Is Now the Time to Buy Gold and Silver?

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Wondering if now's the time to buy gold and silver? Wonder no more. Let me explain.

As a collector of both precious metals, like many, I planned on loading up in the wake of recent price declines. But guess what? My usual dealers were out of gold and silver.

Thanks to the selloff, a buying frenzy for bullion has crashed websites, jammed phone lines and depleted inventory.

"Our website was overloaded for the first time ever Friday and Monday. Every phone line was lit up. We did seven times our normal volume," Jake Haugen, VP of sales for Texas-based  Provident Metals, told Money Morning.

You see, with gold on track to log its fourth weekly decline and silver headed for the worst week in about 19 months, bargain hunting abounded.

Declines in gold and silver prices began last Thursday and accelerated Monday when gold plunged $140.40, or 9.4%, to $1,360.90 an ounce, marking its biggest one-day decline in 30 years. Since its 2011 high of nearly $1,900 an ounce, gold has tumbled 28%.

Silver slumped $2.97, or 11.3%, Monday to $23.36 an ounce, well off its 1980 record high of $49.45.

As recently as last year, investors like me were paying more than $1,700 per ounce for gold and $35 per ounce for silver.

Bargain Hunting: Gold and Silver Coins

Amid the biggest gold and silver price declines since 1980, physical bullion sales are surging.

In April, the U.S. Mint has sold 153,000 ounces of American Eagle gold coins, more than double March's tally and up sevenfold from a year ago.

Over the first six business days in April, the Mint sold 1.645 million ounces of silver, taking the 2013 total to a whopping 15.868 million ounces. With demand for Silver Eagles so robust, the Mint rationed sales to primary dealers. Haugen called the situation "a perfect storm" for frenzied buying.  

Sales also spiked in China, India and Australia. In Switzerland, "physical demand is extraordinary," Bernard Sin, head of currency and metal trading at bullion refiner MKS SA in Geneva, told Bloomberg.

If you want to get in on the bargain hunting for the precious metals, Money Morning Capital Wave Strategist Shah Gilani says your timing could hardly be better.

"I don't think this is a bottom, but the way I trade, I love it at these levels," said Gilani. "Another 20% fall is a signal for me to jump in with both feet! I'd add to it down to $1,100. Any further than that, and I'd be concerned, but this is basically a half-off sale."

Rich Checkan, senior VP of Asset Strategies International, a Rockville, MD, firm where customers buy, sell, store and take delivery of precious metals, told Money Morning the selloff and declines in gold and silver prices came as a result of technical moves such as stops and margin calls.

"But the physical market is different and demand here remains strong," Checkan said. "Product has become non-existent. There are four- to five-week delays and premiums are going up. There's simply not enough supply to fill demand."

Vigorous physical demand isn't reflected in spot prices, Checkan explained.

How to Buy Silver Now

Join the conversation. Click here to jump to comments…

  1. ron | April 20, 2013

    Hi I have a question for you about companies that let you finance gold and silver and they store it and trade it for you one company I am looking at is guildhall wealth management can you give me any advice is this company lagit they are in canada

  2. tom tuttle | April 21, 2013

    So many PM articles recommend storing physical PMs "off-shore" or "in another country". Who does this? and how/where does one do this? Are they "trusting" some-one else to hold it for them? Storing it in their Swiss vacation home? It is ambiguous beyond my comprehension.

  3. Einah | April 23, 2013

    It is still important to know all the aspects first before buying gold. You also need to consider some important things to be sure of.

  4. Michael | April 24, 2013

    Who is pushing the price of Silver down and Why ? Apparentally it is more useful than Gold and reasonbly rare . I will bet it is not the buyers of the physical SILVER that are lowering the price .Yes I am a buyer of Silver and Gold due to previous experts saying Gold is going up to $5000 per ounce ( ounce – everyone in the world refers to grams and kilograms also while I am on this soap box what is a bushel ie a bushel of wheat ?) and Silver is going up to $150 per ounce .

  5. Lou Iorio | May 14, 2013

    Is now the time to start loading up on Jan. 2014 and 2015 options of SLV etal? Your thoughts?

  6. Adele | December 29, 2013

    Hola! I've been reading your web site for a while now and finally got the bravery to go ahead
    and give you a shout out from Huffman Texas! Just wanted
    to say keep up the excellent job!

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