Since I have seen this risk of short term liquidity be minimized, I started to shift my strategy of my cash holding as it started to grow. I have really never been a person whom liked to have much cash laying around nor carrying it for obvious reasons. As the financial markets started to stabilize despite the continued declines in economic indicators, I felt that the rotation into precious metals would be the be approach with most of these funds.
Gold and Silver, known to be safe haven type assets, also suffered early losses when investors started the liquidity squeeze as all assets were sold for cash to be raised. However, they quickly recuperated as they once again became a focus for the long term as the amount of fiat currency printing and stimulus occurring continues to point to future challenges of inflation. The facts around the potential of inflation will be the most debated statistic in the coming years.
It is funny to see most economists ignore inflation during this time as deflation is the primary concern as asset prices suffered quick and steep declines. However, as inflation metrics like PPI and CPA confirm their lenient stances, the data within those reports show concerning trends where items and products of necessity like food and health have seen steep increases in price. I have personally experienced this inflation as fresh products like produce and meats have not only risen in price but have also become limited in supply.
I finally got to my local coin dealer and was not surprised to see and hear what I did about the market. Supply continues to be very restricted for many Gold and Silver products. While they had more than they have had during the crisis, they also had to add very high premium prices to the more popular products like Silver Eagles. The Silver Eagle coins were commanding premiums of up to $10 in some additions! This represented an almost 50% premium to spot prices. It continues to show the disconnect of the physical and paper market I continue to research.
Given the amount of cash I had accumulated, I really wanted to get some Gold as it is the category within my Collection with less representation. Despite the demand spike, there was generally a bit more to chose from that day although I really wanted to get my first Buffalo Bullion; it was not available. I was also not really willing to pay some of the premiums for Silver so I ended up only buying two ounces of a new type of Coin I had never bought before. I will surely be back as I am still accumulating some cash as well to have on hand despite the signs of improvement in many aspects!
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