Mexico 2014: demand for silver ounces fell

Any way you look at it, it's bad news that Mexicans aren't buying physical precious metals as financial protection.

This blog regularly monitors the accumulation of Libertad silver ounces – the best-known investment coin in the country along with the gold Centenario – by the investing public. In this way we discover that demand tends to rise in periods of crisis or high inflation. It has been that way since the turn of the century.

In this issue we update the figures. According to official data from the Bank of Mexico (Banxico), the appetite of Mexicans for the fine metal fell 3.7% in 2014 compared to 2013. The total number of new one-ounce pure silver coins put into circulation amounted to only 823,091. This figure is just below the 15-year average (yellow line) of 858,195 coins per year (continued after chart).

Wherever you look at it, it is bad news that Mexicans are not acquiring physical precious metals as financial protection at the level they are doing in other horizons, especially in Asia. Although last year's drop in demand is not a crash like the one that occurred in 2012, the reality is that national savers did not take advantage of the fact that silver was sold at five-year low prices. A missed opportunity.

As I informed you a few days ago, this month the trend for the precious metal has been upwards, but although a new significant fall in prices is not ruled out, there is no guarantee that we will return to last year's levels.

Gold and silver are in a major bull market that is not over yet. That cycle will one day end in a bubble phase, which for now seems very, very far away. However, since 2011 the pair of monetary precious metals has suffered a (low) correction that will eventually reverse. The fundamentals of gold and silver are stronger than ever.

However, the drop in the price of silver last year was the result of various factors such as: market manipulation, a drop that is estimated to reach 7% in industrial and jewelry demand, and deflationary pressures in the world. The latter, aggravated by the massive printing of money by central banks (see here why they are not creating inflation as is their purpose).

Given the bleak economic outlook that we have in Mexico and the world, it would be a shame if investors let the possibility of reinforcing their long-term silver financial shields pass by, preferably in coins – due to their greater negotiability, bars or ingots. The above, of course, as long as we see a new purchase opportunity. No asset should ever be purchased when it is already expensive and/or rising.

Screams in cowboy-

— ‎ ‎ ‎ ‎‎‎ ‎ ‎ ‎ ‎‎ ‎— 𝘞𝘦𝘭𝘭 𝘠𝘦𝘦𝘩𝘢𝘸 ‎ ‎ ‎ ‎ Wed Jul 21 04:57:52 +0000 2021

It should be remembered that precious metals are necessary in times of inflation, but essential in times of deflation. This is because they are a tangible protection against the collapse of the monetary system, which is what we are approaching. And it is that, desperate and guided by wrong theories, governments and central banks will go to the last consequences to try to revive the economy with their usual methods: wasting money, printing it without limits and further depressing interest rates. The monetary “stimulus” announced by the European Central Bank a few days ago is just the most recent example. In the end, the mess they are creating will be attributed to everything but their own mistakes.

Let's hope that 2015 is indeed a new "year of silver" and we spread the message. The drop in demand for Libertad ounces could be a sign that the public is getting carried away by the official propaganda that “we are doing well”. An old tale that we must not believe.

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