If you look at the price of silver today, you see it at $26.20 or so. If you go back to Jan 21st, you see $26.01. Us “permabulls” who said silver should always go up must be clearly wrong.
This is what I’m seeing…
Let me do a quick review of the charts in the last two months to give you a picture of what we are seeing…
What you are seeing here is Jan 21st at about $26.10, then 2 months later, about the same. There was the massive spike up with the silversqueeze futures debacle (which I’d argue is 100% different than the ACTUAL silversqueeze of the physical drain media continues to not understand). You then had them smash it down, and a period of time over $28.
However, this was going on the entire time during this 2 month process….
What you saw is on 1/4, you were at .91% for the 10yr. Just yesterday, we hit 1.757%. Meaning, essentially in the last 70 days, the 10yr has DOUBLED and silver has gone sideways.
What most people do not understand is the correlation with a lot of this – either direct or inverse.
To make this simple, gold and silver have rocket fuel the lower a REAL RATE is. So it is better to be -6 than -1 if you are in to gold and silver.
You take the 10yr and subtract the inflation rate (CPI). If you look at today’s CPI chart, you see 1.7% overall:
This would mean that 1.7 – 1.7 = 0.
Gold and silver also have storage and transportation fees, and I’ve seen this discounted at .1%.
Meaning – that if a REAL RATE is zero, gold yields 0. They would be EQUAL. Except, gold’s storage and transportation fees ding this by .1.
So gold, in a sense, does not yield 0, it yields -.1%.
Meaning, at 0, it is better to put your money in bonds than gold or silver.
Well, if we actually used more REAL inflation rates, this could actually be 3, 4, or even 8% depending on who you use, what methods, etc.
So by using the actual CPI calculations, you would have seen the REAL RATE go from -.8% to 0 in about the last 70 days. Surely, you would have expected everyone to flee gold and silver and go to bonds.
Well, that’s kind of what we have seen in gold during this time.
Gold has steadily declined and we saw this on Jan 4th at $1944 and today at $1736. Gold dipped down into the 1600s briefly. Point is – gold is acting as you’d expect it to with a REAL RATE that is increasing to a positive number. I can debate the legitimacy of the CPI all day long with people, but the idea is that even if it was a negative REAL rate, it was a decreasingly negative REAL RATE. For example, going from -3 to -1 or the like.
But silver – silver is the same price, essentially. If you go back to Jan 4th when this whole rate thing started picking up, you see silver was $27.50, dropped off of a cliff, recovered, and has been essentially sideways ever since. Yes, we had silversqueeze, and a period in the $28s. One could make a legitimate argument that if WallStreetSilver and the silversqueeze had not existed, we could be at $21 or $22 paper silver price right now. Possibly $23. To be $3-5 higher than that, suggests MASSIVE physical buying has taken place during this time.
But in 60 days, same price. So what gives?
First, I feel there’s a bank run going on that perhaps only a few thousand people on the planet know about. That is, silver is being drained, and has been drained, for years. However, only now is it really showing up at the retail levels. Yes, silversqueeze happened in late January where a bunch of idiots bought silver and cleaned out retail worldwide. Wait. I was one of them. OK. When a lot of smart investors cleaned out silver at the retail levels, worldwide.
Pundits immediately came on to CNBC (“send out the CNBC muppets” from the silversqueeze Downfall video still makes me laugh). They proclaimed that you can’t squeeze the 25b oz silver market (it’s 3b oz). That “the shorts…ARE the ETFs” (no, they are not. It appears the holders in the ETFs are long there, then they hedge in the futures on COMEX. The ETFs themselves do not short). I saw guys I respect saying that cleaning out the retail won’t do anything – but they forgot the PSLV side of this, which I pointed out in my article – that would participate in draining the 1,000 oz bars. You had SLV supposedly add 110m oz in inflows in 3 days, change their prospectus to say the silver might not be there – and since have 90m leave the building. PSLV added nearly 30m oz this past month. The COMEX fulfilled 50m in deliveries – which included 15m from Goldman via SLV and 27m being pulled out of the COMEX.
We cannot underestimate the relentless retail pressure that has been put on all major bullion dealers. They are constantly trying to re-supply, which then has refineries taking 1,000 oz bars, and making products to help them backfill.
We can’t forget the billboard campaign, which raised $113,000 so far (I’m still on the top 20 donors list…woohoo!!) – and I am betting this will lead to some reinforcements coming…in droves.
The piece de resistance is the recent reports of the Perth Mint not only out of retail, but out of unallocated. PLEASE – BE CAREFUL WHEN READING THIS – we have reports of people who are trying to get their unallocated sent to them, and the Perth Mint telling them that they would be on a waiting list and it might take a year to get it. In their contracts, it states 10 days for unallocated, but of course there’s loopholes everywhere. The Perth Mint then came out with a non-denial denial, saying you can get product and invest in allocated and unallocated. They didn’t say you could take delivery of unallocated, but can invest in it.
Run on the banks
So many YouTubers have claimed for years that the short game of the big banks was to use the COMEX futures to spoof people out of their positions, buy back cheaper, make money. And – to continuously buy discounted silver to add to their stashes. While Ted Butler talks about the big 8 shorts being 400m short, no one is claiming they are naked short. They either have it in COMEX, LBMA, etc and then use the COMEX futures to short. Having the physical long allows them to absorb this risk.
However, if you look at the open interest, you see….804m oz short.
If the big 8 “crooks” as Ted calls them are indeed short 400m, AND if we assume they are all covered with long physical – this then reveals 404m more oz short by smaller players. And – do we know if they all have the metals? What percent of that could be naked short? I am not sure anyone on the planet would be able to get that information.
If we look at the most recent inventory report, you see 126.8m in the registered. These are, essentially, “for sale”. No one knows how much of the eligible COULD be for sale, but at the moment – these are 1,000 oz bars that hypothetically COULD be for sale, at some point.
This tells me that the COMEX futures are trading at 6.34x what is for sale. Obviously, we all know most of these get knocked down on paper, rolled over, etc. We are still seeing 5m that need to be delivered for March, and the question is – if you have the silver, why not just hand it over?
As Rick Rule said, trying to get the 1,000 oz bars from NA is tight. Premiums have come down a little, but are still high.
Now – question for the group. Of that 800m Open Interest (OI)…what if…just what if, there are news reports of a run on the banks? Do you think it would be more likely that some of these may stand for delivery? Heck you have a contract at $26, and price is now $36, and you hear it may go to $60. Do you buy the metals to front run? Possibly. Will they give it to you? Not likely. We won’t “break” the COMEX, but the “run” could be on for quite some time before the end of a delivery month like May comes where they simply tell you we need to settle in cash. IF that happens…dear god. To put it into perspective, TWICE we have had $50 silver prices without the COMEX defaulting. And, I’d suggest we would hit $50 again before any hint of a default would occur.
Would anyone tell you if there was danger? No. Because the next day you’d have 30m Americans lined up around every coin shop in the country.
Silver…is the terminator. IF this Perth Mint thing happened, and IF they can get a lawyer involved to get a written statement back – and this goes to mainstream media…well…anyone involved with silver junior miners will be wondering what island they want to buy.
I believe a bank run has been ongoing for some time, but now it is becoming more apparent to the visible eye. And the visible evidence that some idiot like me can plainly see means those on the inside have lined their pockets full of silver for quite some time.
And silversqueeze appears to be working.
How else can you explain in the same 2 month period that gold is down a LOT more than silver? Silver has held up, remarkably well. It keeps getting punched, and getting right back up. It is taking grenade launchers. And just immediately repairing itself. We are .85% higher in the 10yr, and price is the same???????????????????
People, this is HUGE.
Furthermore – in my writings, I discuss the phases of this silversqueeze so an outsider can understand. This is a little bit of a more high level document than my article on Eric Sprott being the 4D chess champion of the silver world (by the way, he now owns 16.6% of First Majestic and seems to own billions of ounces, in the ground). I believe we are nearing the end of Phase 3 now, which is having industrials now sure up their stockpiles and taking their metals off of the exchanges. This could be why we’ve seen so much metal getting drained from the COMEX, SLV, and now, perhaps the Perth Mint unallocated pile. We also saw with Ronan Manly reports, how the LBMA was at 85% usage of all of their metals, with the rest being allocated and unallocated – so there wasn’t a lot of float there to pull from. Wondering also how much unallocated is actually left at the LBMA, and IF this is an industrials metal run, how long until that unallocated is gone?
Ronan – you don’t read this stuff, but if any of my readers could give him some homework, this is the guy to do it. Ronan – do you have the ability to find out how much unallocated is ACTUALLY at some of these vaults anymore? Perth? LBMA? Any other big ones? I figure the game afoot right now is to monitor UNALLOCATED piles in the largest vaults. AS a run starts, investors may want to pull the metal they think is theirs from unallocated. And, possibly like the Perth Mint – some or many of these vaults may quickly put you on “a waiting list” and this may lead thousands of people to then start to scream from the rafters. That is probably in phase 4 as the banks are getting smashed on their shorts.
See – with fractional reserve banking, a bank might have $10 in cash, but can lend out at 10x or so, so perhaps they lend out $100 on that. With unallocated silver, this is PERHAPS the same concept. I don’t know. Anyone in the metals business want to let me know? It would stand to reason they could sell this unallocated many times over. If anyone wanted their metals, they send to them, place an order to backfill, and so on. If a run ever happens – you would just hypothetically do what the Perth Mint was said to have done by pointing to the fine print and telling them they would be wait listed up to a year to get the metals, denying there’s a problem, and using loopholes to offer cash.
I would then start to wonder…what about all of the other unallocated piles out there on the planet? How many of them have been drained? No one can tell you. Or some that might know, sure as hell won’t tell you. What’s left is an outsider idiot like me left to pontificate. We have to look at the signs all around in order to draw the picture.
Yield Curve Control
When I see yields rise like this, you start seeing the talking heads going out and saying…
“Interest rates are rising due to an overheating economy”!!!
Ummm….no. I’m not sure what you are smoking Karen, but please pass it to me.
When these rates are rising like this, it’s a sign of a few things. Inflation, the SLR not being extended, forcing banks to dump bonds, and lack of foreign interest in buying bonds.
Let me be clear. We are near $30 trillion in debt. You have the MMT people now talking about forgiving everyone’s student loans and letting renters not pay until 2022. You have 755,000 new claims for unemployment yesterday, and our economy may be forever broken. The $1.9T stimulus will help with the velocity of money, which then jukes the GDP numbers to 6% and people slap themselves on the back with a job well done.
This is really, really now in bizarro world.
I’m seeing things which trouble me in a geopolitical sense. First, I know the Chinese at one point had $1T in bonds. No idea what they have now. Figured at some point they will, or may, or have – started to dump these. Additionally, I saw how the Chinese are starting to buy up commodities on imports due to food shortages there. This is also telling me they may want to re-patriate a lot of the USD. If they dump the bonds, and they unload USD, it would tell me that this would drive rates way up on the 10yr but also put pressure on the dollar due to supply massively picking up and flooding us. At the same time, this buying pressure of our commodities, which are already massively inflated over the last year, will be pushed even higher – creating even MORE inflation. Which – would put even MORE upward pressure on the 10yr.
I have to tell you, this looks like some serious shit.
At the same time all of this is going on, no one will want to buy our 10yr. Why? Because it looks like our country is writing one massive check after another and I do not think other countries feel like funding our free college educations. Or infrastructure. Or pay free rent.
What I see happening is this….
- chinese buy more stuff with USD and more USD re-patriated. Sends DXY down on supply.
- The buying pressure of these goods increases prices of commodities, even more. Inflation pressures continue to go up.
- CPI will remain unchanged, but more dinner table inflation is noticed.
- More pressure on 10yr rising, Fed has to continue to be the “buyer of only resort”
- 10yr pressures will continue to have negative effect on NASDAQ and cheap tech money.
- Fed balance sheet will continue to rise, perhaps to $20T.
- YCC will have to be enacted formally. I believe some form of it is already in place, but not acknowledged.
- Inflation will continue, and really hot. Interest rates pegged on 10yr permanently to like 1.5, 1.75% – something like that.
- REAL RATES continue to plunge further negative, and CPI refuses to change.
- People start to get really, really nervous.
We also have to keep in mind that Russia now has more gold than dollars. Meaning, Russia can pay for things in gold and no longer really need the dollar.
I firmly believe that any day, week, month now – we will see silver explode at the end of “phase 3” as it starts to become known about how tight silver is. Currently, we see both Toyota and Tesla (edit: add Ford to the list) shutting down their NA factories due to chip shortages. I feel everyone is looking at these companies right now, and then looking at their supply chains, and wondering – where are we weak? What threats do we have? How can we mitigate this risk? Oh….buy MORE SILVER!
As they are thinking this, and looking…they see a headline come across the Wall Street Journal someday, soon….
“Run on silver has begun. Shortages now tracked everywhere, from Perth Mint to LBMA, to COMEX”.
And that’s all she wrote for silver.
Overall, the next 5 years or so, I’m seeing a 10yr between 1.00% and 2.00% with inflation at 3-10%, depending on year, circumstances, etc.
Check out inflation from the 1970s, and we are right back there…
He does look silver, after all? Maybe that’s the secret of the T-1000?