Author Archives: Keith Weiner

     

 

 

Fundamental Developments

Last week, the prices of the metals mostly moved sideways. There was a rise on Thursday but it corrected back to basically unchanged on Friday.

This will again be a brief Report, as Monday was a holiday in the US.

Below, we will show the only true picture of the gold and silver supply and demand fundamentals. But first, the price and ratio charts.

 

Prices of gold and silver – click to enlarge.

 

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Silver Is Pushed Up Again

This week, the prices of the metals moved up on Monday. Then the gold price went sideways for the rest of the week, but the silver price jumped on Friday.

 

Taking off for real or not?

Photo credit: NASA

 

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Gold and Silver Divergence – Precious Metals Supply and Demand

Last week, the prices of the metals went up, with the gold price rising every day and the silver price stalling out after rising 42 cents on Tuesday. The gold-silver ratio went up a bit this week, an unusual occurrence when prices are rising.

Everyone knows that the price of silver is supposed to outperform — the way Pavlov’s Dogs know that food comes after the bell. Speculators usually make it so.

 

Stalin regarded Pavlov’s psychological theories as compatible with Marxism and “dialectic materialism”. Soviet psychologists who championed competing concepts were reportedly often declared insane and involuntarily committed to a booby hatch. Pavlov meanwhile kept a secret stash of silver bars under the table in his lab, which his dog had conditioned him to buy (see photographic evidence of this counter-revolutionary activity above). [PT] – click to enlarge.

 

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Silver Gets Frisky

Last week, the prices of the metals had been up Sunday night but were slowly sliding all week — until Friday at 7:00am Arizona time (14:00 in London). Then the price of silver took off like a silver-speculator-fueled-rocket. It went from $16.68 to $17.25, or 3.4% in two hours.

 

March Silver, 30 min. candles. Someone certainly piled in last Friday… – click to enlarge.

 

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Currency Debasement Doesn’t Make Anyone Richer

The action favored bettors this holiday-shortened week (Monday was Martin Luther King day in the US), with the price of gold up 13 bucks and silver up 26 cents.

We noticed a worrisome remark by newly inaugurated President Trump. The strong dollar of the past 20 years, he said, is not good for American competitiveness. Let’s just tackle this straight on. Actually, we will address three distinct issues.

 

President Trump and his advisor Anthony Scaramucci apparently have discovered the “advantages” of currency devaluation. The only problem with that is that such advantages don’t exist, at least not for society at large. As is always the case when money is debased, there is a small group that will benefit to the detriment of everybody else in the economy. However, in the case of currency debasement, even this group (primarily the export sector) will enjoy only temporary benefits at best. Eventually, domestic prices will adjust to the devaluation, and then many exporters will find themselves in a worse situation than before [PT]

Photo credit: AP

 

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Rising Scarcity and a Nascent Change in Trend

Last month, we noted that there could be a trend change in progress. Not only are the prices of the metals rising (which is just a mirror-image of the dollar falling, from 27.6 milligrams of gold just before Christmas to currently under 26mg). But the scarcity of gold as we measure it, using the spread between the price of gold in the spot and futures markets, has been rising.

 

All the gold in the world (excluding Ben Bernanke’s grillz collection). The estimate appears a bit dated, but even if we e.g. assume that there are  about 180,000 tons of mined gold in the world, the cube would only be slightly larger (approx. 20.5 by 20.5 meters, or 67.25 by 67.25 feet).  There is actually considerable uncertainty regarding the total amount of gold mined in the course of history, but the fact remains that it is quite rare. At the same time, its existing stock is very large compared to the flow of new gold supplied by mines every year. The large stock and only slowly growing stock is one of several reasons why the market has chosen gold as money. [PT]

 

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Supply-Demand Fundamentals Improve Noticeably

Last week was another short week, due to the New Year holiday. We look forward to getting back to our regularly scheduled market action.

 

Photo via thedailycoin.org

 

The prices of both metals moved up again this week. Something very noticeable is occurring in the supply and demand fundamentals. We will give an update on that, but first, here’s the graph of the metals’ prices.

 

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Rate Hike Heeded by Gold, Ignored by Stocks

The price action was not what most of those in the gold community hoped for (or predicted). The price of gold dropped another $24 and that of silver nearly a whole dollar.

 

Observing the stock market triggers all sort of reactions….

Cartoon by Bob Rich

 

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A Lawsuit Makes Waves

The price action was mixed last week. Those hoping for dollar declines in gold terms were disappointed. However, silver gave them a sop as the price of the buck declined by one one-hundredth of a gram of silver. In Monetarist terms, gold went down $18 and silver up 11 cents.

Monetarism, in its insistence that the dollar be used to measure gold, is in denial that the value of the dollar is unstable. Everyone knows that the Fed tries to devalue the dollar at 2 percent per annum (as it reckons it), yet insists on using it as the meter stick for measuring economic value.

 

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A Plethora of Reasons

We’ve gone through a succession of events and processes that were supposed to make gold go up. The following list is by no means exhaustive:

 

  1. Quantitative Easing
  2. Bernanke’s Helicopter Drops
  3. Janet Yellen’s Keynesianism
  4. Obama’s Deficits (US government debt is now a hair away from $20,000,000,000—and that’s just the little part of it they put on their balance sheet)
  5. The election of Trump
  6. The Italian Referendum (current as we write this)

 

gold-and-scales1We knew it! The darn thing is simply too heavy to go up! But it is going to get a boost now, because the vast majority of mainstream analysts who turned bullish as the rally earlier this year was close to ending have turned bearish by now…[PT]

 

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How Not to Predict Gold Prices

Sometimes, we think that every story in the gold community has the same template:

 

  1. I have inside information to share with you
  2. My peeps are telling me that <XYZ> will happen
  3. If <XYZ> happens, then the gold price will go ballistic
  4. (<XYZ> will happen, I just know it)
  5. So buy gold now, to front-run <XYZ>
  6. If you, you will make lots of money
  7. (Money is not gold, but dollars)
  8. Unless The Dark Cabal acts in their old nefarious ways
  9. If The Dark Cabal does, then don’t blame us
  10. Like the last time we predicted $200 silver or $30,000 gold

 

tinker-tailor-soldier-spy-nop-briexSecret gold bug information is passed on…

Illustration by Nop Briex

 

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The Quality of Money

 

“The problem with central banks is that they increase the quantity of money in the same way that the problem with piping sewage into a swimming pool increases the quantity of water.”

 

the-gasp-dollarThe doubleplus-ungood FRN.

 

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