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Gold and Silver have longer delivery times. What causes it?

Published by Karl Martin Karus in category Precious metals on 23.11.2022
Gold price (XAU-SEK)
19 814,41 SEK/oz
  
- 18,64 SEK
Silver price (XAG-SEK)
243,45 SEK/oz
  
+ 0,95 SEK

Physical gold is in high demand. Rising Uncertainty is Increasing Demand

The global economy weakens, and geopolitical issues remain a constant in everyday life. Investors everywhere are looking to buy gold in fear of impending economic disaster. People and institutions are concerned, and several legitimate concerns drive people to use precious metals as an inflation hedge for preserving capital.

The cost of living is soaring while the purchasing power is decreasing. In the Swedish market, inflation has not been so high in a long time; for example, the real estate market has not seen such low prices since 2020 and such fear since 1990.

Central Bank Digital Currencies (CBDC-s) and a deepening cashless economy are also one of the reasons why gold demand is increasing.

Tavex Group comments on the situation:

The supply chain in the market is under a lot of pressure right now. In fact, we have not seen such a large demand in the past 16 years in the group,” says Simon Pedersen, gold advisor at Tavex Denmark.

Tavex has a long-standing collaboration with Valcambi in Switzerland, one of the world’s most important smelters.

Tavex is experiencing longer delivery times from coin manufacturers and smelters, not because of a shortage of gold or Silver but because the demand is greater than the supply of units produced.

The supply of physical gold and Silver is limited, and delivery is slow

The precious metals industry is struggling to meet the skyrocketing demand for physical gold and Silver. The combination of fewer people looking to sell gold and Silver and an increasing number of buyers squeezes physical precious metals availability. This unprecedented rush to physical metals has caused market-wide supply shortages and delivery delays for some gold and Silver coins, gold bars, and silver bars.

Tavex Group comments on the situation:

Before September, the average delivery time from an order to a received item in stock was approximately 4-9 days. Now it takes 2-6 weeks, depending on the product, from when we have paid until we receive the item.

We are always trying to factor in the relevant world-economic situations and keep a reasonable amount of stock to meet client demands.

Spot Price and Physical Gold

It is common knowledge that the gold price also increases when inflation increases. Stock market investments turn less favorable, and investors turn to safer options such as precious metals to preserve wealth and capital.

It is important to note that future buying and selling contracts strongly influence spot gold prices. In other words, paper contracts are not actual physical precious metals. Physical metals, such as gold and silver, are limited in supply. As a result, the spot price of gold lags behind. It does not reflect the reality of actual physical precious metals demand. It is only a matter of time before that gap is closed.

Having gold in one’s portfolio

Physical gold and silver are being purchased faster than refineries and suppliers can keep up with the demand. It is objectively a good time to invest in gold as retail investors, banks, and central banks, run to precious metals as a safe haven.

 

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