, Mark. So it's possible, uh, that they may need to compromise, uh, significantly on this 1.9 trillion and the market is expecting it. So you take that out of the equation. Uh, it could have a, uh, you know, a market moving, uh, type of a scenario of, for all markets, including the metals, uh, but equities, for sure.
Yeah. Well, You might coincide with same, same thing happened almost a year ago in March. Well, maybe not to the same extent, I suppose, a lunar new year you're brought that up. Demand is usually higher around this time of the year, right? Or is it, is it a, an anomaly this year? What are you seeing? You know, the demand, uh, again, you, you sort of buy into the holiday and then when the holiday happens, you, you know, you enjoy your holiday.
So I mean, the buying that. On the retail level that that would have occurred for the lunar new year. There's a number of minutes that have coins that represent the new lunar new year. And, uh, you know, we we've done well on selling those to retail clients in, in, uh, in Hong Kong where we have an office. Um, actually what surprised me, uh, with our Hong Kong office, uh, Uh, over the last couple of weeks, we've had a, again, I'm not sure why this is, but, uh, we've had actually quite a lot of liquidation of silver, uh, into our Hong Kong office from retail clients, uh, with the exact opposite happening in North America, where people were chasing the silver market and buying anything that was available.
Now, I don't know if that's a trend, uh, but we picked up. Well, well over a metric ton of silver, which is doesn't sound like a lot, but from retail investors selling back, uh, that, that, that's a, that's a good chunk of silver coming back in, uh, to the market, uh, in small investment size bars. So we'll see if that trend continues.
Uh, but it looks like the Chinese, at least retail Chinese, uh, we're taking advantage of silver in the 27 28 level and liquidating industry. As opposed to North America chasing the market at 28 and buying them and buying it the strength. So, uh, I'm, I'm watching that. I just want to see if that was a one-off or.
Uh, whether that's a trend, I want to talk about sentiment in the gold market. Now, as you know, Elon Musk tweeted about Bitcoin not too long ago. And Tesla is now allowing customers to buy cars with their Bitcoin and they're investing in Bitcoin. As soon as the news came out, the price of Bitcoin shot up.
I wonder why can't the same thing happen for the gold market? Who, who who's, who's going to be out there tweeting about gold, which is going to move the market significantly. Could you see that happen? Well, I mean, if you would've seen the fire, if you were to read the filing from Tesla, they actually, uh, they actually were a gold as well.
Yeah. But they bought gold as well. I'm fairly positive. The gold market. I mean, big, uh, again, uh, I I'm just going to speak, uh, as a layman because I really don't understand, uh, the, the current except, uh, I, I understand the concept of Bitcoin, but you've got a market that has a, a limited supply, um, and, uh, you know, Eli and mosque, uh, you know, All kudos to him, uh, you know, bought 1.5 billion before he then released his tweet that he liked Bitcoin.
Uh, and, uh, you know, it doesn't take a lot to move the market up $4,000. Um, I just don't think you can do that in gold. I mean, you had, uh, what's his name? Warren buffet. He came on and loved the gold. Uh, you know, I'm not sure when he said it where the price was and, uh, he loved gold. Where do you just buy Barrick shares?
Same difference. I mean, he was bullish gold. I mean, gold goes down to $1,200. Barrack is not going to go up. Uh, so, I mean, he was, I think he was bullish the commodity generally, and he picked Barrack as a, as a solid, a solid blue chip, uh, mining company that paid a dividend. Uh, but anticipating because gold was going higher and Barrack was going to make more money because of that.
That's why he bought Barrack. If he was bearish gold, he wouldn't have bought Barrick. Unless he had some other insight information where there might be a takeover target or something like that. I mean, there'd be no reason to be buying Barrick if you were negative to commodities. So I think he, uh, he is positive the commodity cycle I am as well.
I, I, uh, I think there's a lot more upside to come. Um, you've just got to ignore the day-to-day noise, but for somebody to come out and say, ah, you know, I think Gold's going to be at $5,000 an ounce and. That comment alone, moving it up. Theirs is just not possible in a market. That's as big as the Goldmark, right.
You'd have to have, I guess you have to have every single, every single billionaire hedge fund investor and industrial industrialist in the world coming out and saying, Gold's going out to $5,000. Maybe that'll maybe that have inspired people to go out and buy it. We're in a, we're in a bull cycle here, uh, in the commodity space, generally.
That's my opinion. And. The blow off stage in a commodity bull cycle is nowhere near in sight. Uh, and you would think that, well, we had the blow off stage from 1400 gold last March to a 2200. That was not a blow off stage. That was just a fear trade. And now gold has settled in and it's holding sort of the 1800 1850 range.
Uh, That if the cycle is, is still in a bull phase and I believe it is. And I think a commodity cycles run anywhere from seven to 10 years at best. We're a year into this cycle, maybe two. Uh, so the best is still the come and it's usually at the very end of the cycle where you get a blow off stage. Uh, and, and then everything gets recalibrated.
Menu ended up going back into a bear market. So we're not even near that top. Uh, it is it's frustrating. Uh, when, when you're an investor looking at gold sitting at 1800 and watching Bitcoin take off and watching the equity market continue to run feeling that you've made a bad investment. So again, it really depends on the psychology of who you are.
If you're a trader, there's been multitudes of opportunities to make money, both in gold and silver. Assuming you were on the right side, but for an investor again, if you're, if you've got a portion in your portfolio in metals, you know, just don't look at it every day. I mean, I honestly believe that, uh, we're at the beginnings of a commodity cycle, uh, that will eventually, uh, culminate in inflation considerably higher than where we are now.
And, uh, until the central banks start to tighten monetary policy. You have to be bullish the commodity cycle and there is no visibility at all that they're looking to do that until at least sometime mid 20, 22. So we've got plenty of time of this liquidity being in the market and continuing if not increasing.
And in that context, uh, I just can't bring myself to be better. I've noticed a close correlation between gold and inflation expectations. And so if you take a look at just the years between 2012, 2018, 2019, for example, inflation was relatively muted. During that time it was flat. It was, it was, it was constant two to 3% in the U S uh, inflation expectations.
Weren't very high. And so gold kind of stay flat as a result. So maybe that's what we need. Maybe that's what we need to spike and inflation expectations. Much higher than what we have, what we'll we we've had in the past few years and maybe what we have now, what do you think? Well, look at the cycles, remember in 2011, what did the central banks do?
They went into a taper program and they tightened, uh, and, uh, you know, so they, they sort of took their foot off the accelerator. And then in 2020 they had, uh, pushed that accelerator all the way to the floor and it continues to be at the floor. Uh, so. W we're in sort of the Oh seven to 11, we're in the sort of 74 to 81 cycle in the commodity space right now.
And I think in very early times, uh, and then you add to that equation. If the economy does recover and the central banks remain muted on their tightening, which I believe they will. Um, you, you have now the economy starting to rebound now industrial demand picks up. Uh, so you're getting, you're getting demand cycles coming in from, uh, from the industrial side now, which has been muted all through 2020.
That was basically driven almost exclusively by re by investment demand. Um, and you don't have the central banks liquidating metal. Uh, they're still buying. So, I mean, when you add it all up, it's, it's difficult to be bearish this market, you know, as a possible goal goes back to 1750 1700. Yeah. But that's, that's just normal stuff, but the, but the bull market itself, I think, is, is alive and vibrant and it's matter of patients.
Uh, and, uh, we will get that cycle, uh, to a blow off stage. Uh, I can't tell you what year that is going to be, but it's going to come. And when that blow off stage comes, that's when you'll start to see the central banks, uh, start to, uh, reel in their, uh, liquidity, uh, uh, gas pedal and start to tighten. And when that happens, that's your signal that we're probably approaching a top.
Okay. All right, Peter, thank you so much for your update. Another great talk, have a great weekend. You as well, David. Thank you. And thank you for watching. I'm David Lynn. .