If you successfully traded Friday’s collapse in gold and silver, well done. But be careful not to miss out on the big moves ahead. The end of the fiat currency regime is the big picture.
The US Treasury issued 766 Billion in debt this week. Most of it to roll over maturing debt. I'm not sure what net new issuance was, but we can guess it's about 36 billion/week if this years deficit is going to be abound 1.8 Trillion. So in that sense, fundamentals have not changed. But perhaps the arguments is not around fundamentals, but timing. In the long run we are all dead. Our intention is to hedge ourselves in the now - for me, that means 1-5 years.
Physical is at worst a generational hedge but illiquid and we need liquidity to buy stuff. That leaves near-paper vehicles like ETF's to have hedge like exposure to gold, but also with the ability to convert to FIAT which we need to eat.
But it becomes more clear those vehicles will be recruited into FIAT's preservation strategies if they are disruptive enough.
Tokenized gold like what Tether is rolling out at first seems like a possible option, but then you hear that Tether is staffing a gold trading desk which means they will be intriguing with their 140 tons for profits.
Read it, It doesnt change the fact that you need FIAT to eat.
Most grocery stores (and other retailers) are members of large national or global corporations. As a corporation they are agents of the state which gives them their rights as legal persons.
As USD continues to lose purchasing power, try going to one of those stores and offer to pay in silver or gold. The cashier will ask the manager and the manager will say, "not authorized" and our POS system wouldn't know how to handle it even if corporate were to allow it.
1. Holding PMs was hard for 20 yrs while “losing.” It’s even harder now while “winning” with all the volatility, noise, and pressure to sell.
2. The paper/physical stress in silver is a fractal representation of what we are living IRL - with the credit/paper/claims far out-pacing the stuff (GDP).
In my latest Substack post I point out that in 1945 the entire US monetary base could have been redeemed at $56 per ounce. As recently as early 1971 that ratio was only $196. Last October (the date of the most recent statistics from the St Louis Fed) that ratio was $20, 275!
We must remember the story of the Chinese Treasure ships.That's the most important lesson regarding any wealth preservation ambitions we think we have. The elite cult class/es will not tolerate any pleb owning anything that will cut their ties to the banking system. In my view, this volatility could continue until they are ready to role out the CBDCs with 100% efficacy in whatever form that will take. https://www.businessinsider.com/china-zhenge-he-treasure-fleet-elite-free-trade-2017-2
They will come up with a master stroke event for the epoch. It will inhibit all wealth held by everyone else but themselves. When the world population is enslaved by UBI, access to the internet or owning a phone will be so catastrophically expensive, that owning gold or silver will be irrelevant. That could be one, two or three generations down the line though.
That risk is hedged with the right copper and lead position. Every day, we should all be de-dollarizing, and pulling funds from the banking-investment system. Either we pull them now, or 'they' vanish them at their convenience, or convert them to more-controllable CBDCs, where they could deny you the usage to purchase donuts, beer, steak, etc.
Gordon, I am certain the elite/cult classes are beyond thinking we are of their ilk .. they believe they are the absolute ones and for us to be their slaves ..
Well, when there is income tax to take almost half my salary, VAT, inheritance tax, property tax, fuel tax, CO2 tax, import duty, capital gains tax, quack tax aka forced health insurance, sin tax, car tax, lisence fees, etc. etc. etc. you can be pretty sure that we are already enslaved.
A snowball has more chance in Hell than the next generation.
With the still huge arbitrage between Shanghai and Comex it would seem that this effort to save the banks will hasten the departure of both physical silver and gold eastward - short term gain (for the favoured few) at the expense of losing even more critical metal - it will be interesting to see how actual physical deliveries begin to play out over the next few months as all these newly purchased lower priced contracts begin to come off the board...
Oh! Good point about east west arbitrage. Could the American Great Unwashed directly sell physical silver to Shanghai? I know we’d need to use USA carriers but perhaps despite the shipping/insurance/taxes the small retail seller could come out even, if not ahead. Has anybody tried this?
Regarding continuation of silver stacking....here in the UK the only dealer selling (Gerrard's) is doing so at £87 per ounce for 1oz Britannias. Spot is £60, VAT at £12 and the balance being commission at £15...a whopping 25%. All the others are marked out of stock or unavailable.
1oz silver Britannias selling on eBay anything from £95-£110.
it looks like CHINA PLAYED ALONG allowing jpm to escape their SHORT POSITION , in return for physical delivery of silver to CHINA??????????? LIKED your assessment of CHINA using silver as a parallel money for store of wealth , and believe this may be their intention for delivered silver
This seems to be so and should be a warning to all. Perhaps Chinese and US interests are more aligned than Alasdair's thesis accounts for. The Chinese are not interested in USD collapse. They continue to have exposure to USD and so a USD collapse is not in their interest in the short to medium time frame. Indeed, it seems more clear that China will work with the US to preserve some degree of USD hegemony in exchange for the US consenting to YUAN's continued maturation as a global reserve.
These kinds of actions in the metals markets, apparently with Chinese connivance means USD has a decade more of viability, perhaps more.
Maybe this is just a repeat of the October crash and recovery after the run from 3000 to 4000, but the technicals seem to have gone out the window this time.
I wont sell my physical position, because it's very difficult (impossible) to sell without a big haircut, there is little or no retail buy side liquidity to buy or sell so my physical holdings are basically dead money whose only utility will probably be to pass it on to the kids.
It's also important to remember that Weimar Germany was it's own special case. A country that had lost a devastating war, an economy with limited access to commodities within it's own borders which continue to be blockaded a year after the war ended, a currency ruined by it's former government to finance the war it lost, saddled with impossible reparations debts and it's industrial heartland occupied.
i'd love to see an analysis of what happens to currencies when it becomes clear that the people running the govt are taking bribes -- see spy sheikh article today in ws journal. has this been studied?
I’ll worry (a bit) if gold breaks $3500 and silver breaks $50, and if it does, I think the banksters will probably be in trouble because their gaming will be too obvious.
I think people already know it's a game. My broker called me years ago and asked what he could do to help me and I said: "Bring back price discovery". Never heard from him again.
True, but if things get obviously out of sync, for lack of a better descriptor, the SEC will need to slap a wrist to save its lying face. Again. How many times will that be?
The fundamentals did not change ! 42 don’t panic
The US Treasury issued 766 Billion in debt this week. Most of it to roll over maturing debt. I'm not sure what net new issuance was, but we can guess it's about 36 billion/week if this years deficit is going to be abound 1.8 Trillion. So in that sense, fundamentals have not changed. But perhaps the arguments is not around fundamentals, but timing. In the long run we are all dead. Our intention is to hedge ourselves in the now - for me, that means 1-5 years.
Physical is at worst a generational hedge but illiquid and we need liquidity to buy stuff. That leaves near-paper vehicles like ETF's to have hedge like exposure to gold, but also with the ability to convert to FIAT which we need to eat.
But it becomes more clear those vehicles will be recruited into FIAT's preservation strategies if they are disruptive enough.
Tokenized gold like what Tether is rolling out at first seems like a possible option, but then you hear that Tether is staffing a gold trading desk which means they will be intriguing with their 140 tons for profits.
It's a conundrum.
Read “ the great taking “ then you will see how they plan to rob you in just about every possible way
Read it, It doesnt change the fact that you need FIAT to eat.
Most grocery stores (and other retailers) are members of large national or global corporations. As a corporation they are agents of the state which gives them their rights as legal persons.
As USD continues to lose purchasing power, try going to one of those stores and offer to pay in silver or gold. The cashier will ask the manager and the manager will say, "not authorized" and our POS system wouldn't know how to handle it even if corporate were to allow it.
Go to a farmer and trade a coin for a sheep. He'll take it.
Two favorite conclusions:
1. Holding PMs was hard for 20 yrs while “losing.” It’s even harder now while “winning” with all the volatility, noise, and pressure to sell.
2. The paper/physical stress in silver is a fractal representation of what we are living IRL - with the credit/paper/claims far out-pacing the stuff (GDP).
Hold on tight.
Thanks A
Wise words from a wise man.
In my latest Substack post I point out that in 1945 the entire US monetary base could have been redeemed at $56 per ounce. As recently as early 1971 that ratio was only $196. Last October (the date of the most recent statistics from the St Louis Fed) that ratio was $20, 275!
AND it’s rising fast!
We must remember the story of the Chinese Treasure ships.That's the most important lesson regarding any wealth preservation ambitions we think we have. The elite cult class/es will not tolerate any pleb owning anything that will cut their ties to the banking system. In my view, this volatility could continue until they are ready to role out the CBDCs with 100% efficacy in whatever form that will take. https://www.businessinsider.com/china-zhenge-he-treasure-fleet-elite-free-trade-2017-2
I doubt that that will work. It’s just another inflation prison.
They will come up with a master stroke event for the epoch. It will inhibit all wealth held by everyone else but themselves. When the world population is enslaved by UBI, access to the internet or owning a phone will be so catastrophically expensive, that owning gold or silver will be irrelevant. That could be one, two or three generations down the line though.
That risk is hedged with the right copper and lead position. Every day, we should all be de-dollarizing, and pulling funds from the banking-investment system. Either we pull them now, or 'they' vanish them at their convenience, or convert them to more-controllable CBDCs, where they could deny you the usage to purchase donuts, beer, steak, etc.
Donuts especially. and ice cream and Cokes.
you sure?
Nobody can be sure of anything. Everything is speculation to one degree or another.
Gordon, I am certain the elite/cult classes are beyond thinking we are of their ilk .. they believe they are the absolute ones and for us to be their slaves ..
Well, when there is income tax to take almost half my salary, VAT, inheritance tax, property tax, fuel tax, CO2 tax, import duty, capital gains tax, quack tax aka forced health insurance, sin tax, car tax, lisence fees, etc. etc. etc. you can be pretty sure that we are already enslaved.
A snowball has more chance in Hell than the next generation.
It seems you are living in France.
With the still huge arbitrage between Shanghai and Comex it would seem that this effort to save the banks will hasten the departure of both physical silver and gold eastward - short term gain (for the favoured few) at the expense of losing even more critical metal - it will be interesting to see how actual physical deliveries begin to play out over the next few months as all these newly purchased lower priced contracts begin to come off the board...
Oh! Good point about east west arbitrage. Could the American Great Unwashed directly sell physical silver to Shanghai? I know we’d need to use USA carriers but perhaps despite the shipping/insurance/taxes the small retail seller could come out even, if not ahead. Has anybody tried this?
Regarding continuation of silver stacking....here in the UK the only dealer selling (Gerrard's) is doing so at £87 per ounce for 1oz Britannias. Spot is £60, VAT at £12 and the balance being commission at £15...a whopping 25%. All the others are marked out of stock or unavailable.
1oz silver Britannias selling on eBay anything from £95-£110.
You're getting sloppy Steve - you should also reveal the price Gerrards pays for your silver Britannia.
it looks like CHINA PLAYED ALONG allowing jpm to escape their SHORT POSITION , in return for physical delivery of silver to CHINA??????????? LIKED your assessment of CHINA using silver as a parallel money for store of wealth , and believe this may be their intention for delivered silver
Means China really isn't Washington's enemy at all. Only a secretive co-conspirator.
This seems to be so and should be a warning to all. Perhaps Chinese and US interests are more aligned than Alasdair's thesis accounts for. The Chinese are not interested in USD collapse. They continue to have exposure to USD and so a USD collapse is not in their interest in the short to medium time frame. Indeed, it seems more clear that China will work with the US to preserve some degree of USD hegemony in exchange for the US consenting to YUAN's continued maturation as a global reserve.
These kinds of actions in the metals markets, apparently with Chinese connivance means USD has a decade more of viability, perhaps more.
Maybe this is just a repeat of the October crash and recovery after the run from 3000 to 4000, but the technicals seem to have gone out the window this time.
I wont sell my physical position, because it's very difficult (impossible) to sell without a big haircut, there is little or no retail buy side liquidity to buy or sell so my physical holdings are basically dead money whose only utility will probably be to pass it on to the kids.
It's also important to remember that Weimar Germany was it's own special case. A country that had lost a devastating war, an economy with limited access to commodities within it's own borders which continue to be blockaded a year after the war ended, a currency ruined by it's former government to finance the war it lost, saddled with impossible reparations debts and it's industrial heartland occupied.
https://pbs.twimg.com/media/G_-LjGdXQAAuqVa?format=jpg&name=small
Unfortunately I missed the $78 bottom Friday, but was able to buy at $77.00 (plus premium) today. Stacking...
Chinese banks have stopped buy/sell for customers today, the customer buy/sell facility will be reopened tomorrow.
In the UAE no gold or silver is available to buy online, all "out of stock". I got lucky on Saturday I got more silver before the block went up.
Thank you as per usual Alasdair. It is always important to have a cool head in these situations and to remember the bigger picture!
This v interesting discussion may add some flavour to the ingredients of current financial PM cookery lessons.
Interesting concept. I am open to consideration of all postulations these weird times.
Enjoy ...........
https://youtu.be/7gN4D4YaMUk?si=sPOEgwv1kNLS-xbd
Is there any thoughts on the COMEX not implementing the 10% shut down on the silver price plung?
Thank you Alasdair..
i'd love to see an analysis of what happens to currencies when it becomes clear that the people running the govt are taking bribes -- see spy sheikh article today in ws journal. has this been studied?
I’ll worry (a bit) if gold breaks $3500 and silver breaks $50, and if it does, I think the banksters will probably be in trouble because their gaming will be too obvious.
I think people already know it's a game. My broker called me years ago and asked what he could do to help me and I said: "Bring back price discovery". Never heard from him again.
True, but if things get obviously out of sync, for lack of a better descriptor, the SEC will need to slap a wrist to save its lying face. Again. How many times will that be?