ANDREW LIMBONG, HOST:
Silver is outshining the competition. Prices of the precious metal are hitting an all-time high, which is good news if you happen to have a lot of money in silver. But it also means everything from sterling silver jewelry to solar panels are getting more expensive. To help us wrap our heads around the international silver squeeze is longtime metals trader Bob Gottlieb. Bob, welcome to ALL THINGS CONSIDERED.
BOB GOTTLIEB: Thank you. I'm happy to be here.
LIMBONG: So you spent a career helping some of the largest banks manage their reserves, and you're recently retired from the industry. But help us here a bit. What is going on with silver?
GOTTLIEB: It really basically started with the gold run. The last two years, we've had a tremendous rally in gold, and silver has followed it. Gold, for instance, according to my thought process, has become the ultimate safe haven, and silver has followed that. Silver can have a catch-up because silver has a unique property as far as it's running in a five-year deficit. The demand for silver has outstripped the supply for the last five years. In addition to that, it's a safe-haven asset like gold is. It's a monetary metal, meaning that silver has been denominated in currency in the past.
LIMBONG: Yeah.
GOTTLIEB: The domestic production of silver is at max. People felt that tariffs were going to be instituted. And matter of fact, in the beginning of the year, tariffs were imposed initially on Mexico and Canada. And as you said correctly, Mexico is the - first of all, the largest producer of silver in the world. So the idea that you're going to tariff silver would restrict the amount of silver to come in.
Prior to the threat of tariffs, there was 250 million ounces of physical silver sitting in the CME warehouses, located in the U.S. A threat of tariffs - the price of silver went higher in the U.S., higher than the price of silver abroad. You had to pay a 10% tariff, and if silver was trading $50 today, that means you would pay $5 just to import the silver in. So theoretically, silver would be $55 in the U.S. and $50 abroad.
LIMBONG: For someone listening to this and thinking, OK, I think I'm going to empty my savings - right? - drain my retirement, it's time to go all in on silver - what would you tell them?
GOTTLIEB: I can't suggest how much to invest in silver as a portfolio diversifier. So for when the stock market crashes or you have economic uncertainty and geopolitical uncertainty, the safe-haven assets, such as gold and silver, will outperform.
LIMBONG: You know, you've mentioned a couple times now, gold and silver is a safe-haven asset, and there's people all around the world lining up to buy gold and silver. Why is there such a demand for a safe-haven asset?
GOTTLIEB: A tremendous amount of economic and political uncertainty - also if you take a look at our U.S. administration, you know - for instance, are there tariffs? Are there not tariffs? And also geopolitical as far as I think people are afraid of what the U.S. can do. And why is that? It's because countries are diversifying away from the dollar because of all this uncertainty. And with that, the safe-haven assets are getting a bid. And I think that's why it's just getting on people's radar, to screens. And the individuals haven't really gone into the silver like they have gone into gold. So I believe that's why there's a catch-up in silver.
LIMBONG: What is your outlook for silver in the future? Are we running out of it?
GOTTLIEB: Right now, the higher price has created some selling in the states - for instance, people that have inherited their grandmother's silverware. With the price, that's $50, and you never use the silverware. So we're seeing refineries in the states being inundated, and we will continue to see people investing in silver as a safe-haven asset.
LIMBONG: Bob Gottlieb is a retired precious metals trader and author of the upcoming book "Mastering Gold And Silver Markets." Bob, thank you so much for joining us.
GOTTLIEB: You're quite welcome. Thank you very much for having me.
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