The Great Gold Upgrade, Report 15 July 2018

By Keith Weiner

[biiwii comment: Au & Ag supply/demand report follows opening segment]

In part I the Great Reset, we said that a reset is a terrible thing. The closest example is the fall of Rome in 476AD, in which more than 90% of the population of the city fled or died. No one should wish for this to happen, but we are unfortunate to live under a failing monetary system. Debt is growing exponentially. A way must be found to transition to the use of gold. We covered a few ways that won’t work. The Fed can’t determine the right gold price, or indeed control the price either. Nor would it work to declare the dollar to be gold backed. A high gold price won’t make gold circulate. Nothing less than redeemability will do. But you cannot retroactively declare the irredeemable dollar to be gold-redeemable. Every dollar in the system was borrowed into existence without the expectation of redemption. Changing this rule would create the greatest orgy of lobbying Washington has ever seen.

Interest Draws Gold into Circulation

Interest is the only force that can pull gold out of private hoards and into circulation. We have said many times, that interest is the regulator of flow in the gold standard. A lower rate will tend to push gold out of the market and into hoards. A higher rate will tend to draw it into the market.

Continue reading The Great Gold Upgrade, Report 15 July 2018

The Current Message From the Most Useful Sentiment Indicator

By Steve Saville

As I’ve noted in the past, the Commitments of Traders (COT) information is nothing other than a sentiment indicator. Moreover, for some markets, including gold, silver, copper, the major currencies and Treasury bonds, the COT reports are by far the best indicators of sentiment. This is because they reflect how the broad category known as speculators is betting. Sentiment surveys, on the other hand, focus on a relatively small sample and are, by definition, based on what people say rather than what they are doing. That’s why for some markets, including the ones mentioned above, I put far more emphasis on the COT data than on sentiment surveys.

In this post I’ll summarise the COT situations for five markets with the help of charts from “Gold Charts ‘R’ Us“. I’ll be focusing on the net positioning of speculators in the futures markets, although useful information can also be gleaned from gross positioning and open interest.

Note that what I refer to as the total speculative net position takes into account the net positions of large speculators (non-commercials) and small traders (the ‘non-reportables’) and is the inverse of the commercial net position. The blue bars in the middle sections of the charts that follow indicate the commercial net position, so the inverse of each of these bars is considered to be the total speculative net position.

I’ll start with gold.

Continue reading The Current Message From the Most Useful Sentiment Indicator

The Great Reset, Report 8 July 2018

By Keith Weiner

[biiwii comment: Au & Ag supply/demand report follows opening segment]

Before it collapsed, the city of Rome had a population greater than 1,000,000 people. That was an extraordinary accomplishment in the ancient world, made possible by many innovative technologies and the organization of the greatest civilization that the world had ever seen. Such an incredible urban population depended on capital accumulated over centuries. But the Roman Empire squandered this capital, until it was no longer sufficient to sustain the city (we are aware the story is more complicated than this).

After the collapse, the population fell to about 8,000 people. Some fled and arrived at safe places, but surely most perished.

Monetary Reset

This is what we think of when we hear someone say, “There will be a reset”.

A reset is not a good thing. No one should look forward to it, and you certainly cannot profit from it. Not even from owning gold. Sure, those who don’t own gold may be worse off than those who do, but no one does well in a catastrophe like that.

Continue reading The Great Reset, Report 8 July 2018

Precious Metals Summer Potential

By NFTRH

On June 26 we provided an antidote to some media hysterics about a “Death Cross” in gold.

On that same day we had an NFTRH update (still password protected, but below is the screenshot of the intro) illustrating for subscribers a developing positive risk vs. reward proposition in gold and silver.

On June 28 we noted the out-performance by counter-cyclical gold miners to cyclical copper miners.

Continue reading Precious Metals Summer Potential

Gold’s True Fundamentals Turn Bullish

By Steve Saville

I update gold’s true fundamentals* every week in commentaries and charts at the TSI web site, but my most recent blog post on the topic was on 30th April. At that time the fundamental backdrop was gold-bearish, but there has since been a change.

My Gold True Fundamentals Model (GTFM) turned bearish in mid-January 2018 and was still bearish at the end of the week before last (22nd June). There were fluctuations along the way, but at no time between mid-January and late-June was the fundamental backdrop supportive of the gold price. However, at the end of last week (29th June) the GTFM turned bullish. The deciding factor was a small, but significant, widening of credit spreads.

Here is a chart comparing the GTFM (in blue) with the US$ gold price (in red).

Continue reading Gold’s True Fundamentals Turn Bullish

An Idea Whose Time Has Come, Report 1 July 2018

By Keith Weiner

[biiwii comment: gold & silver funda report follows opening segment]

“On résiste à l’invasion des armées; on ne résiste pas à l’invasion des idées.”

These are the actual words written by Victor Hugo in Histoire d’un Crime (History of a Crime).Translated literally, it means an invasion of armies can be resisted; an invasion of ideas cannot be resisted. However, there are many alternative translations that try to express the sentiment, if not the exact meaning. Perhaps the most famous of them is this.

“Nothing can stop an idea whose time has come.”

This, itself, is a powerful idea (we have seen it misattributed both to Ghandi and Martin Luther King). It is rife with implications. At least for ideas about how a society ought to be organized, for ideas about governance.

Continue reading An Idea Whose Time Has Come, Report 1 July 2018

Japanese Yen Disagrees With Gold

By Tom McClellan

Japanese yen versus gold prices
June 29, 2018

The price of gold carries on an interesting relationship with the exchange rate of the Japanese yen versus the dollar.  Most of the time, the two move together, but they occasionally disagree.  When that happens, it is usually the chart plot of the yen which ends up being “right” about where both are headed.

That is relevant at the moment because the dollar price of gold is making lower highs and lower lows, but the yen is showing a bullish divergence.  The yen is not yet making higher highs, but it is making at least a higher low, and that is different from what the price of gold is doing.

Continue reading Japanese Yen Disagrees With Gold

Can Silver Rally Without Gold?

By Steve Saville

The article titled “Silver’s Critical Role In Electrification May Fuel Its Rise” contains some interesting comments about the silver market, but with one minor exception the information presented in this article has no bearing on silver’s risk/reward as a speculation or investment. The minor exception is the high (by historical standards) gold/silver ratio, which suggests that the silver price is likely to rise relative to the gold price over the next few years. However, none of the information about silver ‘fundamentals’ presented in the article is relevant to the silver price.

It isn’t relevant for the same reasons that most of the information presented by the ‘experts’ about gold fundamentals is also not relevant: It treats the annual output of the mining sector as if it were the total supply (annual mine production is a small fraction of the total supply) and it confuses flows from one part of the market to another with changes in total demand (every ‘flow’ involves an increase in demand on the part of the buyer and an exactly offsetting decrease in demand on the part of the seller). Furthermore, it isn’t relevant for another reason that can be illuminated by asking the question: within the past 80 years, when was there a major silver rally in the absence of a gold rally?

Continue reading Can Silver Rally Without Gold?

The Thing About Wesdome (WDO.to) and the Gold Price is…

By Otto Rock

…it doesn’t really matter what the US Dollar print for the price of gold is.

Wesdome Gold (WDO.to) runs its books in Canadian Dollars, its workforce is paid in Canadian Dollars, its costs are in Canadian Dollars, its sales are in Canadian Dollars and its share price is in Canadian Dollars. So gold is down in USD terms? Okay, so is the Loonie and look at what happens as a result above. Anyone who thinks WDO dropped under $3.00 today because “gold was down” is looking in the wrong place and falling for the same hypnosis as those who sold, the Kiena numbers are sparkling and even though it’s up sharply from the recent $2 line, there’s tonnes of upside left to run. Don’t say you weren’t warned.

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The Money of Metals; More Gold Beyond Repo

By Jeffrey Snider

In all honesty, I do mean to beat this one particular dead horse. In fact, I intend to pulverize it until there is nothing left but the smallest particulate matter. This is everything that is wrong with how things are right now. Either they are willing to put out what could only be legitimately classified as outright propaganda (lies), or they are so thoroughly incompetent they don’t know what else to say.

Those are the only two choices. I’m not sure right now which option would be worse.

Bloomberg (where else?) dutifully outlines (from June 15) the deceased equine in question:

As Treasury Secretary Steven Mnuchin increases issuance to plug swelling budget deficits, the department’s choice of maturities has had some unintended consequences. America’s fiscal stewards have chosen to lean short, ramping up sales of bills and short-dated notes. The approach has created distortions in funding markets that have curbed the Fed’s ability to control its key rate and influenced the debate over the size of its balance sheet.

We are actually being asked to believe that the fate of the entire global economy just as it is about to take off into a recovery now eleven woeful years in the making rests solely on the market outcome of this one thing:

Yeah, no. Either they are lying or they have no other account. It’s an enormous problem whichever way. Both leave the world without any answers, and therefore no solutions.

Continue reading The Money of Metals; More Gold Beyond Repo

The Wealth Effect, Report 24 Jun 2018

By Keith Weiner

[biiwii comment: as usual, gold & silver funda report follows opening topic]

Last week, we discussed Social Security, a Ponzi scheme that is inevitably approaching its default. That leads us to another point in our broader discussion of capital destruction. Let’s illustrate with an example.

The Fraudulent Promise

Suppose Eric works for wages. He is 50 years old. His house is paid off, he has no student loans, and owns his car outright. He has no debt (he is a rare type of person). His kids are out of college. He has no expenses except ordinary living costs, and no demands on his savings except his own retirement.

Oh, and one other thing. He gets a statement from Social Security telling him that they will pay him a pension when he retires in 17 years.

When faced with a choice to take a vacation or save for retirement, he wonders why he should deny himself a bit of pleasure. With retirement covered by Social Security, there’s no need to save for retirement. So each year, he visits a place on his “bucket list”, not worrying about how he will live when he is in his 70’s and 80’s.

You see the problem. Social Security cannot go on paying as it has promised to pay. Eric will not have the secure retirement that he plans to have. In future years, he will look back bitterly on the bogus account statements they sent to him. He will play over and over in his mind what he spent, thinking he should have saved more. His spending was based on a counterfeit promise, a fraud.

Capital Consumption

This is another way that the system drives people to consume their capital. Social Security may or may not be considered a debt, either legally or for accounting purposes. We will leave that debate to others. However, people certainly count their future Social Security checks as an asset. In order for that asset to be good, there must be a corresponding liability somewhere, and the party with that liability must have the means and intent to make good on their promise.

Continue reading The Wealth Effect, Report 24 Jun 2018