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Logistical Issues in Argentina and Mexico can Trigger a Much Bigger Silver Shortage

Logistical Issues in Argentina and Mexico can Trigger a Much Bigger Silver Shortage

Similar to gold, the silver industry is impacted by COVID-19. Although this hasn’t triggered any major problems just yet, that situation may change soon. Several companies are struggling to move their silver supply across borders.

Silver Logistics Worsen

It was somewhat to be expected that COVID-19 would continue to wreak havoc throughout 2020. With new infections popping up globally, the same issues which arose several months ago will come into play once again. For companies active in the precious metals industry, this will mean logistical problems more often than not.

Albeit there have been signs of a looming silver shortage, the situation may grow worse. Any company producing silver in Mexico and Argentina will run into export issues. Travel restrictions have been imposed once again, making it very difficult to move metals to other countries.

In Argentina, for example, the number of flights coming out of the southern part of the region is virtually nonexistent.  Mining operations in that part of the country cannot export their ore, bars, or other goods conveniently. Getting workers to and from these locations can be equally problematic.

Overall, the situation in Mexico is relatively similar. Logistics remain a key problem for as long as COVID-19 continues to claim victims. As the global rate of infection is ramping up – primarily in Middle and South America – it seems unlikely that things will improve.in the foreseeable future. 

Lower Production Equals a Higher Price?

On paper, the silver price will rise if the production and supply is lower than normal. COVID-19 may prove to be an interesting catalyst in this regard. Silver has many industrial use cases, as it is found in a lot of products and goods. That demand will not necessarily slow down all that much during this pandemic.

In fact, some industries note stronger demand for silver than normal. An interesting turn of events, and combined with a decrease in production, anything can happen. At the same time, it is possible that production will be able to ramp up again in the near future. It is unclear what effect that would have on the current silver price trend.

Solving logistical issues is never done overnight. Especially not when so many external factors tend to disrupt one’s plans. As the overall available supply of the precious metal keeps shrinking, interesting things are bound to happen. What those things are exactly, remains unknown.

Fortuna Silver Mines Notes Steep Silver and Gold Production Decrease in Q1 2020

Fortuna Silver Mines Notes Steep Silver and Gold Production Decrease in Q1 2020

The coronavirus measures have affected the production of precious metals in some unexpected ways. The decreasing supply of ore and metals can have an interesting price impact down the line. Fortuna Silver Mines Inc. has now reported its production for Q1 2020, which paints an interesting picture.

Fortuna Silver Mines Inc Report

As one of the many mining companies active in Mexico, the figures shared by Fortuna Silver Mines Inc. are very interesting to keep an eye on. It also paints an interesting picture as to how the coronavirus measures have affected this particular operation throughout the first quarter of 2020.

As is to be expected, the company has been able to maintain a degree of gold and silver production throughout the first three months. As of right now, the operations in Mexico have been suspended completely, a countermeasure that may remain in place until the end of Q2 2020. 

When looking at the numbers, Fortuna Silver Mines Inc has had a decent quarter. Nearly 10 fewer tonnes of processed ore were milled compared to Q1 2019. 

Recovery rates for silver are up slightly, yet its overall production has decreased by over 420,000 ounces. A very tough situation, albeit it is to be expected due to the spreading of COVID-19. 

As far as gold is concerned, the recovery percentage is down slightly as well, and production decreased by over 3,000 ounces. It is evident that the San Jose mine in Mexico is very beneficial to this company under normal circumstances, thus resuming the momentum will only become more important moving forward. Unfortunately, the coronavirus crisis may hamper those expectations for some time to come. 

Caylloma Results are Equally Promising

Fortuna Silver Mines Inc also operates a mine in Caylloma, Peru. That venture is, due to the ongoing coronavirus crisis, on a reduced production rate. How long that situation will remain in place, will primarily depend on how the coronavirus situation evolves in Peru and the rest of Latin America.

In terms of this mine’s silver operations, there is a minor decrease in recovery percentage, albeit the production increased by roughly 15,000 ounces. A somewhat unexpected turn of events, and one that highlights what the future may hold for this operation.

On the gold side of the spectrum, there is a definite decrease in recovery percentage – 46.39% is still far from ideal – as well as production, which decreased by over 100 ounces. Once the situation returns to normal, it will be interesting to see how all of these figures evolve throughout the quarters to come.

Metal By-products Production Increases

It is interesting to note that the Caylloma mine allows Fortuna Silver Mines Inc to increase its metal by-products production. More specifically, the production of both lead and zinc has increased by 8% and 5% respectively. This is a somewhat unexpected “bonus” for this mining operation.

As such, it is evident that even mining operators need to be aware of the diversified production at their disposal. While it will not help much in terms of gold and silver production, these figures go to show that not all hope is lost during the coronavirus crisis. 

Gold or Silver: Which is Best in a Pandemic-Induced Recession?

Gold or Silver: Which is Best in a Pandemic-Induced Recession?

Countless civilizations—from ancient Egypt to Mesopotamaia—have built their economies on the solid foundations of gold and silver bullion. The exchange rate between the two metals dates back as far as 3000 BC.

But while both metals are often lumped together by investors in the commodities basket, the price of each asset is buoyed by different forces.

In recessions, wars, and the many different types of economic turmoil, each metal will behave differently. 

So As COVID-19 spreads like wildfire around the world, let’s ask the important question…

Will gold or silver perform best in a global pandemic?

From ‘just the flu’ to a deeply deadly disease, doctors (and Twitter users) are still trying to understand the virus, and economists are still grappling with the possible effects on business. But anyone can see that hitting ‘pause’ on the global economy by putting one-third of humanity under lockdown will have complications — and lead to a possible recession.

To stop the economy collapsing completely, policymakers are turning to extreme helicopter money and quantitative easing. Pumping money into the economy creates the perfect storm for deflationary metals like gold and silver. And, the wave of fear sweeping over the populations has turned even ‘normies’ into overnight doomsday preppers—stockpiling masks, tinned foods, and sound money metals…

Gold, the 5,000 year-old tried-and-tested ‘sound money’, is typically the first choice of investment. Although it is used in electronics, the bulk of the demand comes from its safe haven appeal—as shown by the buying activity of central banks in uncertain times.

Silver also has safe haven appeal, but typically suffers from a weakened outlook in recessions. The metal has a variety of uses—from stopping Lululemon yoga pants stinking, to turning sunlight into energy in solar panels—and as the economy stalls, demand from industry drops.

But enough theory, let’s look at the data…

How did gold and silver hold up in past recessions?

The Energy Crisis Recession (November 1980 – August 1982)

When Iraq invaded Iran in 1980, the price of oil exploded higher. Inconsistencies in the supply of the valuable commodity then coincided with stagnant economic growth, high unemployment, and high inflation—a dangerous economic brew known as stagflation. Then when Federal Reserve Chairman Paul Volckert tried to tame the inflation through restrictive monetary policy, the brew turned toxic and the U.S. sank into a recession that left stocks, gold, and silver worse for wear.

Gold -46%

Silver -66%

Note: Though nothing was immune to this downturn, gold’s inability to act as a safe haven could be explained by timing. The metal had just emerged from its biggest bull market in history, where it climbed over 2,300 percent between 1970 and 1980. 


The Gulf War Recession (July 1990 – March 1991)

The recession of 1990-1991 had three major catalysts: Restrictive monetary policy enacted by central banks in response to inflation, the banking collapse of the savings and loan crisis, and the oil shock triggered by Iraq’s invasion of Kuwait.

When global markets had finally settled, gold was up, but silver was down.

Gold +1%

Silver -14%


The 9/11 Recession (March 2001 – November 2001)

The dot-com bubble popped in March 2000, and as stock prices declined, internet companies went bankrupt. Then in the following year a series of accounting scandals at major U.S. corporations worsened the downturn. To top things off, the attacks of 9/11 sent markets plummeting, leading stock exchanges to close for several days after the attacks. It only took a few months for markets to recover, but while gold managed to weather the storm, silver lost value.

Gold +5%

Silver -5%


The Global Financial Crisis (April 2007 – March 2009)

The trigger of the biggest recession in recent memory was immortalised in the film The Big Short. This dramatized the subprime mortgage crisis and excessive risk-taking by banks like Lehman Brothers. The collapse of credit bubbles around the world had a global impact, leading stocks to collapse, banks to be bailed out by governments, and prolonged mass unemployment.

Although gold dropped at the beginning as investors ran to cash, it eventually pushed up as silver remained flat.

Gold +36%

Silver -0.5%


Gold or Silver: Which has the most safe haven appeal?

As these historical examples show, In three of the four big recessions of the last 40 years, gold has outperformed silver. The only outlier was after gold’s biggest bull market in history. 

When there is fear in the market, gold is the classic ‘risk off’ asset that has a stronger negative correlation with the stock market. When equities move down, gold moves up, and vice versa.

As we saw in 2008 and with the recent coronavirus crash of Black Thursday, both silver and gold can fall with stocks when global markets decide to jump off a cliff and investors run to cash to cover margin calls. But in the longer term over the length of the recession, gold has consistently demonstrated an increase in value. Silver on the other hand often remains flat during downturns, and has a tendency to lose value due to its high usage in industry.

So bear in mind that if you buy silver to act as ‘insurance’ against the threat of recession, then you may be disappointed. Although its bigger brother gold has significant safe haven appeal, silver Is primarily an industrial metal and is statistically unlikely to ride higher during a recession — particularly one induced by a global pandemic that Is disrupting huge supply chain disruptions.


The information in this article is for informational and educational purposes only and should not be considered financial or investment advice.  

How to Immunize Your Investment Portfolio Against Coronavirus

How to Immunize Your Investment Portfolio Against Coronavirus

A butterfly flapping its wings in Brazil can cause a tornado on the plains of West Texas, says the butterfly effect. And in today’s global economy, a man eating a bat in China can end up eroding the retirement savings of millions of people around the world.

A butterfly flapping its wings in Brazil can cause a tornado on the plains of West Texas, says the butterfly effect. And in today’s global economy, a man eating a bat in China can end up eroding the retirement savings of millions of people around the world.

To control the unpredictable ‘black swan’ of coronavirus, politicians are quarantining citizens to buy time for strained healthcare systems. But these containment measures threaten to bring a heavy economic toll. 

With entire regions in lockdown, the factories that lie at the source of global supply chains have fallen quiet, millions of workers are telecommuting rather than going into the office, likely causing productivity to drop. And, thousands of flights, cruises, conferences, and events are being cancelled around the world. 

From tiny mom-and-pop stores to the Silicon Valley giants of Apple and Microsoft, businesses everywhere are registering an impact, and the shock has sent markets plummeting—leading everyday investors to feel the pinch.

So how can you immunize your portfolio against the coronavirus?

The sickening global economy

The first step is understanding what the economic impact of this new virus will be. Unfortunately, even experts in the matter disagree.

Some suggest it will only cause slight supply chain disruption, and others claim it could be the pin that pops the credit bubble of quantitative easing and triggers a drawn-out recession.

When Spanish Flu ripped around the world one hundred years ago, at least 50 million people died. And the Dow Jones Industrial Average fell about 30%. But World War I was raging at the time and the exact economic impact of the virus is difficult to quantify.

Today’s interconnected world offers more possibilities. The coronavirus can board aeroplanes and cross countries in mere days. But at the same time, improvements in medical technology have fortified our defences. 

But whatever the impact, global markets are already pricing in a significant economic slowdown.

An economic injection

As the virus sweeps around the globe, U.S. stock indices have set record declines. The Dow plunged more than 2,000 points in the biggest drop since 2008, and the S&P 500 has set some of the biggest “gap-downs” at the open since 1982.

In bid to prevent the economy from getting knocked off course, governments are beginning to intervene by injecting liquidity. This takes two forms: Pumping liquidity into the country’s financial system via open market operations like quantitative easing (or printing money), and lowering interest rates to encourage borrowing and investing.

But because these economic measures have become standard practice, they are losing their potency. Governments are now getting desperate and making ever more extreme measures to keep the market lurching upwards 

China was the first to react by injecting 1.2 trillion yuan (US$174 billion) into the markets and cutting rates at the first sign of trouble. In the U.S. the Fed has also been feeding the stock market with piles of freshly minted digitized money, and is expected to keep cutting interest rates as the year goes on. 

But, as interest rates are so near zero already, rate cuts are unlikely to have much effect, and so some countries are already resorting to more drastic measures.

Helicopter Money—where money is printed and given directly to the public—is becoming standard practice. 

Hong Kong has gifted HK$10,000 in cash to residents (1,200), Italy is suspending tax and mortgage payments in the virus zone, and even the White House is weighing up the idea of sending cheques directly to those in need.

This added liquidity can prop up the market for a short time, however it can’t mitigate the effect of the virus on local businesses, and it can’t replace lost incomes. Instead, it makes businesses dependent on an ever expanding debt load.

As Caitlin Long suggests, the coronavirus could end up highlighting how ineffective these economic stimulus measures are, and — as govts realise they cannot stall the pandemic with liquidity— end up being to China or the U.S. what the Chernobyl nuclear accident was to Soviet Russia — a catalyst tipping a precarious economy over the edge into crisis.



Comic: Fighting CO-VID 19 by Chapatte.

How to protect your portfolio

The recent crash shows that holding equities inflated to the tune of the Fed balance sheet is dangerous, with gains liable to be wiped out in an instant. 

But… holding cash is equally treacherous. Economic stimulus measures like constantly pumping liquidity into markets around the world increases the global cash supply — turbocharging inflation.

To guard against this, the typical route of investors is to park funds in tried-and-tested safe haven assets like gold and bonds.

But even the trusted safe haven status of bonds is now under threat. As we move into an era of increasing negative interest rates, we have more negative yielding bonds, which means you are literally paying the government for the privilege of lending them money.  The yield on the U.S. 10-year Treasury fell to a historical low of 0.38 percent on March 8, and German and other European bonds have long since been negative.

The only asset that is immune to both quarantine-induced economic downturn, and the side effects of looser monetary policy around the world, is gold.

Despite heavy volatility, gold typically holds up as other assets fall. Since the first cases of coronavirus on December 31st, gold has been subject to heavy volatility, but has managed to remain buoyant as other assets have fallen sharply. 

This echoes the performance of gold during previous outbreaks, like the H1N1 swine flu of 2009 in which gold appreciated 39%, and the Zika epidemic of 2015 and 2016, during which the yellow metal rose 21%.

Best Practices When Using Mobile Payments During the Novel Coronavirus Outbreak

Best Practices When Using Mobile Payments During the Novel Coronavirus Outbreak

The novel coronavirus outbreak has put a lot of people on edge. This also makes it tough to find viable payment methods without risking a further spreading of the virus. Mobile payments are still a viable option today.

Mobile Payments Require no Interaction

Many things can be said about the way the payments industry is evolving. Some think it is going in the right direction, whereas others oppose these non-personal options. Using mobile payments, for example, requires little to no interaction with a cashier. 

Despite this lack of a social aspect, these mobile options present opportunity as well. During this novel coronavirus outbreak, they may be the most prominent way of paying for goods in a store. It is precisely their lack of human interaction that make this option relatively safe to use.

Solutions such as Apple Pay, Google Pay, Samsung Pay, and WeChat Pay are all perfectly usable during these troubling times. There are concerns as to how both payment cards and cash may contribute to spreading COVID-19 in the future. As such, any payment option not requiring physical contact will become of greater interest.

Using either Apple Pay or Google Pay is very straightforward. Dedicated mobile applications exist for either option. The use of Apple Pay with an iWatch is also an option to explore during these uncertain times. Both of these payment solutions are also accepted on some public transportation across the US, making it more worthwhile to explore. 

Mobile Phone Hygiene is Crucial

If one wants to explore mobile payments, another factor will prove crucial. Our society has become incredibly reliant on smartphones. Pulling such a device out while on  the subway, bus, or otherwise can potentially expose it to COVID-19. Those who are germ-averse may want to keep it in a pocket on their person at all times .

Keeping one’s phone clean is also crucial when relying on these payment solutions. Using a microfiber cloth can be a very long way in this regard.Cleaning the device regularly is always mandatory, but especially while the novel coronavirus continues to rage on. One can never be too careful in terms of personal hygiene.