Gregor Gregersen: Panic in the Paper Markets and Shortages of Physical Silver

Gregor discusses the silver market and how we see the same pattern that happened back in 2008, 2011, and 2013. The markets are crashing, and investors are getting margin calls and need liquidity. This need for liquidity is pushing down the price of silver.

While the paper price of silver is crashing, it’s getting harder to purchase physical metals. The price for silver and gold is determined by futures exchanges dealing in paper promises instead of actual supply and demand. Due to these paper markets, silvers price is not well correlated with physical demand.

Prices for silver and premiums from suppliers continue to rise, while available supply is contracting. Also, it’s becoming harder logistically to get silver due to the cutbacks with airline routes.

The paper price for silver is dependent on the expectations of traders and analysts. Silver is a metal that can’t easily be substituted. The price of silver seems incredibly cheap today, especially considering the current monetary environment.

He discusses the reasons why Singapore is a good jurisdiction for storing precious metals and the things you want to see in a precious metals depository.

Singapore is an amazing place with a government that believes in pragmatism. They do what makes sense for their people long-term. Very early on, Singapore blocked Chinese nationals and people who had visited China. Compare this with Italy, who only canceled flights from China, but that didn’t stop travelers from reaching Italy via other European countries.

Time Stamp References:
0:50 – Silver and liquidity.
2:10 – Physical supply and paper markets.
6:00 – Silver Ratio to Gold.
8:20 – Industrial demand outlook.
10:15 – Risks when storing bullion.
16:00 – Crisis and precious metals.
26:15 – Life in Singapore.
33:30 – Expect crisis to last one year.

Talking Points From This Week’s Episode
Physical silver market vs. paper commodity markets.
Margin calls and the effect on paper silver prices.
The Demand picture for silver.
Singapore as a safe jurisdiction for physical storage.
The effect of coronavirus on markets and exchanges.

Gregor Gregersen is the founder and owner of Silver Bullion SG and Safe House Depository, a premium bullion dealer and storage facility in Singapore. Gregor has a background in finance and software development. Gregor was a Senior Data Architect for Commerzbank in Germany. He started Silver Bullion Pte Ltd. In April 2009.

In 2008, when Lehman Brothers went bankrupt and defaulted on their derivatives obligations, the whole system was about to collapse. It was only massive government bailouts and guarantees that prevented a meltdown that would have wiped out most people’s savings. In my mind, the financial system now is like a house of cards, and I don’t want to be invested in it materially when the next crisis occurs. So I moved my assets into physical gold and silver and stored it in a manner that removes counterparty risk and minimizes jurisdictional risk.

I started Silver Bullion Pte Ltd in April 2009 to see if other people, besides me, were interested in buying physical silver in Singapore (where I had moved to because of their competent government and policies). As the company grew, we built our 600-ton capacity vault and eventually allowed for gold/silver collateralized peer-to-peer lending among customers.

I am not enamored with precious metals per se. But if purchased and appropriately stored, they are one of the best ways to protect and increase your wealth when the next big crisis hits us.

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