In an interview on the Liberty and Finance, precious metals expert Andy Schectman, CEO of Miles Franklin Precious Metals, delivered a stark warning about the vulnerabilities of paper-based gold and silver investments while highlighting an unprecedented surge in demand for physical metals by major players. Schectman's analysis suggests a growing lack of faith in traditional financial instruments and a strategic shift towards tangible assets amidst global economic uncertainties.
The widely viewed interview, hosted by Kaiser Johnson, explored the underlying forces driving the sustained strength of gold and silver. Schectman, a respected voice in the precious metals industry, drew upon his deep understanding of market dynamics to explain why "smart people are… standing for delivery in levels and amounts that the COMEX has never seen before."
Schectman Slams Paper Gold and Silver as "Awful Product"
A significant portion of the discussion centered on the critical differences between owning physical gold and silver versus investing in Exchange Traded Funds (ETFs) like GLD and SLV. Schectman was emphatic in his criticism of these paper-based alternatives, labeling them an "awful product in every way."
"GLD and SLV are simply a way to relatively track the price of the two metals," Schectman explained. He raised serious concerns about the custodial arrangements, the inability of investors to take physical possession, and alarming clauses within the ETF prospectuses. "If the gold or silver that is held by the subcustodians does not meet London good delivery standards, they are not responsible. In other words, it could be lead bars painted gold or silver, and the custodian is not responsible," he cautioned.
Schectman argued that these ETFs expose investors to unnecessary risks and costs, including management fees and counterparty liability. "Having physical metal in your possession… removes any counterparty liability," he stressed, adding, "I would 100 out of 100 times choose physical possession over uh something that I consider to be an awful product in every way. And that would be GLD and SLV."
A key focus of Schectman's analysis was the unprecedented demand for physical gold and silver on the COMEX. He revealed staggering delivery numbers, indicating a strong preference for tangible assets among well-informed investors.
"Almost 14,000 contracts have been delivered in silver, another all-time high in May," Schectman stated, emphasizing the magnitude of the demand. "The May COMEX contract had over 16,000 contracts standing for delivery. That smashes the previous record, which was in March… what that signals to me is this is a full-blown run on physical metal."
Global Shift Away from Dollar Dependence Underway
The Liberty and Finance interview also touched upon the broader global context, with Schectman highlighting the increasing trend of de-dollarization and the strategic accumulation of physical gold by central banks worldwide. He pointed to the actions of BRICS nations and other countries actively reducing their reliance on the US dollar and bolstering their gold reserves.
"We're seeing physical delivery everywhere across the globe, certainly through all the BRICS nations," Schectman noted. He specifically mentioned Poland exceeding its gold backing targets and China's methodical accumulation strategy. "They've been slowly and methodically on all different levels… upping the quotas on the banks to state-sponsored accumulation programs through the Shanghai Metals Exchange."
Schectman believes this global appetite for physical gold signifies a growing "loss of faith within the system," encompassing not just the US dollar but also traditional financial infrastructure. He suggested that the preference for physical ownership could be linked to preparations for a new international monetary system where gold plays a more prominent role.
Expert Warns Against Outdated Financial Thinking
Addressing a statement from a Florida Homeowners Association committee that deemed gold a "speculative and volatile asset" unsuitable for low-risk investments, Schectman strongly disagreed. He argued that such thinking is "outdated" and fails to recognize the current realities of inflation and the potential fragility of traditional investments.
Andy Schectman's interview on Liberty and Finance provides a compelling perspective on the current state of the gold and silver markets. His emphasis on the unprecedented demand for physical metals by significant players serves as a powerful indicator of underlying concerns within the financial system and a strategic move towards tangible assets. By urging investors to look beyond paper representations and consider the "body language" of "big money," Schectman underscores the growing importance of physical gold and silver in navigating an increasingly uncertain global economic landscape.
Watch the full interview:
