John Lee was just on Palisades Radio yesterday – you HAVE to listen to this guy, fascinating. Someday, I want to go to some of these mining conferences if the wife ever allows me to. There’s a handful of people I’d love to sit at a bar with and just kick back for hours – that seems like a great post to have in the future, by the way, “who is your Mt. Rushmore in the mining industry to sit down with for a beer”? John is on that list. Why? The dude has lived everywhere, and my guess is he speaks at LEAST 3 languages fluently. He has an economics degree and was a software engineer – so my background in my MBA and IT for 27 years seems to be a nice match to chat. But the dude just seems to bring a lot of energy and insight. I have heard him on Arcadia Economics a few times and he always seems great for a chat.
One thing I remembered seeing on paper was that “silver elephant was good in the $40 price range” and is in Ethiopia. So this is NOT a write up endorsing Silver Elephant, and I’d love to hear numbers about SE if anyone has them to help me correct this from above. I’m also not crazy about the jurisdiction, but I have readers from probably 100 countries so that jurisdiction probably doesn’t scare some mining investors. What I DO like is his talk about electrification and nickel and Africa is going to be a big time continent over the next 30-50 years for electrification. He also talks about how companies are not interested in assets less than 100m ounces of silver, so part of me thinks he’s going big on these properties to lead people like a horse to water to show he may have large assets.
The main reason I’m writing about him was there were four particular pieces of information in his interview I thought were compelling:
- He feels the economic issues that lead to devaluing of the dollar can be seen by high price to earnings ratios in things like the S&P, and when you do see this money then trickling into the commodities, this is where you see inflation. I think he’s mostly right here in what I call “dinner table inflation”. When lumber, beef, and corn go up – people see higher prices at the grocery store. However, this stuff isn’t necessarily captured in the CPI, according to Danielle Demartino Booth – so I like how he shows the money trickle down into the commodities as an indication for him for inflation. However, by CPI definition, you could see contracting of the labor force and the like which is deflationary. So our CPI index is HIGHLY flawed. MY takeaway on this is that the price of gold is essentially valued by negative real rates. With the 10yr being pushed down over the years, they needed to SHOW a low CPI to ensure gold doesn’t run hot. The question for everyone is – when will this inflation show more in the CPI, and when will hedge funds and the people in general stop believing the CPI and front run gold anticipating the negative real rates will catch up? I discussed a phenomena where you can essentially have inflation and deflation at the same time here.
- He says the issues going on today are like 2011 but bigger and on a faster timeline. I did this EXACT study months ago where I showed the same problems are repeating since 1971 – but bigger and faster. I can’t find it here – I think I sent it out in my morning newsletter I used to write every day. I showed the cup and handle from 1980 to 2011, then the one from then until now, and all metrics seem to show that it’s on 1/3 the timeline of that. 1980 to 2011 was about 30 years, this last move is 10 years. One third the time. The flagging time may be 1/3. This is also showing acceleration of the loss of the dollar is moving faster – which is another way of looking at that.
- He mentioned how the price FLOOR of silver is set by the manufacturing demand, and the speculative investment then drives the price higher. I think it’s important for anyone who is newer to this sector to know investment demand usually is 20% of silver for the year, and when this runs significantly higher – then so does the price of silver.
- He feels over $27.50, silver is off to the races. I recently wrote about him being on Arcadia last week, and he feels this may only be a few trading sessions away.
$26 silver today?
Chris Marcus put something out there I think all of us NEED to understand – and this will help more with my understanding of price action. I think I’ve been right with price pull backs at the end of the month, but perhaps for the wrong reasons. I have shown that for the last 8 months, you see price pull backs from the 18th-23rd every single month – by an average of $3.09.
What I was ASSUMING was this was part of knocking down contracts for the next month’s delivery. This COULD be partially true. But one other aspect that goes into this is looking at the futures options and understanding where all of the action is. Chris pointed out that a lot of the call options are at $26, so apparently the banks will then take price down below $26 to collect ALL of the money people put up on these bets. You then have to wonder, why would anyone do options on these IF the banks knew where all of the action was and all they have to do is short it down on paper? Today is Tuesday, so this is a new week, I believe, for them to square their books? It would then stand to reason they have to take it below $26, and then they can buy back their positions – perhaps tomorrow or Thursday? Anyway – my chart data could be coinciding with options expirations dates, and this could be a lot of evidence needed by those doing the suits to show that prices are pushed down hard at these times, to then rob all of these silver call options people of their premiums. Essentially, this is shooting fish in a barrel.
I had called for a price drop potentially to $24.50, BASED on the above data. However, if all of the options money is at $26, then perhaps all they need to do is hold it under $25.97 or so for today, then they can let it run tomorrow. They do not NEED to squash it that far down to win the options bets. It would stand to reason they will try and use a cover story like the dollar moving up .1 as a reason for this.
I’m waiting until Thursday to buy back in on any SLV options for June. I sold at like $26.44, so if I can buy these at $25.75 or so it would be a nice lucky move to have made.
I’m also looking to by back into Chesapeake Gold – it was one of my favorite last summer and I bought at like $3.50 or $3.75 and sold out at $5.20 or so. After months of gold pulling back and them appearing to figure out an economic way to extract gold – this might be of interest to watch. Over 500m oz of silver and I think 19m oz of gold? The big issue was – the gold was lower grad and could it be economical? I think I might buy in to this today if metals pull back a little due to the options. Maybe a late day buy in for the position after work if price is right.
Egon’s 1000:1 paper to silver ratio
Oh God. I did bad things. I woke up some sort of massive argument within the community. It really wasn’t my intention. I listened to Egon von Greyerz many times on YouTube. Seems like everyone’s favorite grandfather. And I go in there and start breaking shit like a bull in a china shop. While it wasn’t my intention to cause ANYONE any reputation harm – the questions need to be asked on what this 500:1 or 1000:1 paper to silver ratios are. Egon has claimed there are now 1000 paper claims for every 1 ounce of silver – which is twice as much as been reported recently – quite a mark up.
In the article, you see: “The LBMA and Comex clan has sold their physical silver up to 1,000X over.”
What I did on Friday was write a piece discussing Krakatoa to happen to the banks. I used TWO numbers. One was 500:1, and the other was 10:1. See – the claims Egon has come out recently and said are that there are 1,000 paper claims for every ounce in the LBMA and COMEX. Now, everyone ASSUMES all of these bars have multiple owners. However, I don’t see EVIDENCE of this. It doesn’t mean they are wrong, either, as many of them perhaps have had conversations with people who have worked in these institutions and leaked information to them. What the FINANCIAL evidence is showing is that there are not 1000 paper sales for each ounce in the COMEX/LBMA.
However, I just want you to look no further than this:
If the LBMA has 1.1b oz and the COMEX has about 400m oz (it’s 362m today, work with me for rounded numbers) that is a total of 1.5b ounces between the two. At $25 silver, this is a $37.5 Trillion paper market in derivatives if it is 1000:1. I put out an open call on Friday and on Sunday – can ANYONE tell me any companies or products that could be leveraged even 30:1? 50:1?
See, I have a hard time believing that the silver industry is a $37.5T market. Probably by a factor of 20x. Even the bitcoin people are all over themselves that they are about to surpass the $1.5T silver market. All of us in silver are like, what are you talking about, we think we have an $80b market – where the hell are you getting $1.5T?
Even Juff Currie who talked out of his hind side with a 25 billion ounce silver market takes this to a whopping $625 billion market, less than half of what the bitcoin people think silver is. If you take all of the above ground silver – estimated at 60 billion ounces (that bars, coins – as well as jewelry and silver lost in electronics or dumps) this takes you to…..$1.5 T. So I can at least SEE where the bitcoin people inflate the “silver market” 12 times. They count the silver in band aids, solar panels, and lost in dumps. What the bitcoin people don’t realize is they probably passed the silver market cap well over a year ago. before they went 8x.
But if all of us are putting this number in due diligence to attract more people with an investment case – should we be more careful of quoting this 1000:1? Or even 500:1?
I asked anyone – IF you could point me to ANY products with this kind of leverage, let me know. 37,000 people saw my tweet on Friday. I’m now getting some eyeballs here. IF you can find these products, I will gladly send John Adams, the Liberator of silver unallocated – to assist in this offense.
But I got crickets. If you check the article, there were some thinking maybe Forex trading back in the day may have used 350-500:1 if you were trading against silver, but leverage has changed over the years and this might be 10:1 today.
So this $37T silver market??? Where is this money parked? This is assuming every bar in SLV is sold to 1,000 customers, without even thinking of the COMEX pile. What companies are selling what products to account for this 1,000 number? Yes, maybe some of these are leased out a few times?
See – the good news is, even at 10:1, the whole damn thing implodes on itself very shortly. And that’s why I also used a very conservative number of 10:1. It could even be as low as 2:1.
Where COULD this number come from? I suggested that a Jeff Christian himself came up with this number by talking FUTURES TRADING VOLUME IN A MONTH. I believe he was quoted at 92x gold. I did this for silver.
You had high volume trading of 500m oz in a day, for 20 trading days a month? That’s 10b ounces sold. What if the COMEX only had 200m oz in at the time? That’s 50:1 ratio. But you have to understand, that 500m oz they sell in a day, this is not NET, this is VOLUME – meaning this is the same oz being sold back and forth. So contract A is sold at 9AM to company B. Company B then sells that at 9:36 to company C. Company C sells that at 10:03. And so on, and so forth. The NET contracts are the open interest – where for EACH CONTRACT there is a buyer and a seller. For 170,000 or so contracts, that’s 170,000 sellers and 170,000 buyers. That’s 850m ounces for sale where a seller is selling 850m oz and a buyer wants 850m oz.
So what you CAN say, TODAY, is that if you look at the 850m sold, and look at the 118m in registered and you get a 7.2:1 ratio. Even using the 371m in the COMEX (registered AND eligible), you have a 2.29:1 ratio of paper to physical. HOWEVER, according to Bix, Goldman sold 15m oz out of SLV and handed that over in delivery in early March. SLV has that vault at the LBMA, not the COMEX. So – perhaps these stores are physical at the LBMA – where all of the big banks may also have stakes in SLV located there? It would then stand to reason that a MINORITY by a GREAT DEAL of these 850m oz are NAKED shorts, perhaps then giving us a 1.05:1 paper to physical ratio. This is also perhaps a means of settling the EFP we see from the LBMA. Maybe they are tapping SLV shares and collection occurs over there?
It would appear, to me, that the high ratio that is being talked about is the VOLUME of ounces sold in a month and divide that by ounces in the vault and you get a massive 50:1 ratio. Again – this is misleading. And Egon may have this upsized by 20x?
My goal here is to SOURCE this information – not to make anyone look foolish. All of us that are quoting these experts, we just want to know how we can arrive at 500:1 or 1000:1? So….let’s politely have this conversation. Interviewers out there – let’s prod this number a little so we can get more clarity on this?
We all want the best information we can.
So my question still stands out there – if ANYONE has any evidence of any company doing even a 50:1 ratio, please let me know, as this can help Operation Unwind. Now – is there leverage there? YES!!! And, Operation Unwind is geared towards:
- Understanding what leverage exists. Let’s get the correct information
- Work to unwind that leverage. As the leverage is unwound, all of the people who THOUGHT they were buying real silver, will. This could be another 10 million ounces in demand or 2 billion ounces. Who knows?
The secret here is getting your data and information correct to then strategically target where to look.
Kitco giving me issues
I watched Kitco all the time with Daniela. Tough questions. Personable. Friendly. Seemed to have a real affection for those she interviewed and has known for many years. Fast forward post-Daniela. I like David Lin’s style. Pretty business-like. Strong background. But I don’t know if it is Kitco that is kneecapping him or what, but recently there have been interviews with Jeff Christian and now Phil Newman, who discusses “record silver surplus”.
Kitco. You have lost your minds, and you really, really need to take a look at your comments section for him. I have never literally seen a thumbs down ratio like this on any video on YouTube.
This guy somehow tries to tell people there are record surpluses. The numbers released by the very org he’s representing show deficits since 2016. There was also 500m in investment demand last year, which drove silver to a 350m deficit. Did he MEAN to say record deficits? Because that’s what ACTUALLY happened.
The only thing I can think of is that John Adams has really hit a sore spot with some organizations, including Kitco, and their only response is to try and march out guests which try to use Jedi mind tricks to tell you there is no shortage. It’s literally lies. And we are now getting this in the PM sector from a market leader?
One follow up question that David could have asked.
“Phil, you state there were record surpluses, but since January, there have been reports of 1,000 oz bars having between $.80 and $1.40 premium, which is significantly higher than normal. You state the shortage is just due to the the metal not in the right form, but wouldn’t these high premiums also on 1,000 oz bars suggest there is a shortage here, as well?”
Somehow, this guest remained unchallenged, despite evidence showing 350m deficit last year. How does Kitco save their reputation within our community?
They don’t. This might have been a Fonzi jumping the shark moment. It’s not bad enough they march Jeff Christian out there occasionally to try jedi mind tricks, but now this guy? What I find interesting is – how can these guys keep a straight face?