Why 99% of Central Banks Do Not Own Silver

First, I want to start by saying thank you to everyone who has subscribed to Fiat’s Funeral and given me the chance to share some perspectives and analysis with you.

I will not burden you with a flood of emails every week. When I have something valuable to say, I shall say it.

I will start with a small quote to kick things off with a bit of positivity, wherever you are reading this from:

“The best day to start was yesterday. The next best time is now.”

I had been contemplating starting this newsletter for a while, but after hitting 100 plus subscribers without writing a single piece of content, I thought, why not.

Many people have noticed the massive influx of central banks buying gold over the last little while. What fewer people seem to be talking about is the obvious follow up question.

Why on earth are they not buying silver?

Silver has been flying over the last few weeks, hitting new highs multiple days in a row.

Yet there are only a few countries really pushing against the current.

Russia, India, and Saudi Arabia have already begun buying silver at the central bank level, with India even allowing gold and silver into its pension system for the first time ever.

That alone should make people pause.

The consensus view is that rates are coming down, and therefore gold and silver should rise as a mirror image of that move. While that can be true, it is not the full story and it is definitely not the only driver.

In my professional opinion, gold and silver will continue to move higher over the next few years.

Even the tables above shows silver outperforming gold over the last five years, largely driven by the explosive move we have seen in the last 30 days alone yet over the last 20 years gold has still won the long fiery race.

But back to the main point.

Why Do Central Banks Not Hold Silver?

The simple answer is that the International Monetary Fund does not officially recognize silver as a reserve asset.

Because of that, most central banks have historically focused on gold. Gold checks every box. Liquidity, neutrality, durability, and decades of monetary precedent.

Silver does not.

As economic uncertainty grows, more nations may consider adding silver for diversification and protection, but will the IMF ever formally recognize it.

Could it happen. Yes.
Do I think it will. Highly unlikely.

Silver has always lived in an awkward middle ground. It is treated more like an industrial metal than an appreciating monetary one.

Even platinum and palladium, which were stagnant for years, are now starting to follow gold and silver higher.

That should tell you something.

I will say this with a grain of salt. I can absolutely see silver flying violently higher and then falling off a cliff, just like it has done in past cycles.

For transparency, I do own silver stocks. I own physical silver. I even buy it as gifts for family and friends, mostly because I am not buying them one ounce gold coins just yet, maybe after this precious metals bull market.

So I will end my first Fiat’s Funeral opinion piece with this.

I expect silver to continue higher, but the party does stop eventually. History is pretty clear on that.

When it comes to placing bigger bets, I will still choose gold.

Fiat always fails slowly, then all at once.
Gold survives every cycle.
Silver just moves faster, in both directions.

Sincerely,
Mr. Uppy