Tuesday , August 11 2020
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Tag Archives: Basic Reports

Silver Explodes—But Why?

The silver market witnessed another explosive day! At midnight (in London), the price of the metal was $26.90. By 9pm, it had rocketed up to $28.95, a gain of 7.6%. This is not normal. But then, we are not in a normal world. The Republicans are spending like drunken Modern Monetary Sailors. And there’s some chance that their even-bigger-spending rivals will be in full power after the November election. The deficit is now likely to be $6 trillion. The risk of holding dollars (or its...

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The Wealth Effect: Silver Edition

Silver has gone up a lot. In a post-interest world, one cannot earn much return by financing productive enterprise. Instead, people are forced to speculate on whatever asset bubble is inflating at the moment. Speculation is different from investment, in that the speculator’s profits come from the capital of the next investor. It’s a process of conversion of one investor’s capital into another’s income, to be consumed. This is the great feat, which economists call the wealth effect. The wealth...

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Inflating a Silver Bubble, 5 August

Recently, we’ve been publishing updates after days when the silver price has spiked up. Now, after Tuesday’s trading action, silver trades over $26. Its price moved up over two bucks (about 8%). The long pattern since the peak price hit back in 2011 has been that a rise in price  accompanies rising abundance. That is, more metal comes to market at higher prices. Supply and demand, and all that stuff they taught back in Econ 101. But in recent weeks, there’s been a different pattern. Rising...

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Silver Scarcifies, 27 July

On 23 July, we said “Well, it’s complicated.” The action on 27 July was not. Notice the big drop in basis starting around midnight (London time). It falls from over 7% to under 2%. To refresh: Basis = Future(bid) – Spot(ask) For the first two and half hours, the spot price is not moving. So, the only way the basis can drop is if the price of the September silver future is dropping. In other words selling of futures. But while that was going on, there was enough buying of spot to keep it...

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One of These Silver Days is Not Like the Other, 23 July

Yesterday, the price of silver spiked about 10%. We wrote that it was driven by: “…buying of physical metal.” And we added: “This is a pretty good signal that a bull market may be returning to silver. Let’s watch the basis and price action closely and see how it develops, before we join the pack…” Today, the price was up another 50 cents, or about 2.2%. The question on everyone’s mind: was there more buying of physical? Well, it’s complicated. We broke the day down into 4 segments, to show 4...

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About that Spike in the Silver Price… 22 July

The price of silver has just spiked up about $2.00—that’s about 10%. All the usual suspects have been calling for silver to skyrocket. With some amusement, we have been watching ads from a guy known for savvy junior mining stock investments, who has been calling for gold to go up for a while. And recently, silver. Anyways, the silver trend is obvious. Coming after a long bear market, with many bull traps aka short-lived spikes in the price, and now with central banks committing more Acts of...

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Dear Bullion Banks, Please Come Back! Market Report, 13 July

One of our colleagues recently wrote an open letter to Ted Butler. The point was that Monetary Metals gold leasing is a different kind of activity than what is called “gold leasing” in the institutional bullion market. We make it possible for gold owners to lease their metal to gold-using businesses, and thereby earn interest in gold. Today, I want to discuss something that few in the gold community would defend: bullion banks aka market makers. Where Have the Bullion Banks Gone? There has...

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Defaults Are Coming, Market Report, 22 June

We are reading now about possible regulations for air travel. In brief: passengers might be forced to spend hours at the airport. Authorities will perform medical checks, including possibly needles to draw blood, no lounges, no food or drink on board the plane, masks required at all times, and even denied the use of a bathroom except by special permission. We would wager an ounce of fine gold against a soggy dollar bill that people will hate this. The majority of vacationers will not want to...

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Growing Dollar Demand, Silver Weirdness, Market Report, 15 June

The Federal Reserve has become more aggressive again, after several years of acting docile. As you can see on this chart of the Fed’s balance sheet, it has very rapidly expanded from a baseline from (prior to) 2015 through 2018, of about $4.4 trillion. After which, it had attempted to taper, getting down to $3.8 trillion last summer. Then it was obliged to reverse itself well before responding to the COVID lockdown. Since then, its balance sheet has gone vertical. More is expected to come....

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When Is a Capital Gain Capital Consumption? Market Report, 25 May

The price of gold dropped a few bucks this week, but the price of silver jumped about half a buck. The drumbeat for the gold bull market is well underway, and it is beginning now for silver. So let’s do a quick update on the supply and demand fundamentals. Here is the graph of the gold basis. The basis has come in quite a bit—but it is still 3.6% annualized. We do not believe that this as a “true” reading. It is a sign of buying of futures, which is the opposite of scarcity of metal and the...

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