Silver: The squeeze resumes
Silver is rising strongly due to a shortage of liquidity. It is the start of a new silver squeeze which promises to be dramatic. And it’s worth noting that silver often leads gold higher.
In this article we detail the new factors coming together which will drive both gold and silver significantly higher. In the case of gold, it is under-owned in G7 currencies and there is no doubt that as these currencies decline in their purchasing power, there will be a scramble for gold, driving it higher and accelerating the decline in the credibility of fiat currencies more rapidly than anyone expects.
In silver’s case, without any meaningful investment demand so far, industrial demand and a change in China’s export policy led to a liquidity crisis last October and is leading into another one now. A background of rising gold values will act like rocket fuel for this strategically vital metal which is in very short supply.
This article examines the forces involved, concluding that the outcomes described herein are now inevitable. These are momentous times for both currencies and precious metals.
There can be little doubt that weak holders of silver have now left the party and the price has stabilised, with an increasing certainty that it has found a base. The chart is turning positive with signs of a price breakout and a resuming bull. Open interest on Comex is recovering from 20-year lows. So far this year, 5,347 tonnes have been stood for delivery on Comex, the equivalent of over 20% of annual global mine output. And Comex’s silver inventory has declined by 6,718 tonnes since the beginning of the October squeeze.
Relationships with oil are changing
Monday was the first time that gold and silver prices rose at the same time as crude oil, continuing today for silver while gold is steady and oil is up another 4%. This is evidence that the automatic flight out of financial assets into currency cash in times of energy stress is almost over. It is being replaced by expectations of fiat currency weakness on oil strength, which is already being anticipated by Asian dealers.
This is important, because it indicates that further increases in the price of oil will
