For anyone that has followed my writing for some period of time,
you will remember the series that I wrote, which broke down
India's
war on gold
and how it was going to fail in its goal - and fail spectacularly it did.
This series went on and through time, my initial estimations were
proven correct - the officially reported number of gold imports did indeed
crash, but this was simply because the black market exploded. Smuggling of gold
into India increased dramatically and all kinds of
innovative
ways
of getting the metal into the country at reduced costs were
created. The free market exerted its will and as always, won the day.
Undoubtedly, there was some reduction in imports, but not as much
as the government of India was hoping for. Yet, there was one other predication
that was made during this time period, of which has also been proven correct
through time. The demand for silver was going to explode.
India in the past has had a history of being the largest
importer of the yellow metal, which it has only recently been dethroned
from. Their appetite for gold is insatiable and therefore it was only logical
to assume that a large percentage of the funds intended to flow into
gold,
were going to go to
the next best thing: silver.
This has and continues to prove to be the case. As reported,
imports of silver in September exploded higher, increasing by a whopping 152%
year over year! This is coming on the back of an already significant surge seen in
the month of August.
566.778 tons of
silver were imported throughout the month of September, up from 225 tons in
September 2016. This is a massive and huge increase, indicating that India's appetite
for precious metals not only remains strong, but is increasing, despite the
government's best efforts to clamp down on it. In fact, this was the highest
level seen since 2009.
Meanwhile, in the
West, precious metals continue to be scorned and ridiculed, cast aside and
forgotten as the latest and greatest thing continues to siphon funds out
of this market. Cryptocurrencies, led by Bitcoin, continue to drain funds that
would otherwise have gone into the precious metals space.
This is not
entirely a bad thing, unless you are fully committed to the precious
metals space. As many of you know, I
have
been
a long time supporter of Bitcoin, writing about its value from
its infancy. But, still, as I have always stated, it is no replacement for gold
and silver, which have stood the test of time for over 10,000 years and will
continue to do so for the foreseeable future. They are two different assets and
play two different roles in the protection of your portfolio.
I expect 2018 to
be the year of gold and silver's resurgence after the monumental
explosion seen throughout this year in the price of Bitcoin. A price
increase that has made many feel like they have "missed the boat",
which will cause them to search for other opportunities.
I expect the West
to once again wake from its slumber and take cues from countries such as
Russia, China and India, who continue to take prudent steps and diversify into
hard assets.
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Nathan McDonald is a libertarian, entrepreneur and precious metals enthusiast. He has always taken a keen interest in free markets and economics since an early age, which naturally led him to become a true believer in precious metals and all that they stand for.
Nathan served eight years in the Royal Canadian Navy as an electronics technician, seeing the true state of the world, before starting his first successful business. He has since gone on to create a number of businesses, all of which are still in operation and growing.
In addition to this, Nathan runs a network of successful precious metals blogs, and a growing newsletter that has attracted readers from all around the world.
He is a regular and highlighted writer for the highly respected Sprott Money Blog, which covers world events, geopolitics and of course precious metals.
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The views and opinions expressed in this material are those of the author as of the publication date, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.
