A Major Shortage in Gold and Silver Makes These ETFs Safer Buys Today

The gold and silver markets have been on a bullish run that started in 2022, but cracks are starting to show on the supply side that puts many investors at risk. To avoid it, look at ETFs backed by physical bullion, like the ones shown here:

Gold:

• SPDR Gold Trust (NYSEARCA: GLD) – founded in 2004, GLD tracks spot gold prices and its price reflects LBMA PM spot prices minus fees. GLD is listed on multiple exchanges, and trades on the Singapore Stock Exchange, Japan Stock Exchange, Hong Kong Stock Exchange, and Mexican Stock Exchange.

• Goldman Sachs Physical Gold ETF (BATS: AAAU) – AAAU tracks the  price of gold on the LBMA PM.

• Abrdn Physical Gold Shares ETF (NYSEARCA: SGOL) – SGOL also tracks the price of gold listed on the LBMA PM.

Silver:

• iShares Silver Trust (NYSEARCA: SLV) – SLV tracks the silver spot price in the market as listed on the LBMA..

• Sprott Physical Silver Trust (NYSE: PSLV) – recently reaching a $10 billion NAV, this trust holds silver bullion in Royal Canadian Mint vaults. Under certain circumstances, it is one of the only funds that a shareholder may be able to redeem some shares for physical silver. It is listed on both the NYSE and TSX and tracks pricing on the LBMA.

• Abrdn Physical Silver Shares ETF (NYSEARCA: SIVR) –  this ETF keeps its $3 billion in silver bullion assets in London vaults and tracks silver price on the LBMA.

To date, both metals’ spot prices have risen over +150%. Recent spot prices have been so strong that they sent the markets into a state of backwardation earlier this October. Not unlike an inverted yield curve with bonds, backwardation is an occurrence when spot prices exceed futures prices. This interprets that the market believes that a physical metals shortage is in effect. Thus, buyers are willing to pay more now, rather than take the risk of being unable to obtain it in the future.

Due to a surge of physical buying out of India with the onset of the Diwali holiday, Indian markets were closed and buy orders were routed to an unprepared London Bullion Market Authority, which resulted in spot premiums for silver zooming from the normal equivalent of 25-30 cents to over $5.00 per oz. Although the backwardation did not last long, it was viewed by many analysts as the first sign that the dam is about to burst, and that supply and demand are going to supplant the paper traders in the precious metals market going forward, due to a variety of interrelated reasons. While a number of them cross over, the reasons for current and projected future shortages of physical gold and silver can be approximately categorized as follows:

• Industrial

• Economic

• Geopolitical

• Systemic

Industrial Reasons

Although gold’s industrial and commercial applications are dwarfed by those of silver, gold has become an increasingly important component in the manufacture of pacemakers, cochlear implants, and imaging for cancer patients in the medical field.

In the case of silver, it has long been valued for its electric conduction properties. Just a few of the ubiquitous items that utilize silver in a limited to non-recyclable configuration include:

• Smartphones

• Flat screen TVs

• Computer monitors

• Electric Vehicles

• Batteries

• Solar Panels

The surge of demand for solar panels, in particular, has driven significant physical silver buying from China and Saudi Arabia. AI growth demands additional use of silver in many data center computer components and other applications in aerospace and other fields are created annually.

Although it is less commercially utilized than silver, gold applications in medicine, environmental technology, and in satellites have evolved in the past decade and continue to do so. Some examples include:

• Gold durability and reflective properties are valued for protecting satellites, space shuttle windows, and astronaut helmet visors.

• Medically, gold is becoming increasingly used for cochlear implants, cardiac pacemakers, and medical imaging for cancer monitoring.

• Environmentally, gold is being used for water purification systems and as fuel cell catalysts.

Economic Reasons

The weight of inflation from Bidenomics is one of the major triggers that spurred on the bull run in physical gold and silver in 2022 that has continued to the present.

It’s no secret that the effectively double-digit levels of inflation under Bidenomics resulted in prices of fuel more than tripling and the price of eggs zooming from $3/dozen to over $15/dozen. The buying power of the US dollar has lost 90% of its buying power since President Nixon took the US off the gold standard to create the Petrodollar with OPEC back in the 1970s. The historically validated use of precious metals as a store of wealth and as a hedge against inflation appears to have been embraced in the market – the high point of Bidenomics’ inflation coincides with the 2022 beginning of the current bull run in gold and silver.

The popularity of gold and silver has grown to such an extent that the following states have officially passed legislation declaring those metals in hallmarked configuration as legal tender:

• Arizona

• Arkansas

• Florida

• Kansas

• Louisiana

• Missouri

• Oklahoma

• South Carolina

• Texas

• Utah

• West Virginia

• Wyoming

17 additional states are reportedly pending completion of legislation and ratification.

Bullion dealer Goldcore’s Dave Russell has noted that the overall sentiment driving smaller configuration physical gold and silver buying (1kg and lesser amounts) is an overall sentiment that is pro sound currency and anti fiat currency. Currency debasement has historically wound up with economies once again falling back to sound, hard currency, i.e. gold or silver. As a result, he believes that the US dollar, Euro and Pound Sterling – all fiat currencies – are going to fall further into disfavor as the trend continues.

Geopolitical Reasons

A longtime advocate of sound monetary policy and returning the dollar to the gold standard, President Trump’s initiatives to end federal income tax, transform the IRS into a tariff collection agency, and to co-opt the Federal Reserve Bank may become manifest if Treasury Secretary Scott Bessent authorizes US Treasury bonds that redeem in physical gold.

There are a host of geopolitical events, policies, and trends that have caused a global trend towards accumulation of physical gold and silver bullion, aside from commercial and industrial demands.

• De-dollarization: There has been a global shift towards de-dollarization. Much of this has been led by BRICS (Brazil, Russia, India, China, and South Africa), which have entered into trade agreements that settle international transactions in the member companies’ respective currencies rather than in US dollars. Additionally, gold statistics show that international holdings of physical gold have surpassed US Treasuries, further demonstrating this trend.

• Central Bank hoarding: central banks of many sovereign nations have been hoarding hallmarked gold and silver in large 12.5kg bars at a steeply escalated rate. The Royal Mint, which is the UK’s official mint for producing GBP coin denominations, cited fears of the reciprocal tariff announcements from President Trump as a contributing factor towards this trend.

• Domestic US Financial Policy: President Trump’s resetting of US foreign policy has seen a flood of investment funds pouring into the US. A September Forbes article by Steve Forbes alluded to the possibility of Treasury Secretary Scott Bessent authorizing the issuance of US Treasury bonds that would be redeemable at maturity in money or in physical gold. Such a move would:

1. Undercut and reduce the $38 trillion US debt overhang;

2. Undercut leverage that China and other nations holding billions in US Treasuries presently have over the US;

3. Terminate inflation for good by ending fiat currency;

4. Justify folding the Federal Reserve Bank into the US Treasury, return the US dollar to a gold standard, and terminate federal income tax – all initiatives that were discussed in the 2016, 2020, and 2024 presidential campaigns.

Systemic Reasons

BullionStar has cited on numerous past instances that the paper silver market is hundreds of times larger than the amount of physical silver actually available. They hold that the London paper futures market is coming to an end.

Many of the systemic reasons for gold and silver shortages are a manifest result of the causes listed above. For example:

• 29 million oz of silver have left COMEX London vaults this month.

• The huge demand from central banks for 12.5kg bars has occupied the bulk of most refiners’ resources, making smaller configurations scarcer and thus, more expensive.

• Silver lease rates have reached as high as 100 percent, indicating physical silver shortages, particularly in the London spot market. Metals dealer BullionStar has highlighted in numerous past instances that the paper silver market is hundreds of times larger than the amount of physical silver actually available. They hold that the London paper futures market is coming to an end, since banks and ETFs are hoarding bullion, leaving the futures market too risky and unreliable.

• In October, both India’s largest refinery and Japan’s largest bullion dealer had to curtail business due to insufficient inventory.

• A number of precious metals CEFs have halted new subscriptions over inability to access additional bullion.

• Even the Bank of England disclosed that  British investors experienced long waits for physical gold withdrawals in October.

Even if the current shortage is due to a lack of refinery capacity availability, it doesn’t address the fact that, especially in the case of silver, that demand has outpaced production annually since 2025. The current trend towards hoarding gold and silver at a sovereign nation level will only further increase shortages if it continues. It would appear that genuine supply and demand economics will once again dominate over paper trading.

Gold and Silver ETFs To Consider

Gold and silver ETFs are both likely to see commensurate gains with a continued bullish run in spot gold and silver prices.

The likelihood of continued gold and silver price escalation appears to be a strong bet. ETFs that have bullion supplies of either metal are likely to see commensurate upside, as they often track the spot prices of those metals. Some of the more liquid ones to consider are:

Gold:

• SPDR Gold Trust (NYSEARCA: GLD) 

• Goldman Sachs Physical Gold ETF (BATS: AAAU) 

• Abrdn Physical Gold Shares ETF (NYSEARCA: SGOL)

Silver:

• iShares Silver Trust (NYSEARCA: SLV)

• Sprott Physical Silver Trust (NYSE: PSLV)

• Abrdn Physical Silver Shares ETF (NYSEARCA: SIVR)