gold-bars (1)We’re going lower…

 

TND Market Commentary:  Eric Dubin

The following juxtaposition is just too comical for words.  Silver overtook its Friday same period level and witnessed meaningful accumulation as the London trade proceeded.  You want to know what sentiment for precious metals was like before the raid?  Silver tells the story, very clearly:

silver (18)

gold (18)

Silver is a much tighter market than gold, and it’s also much more volatile.  From the start of this particular precious metals upleg that began in late January, we have seen silver lag gold.  This has been due to a number of factors, including but not limited to fears of a global economic downturn crushing silver industrial demand (which I have argued will be dwarfed by replacement investment demand, and later, will in fact spike as well as manufactures begin to get nervous about investor demand making it harder to source industrial supply).

But now that the precious metals bull market re-boot is more visible to Western-based momentum chasers and conventional financial world money managers are increasingly aware that central bankers are starting to break things, it is no surprise that the catch-up phase of silver relative to gold is ripe and ready.  

Through the raid that we are witnessing now, silver will take a bigger percentage beating.  But when we get on the other side of this nonsense following the completion of necessary repair time, the Gold Silver Ratio is going to start falling as silver begins to rise faster in percentage terms than gold.  Naysayers will scoff as they read these words, but within ONLY about a month, the GSR is going to start trending in favor of silver in a way that will add further confirmation to those that need further confirmation that this new precious metals market bull is alive and well.

The cartel is acting aggressively this week on top of the mountain of paper-based gold issuance into the COMEX market they’ve been shoveling into the short side already – for weeks – in an effort to slow momentum.  Now, as you see today, with traders getting nervous considering sky high commercial short positions and an FOMC meeting starting tomorrow, is it any wonder that the cartel was able to get some traction to the downside?

All things considered, this is a piddly raid, but they’ll keep pounding throughout this week as the FOMC runs its dog and pony show otherwise known as determining interest rate policy (at least we will not be treated to goofy, totally staged introduction sequences this time around because FOMC meetings are “private”, as I discussed on my Facebook page – click here).

We’re going lower for the time being.  The commercial short position levels for gold and silver reached very high levels by the end of last week and momentum was sapped enough to execute this week’s cartel capping.  Craig Hemke at TFMetalsReport.com whimsically tweeted this weekend:

One hundred bucks downside on gold is certainly doable. But odds are reasonably high that we’re not going to sustain that much damage.  More importantly, a very strong case can be made that the small amount of time necessary to repair whatever damage cartel dogs inflict will in fact be THE story.  This is just noise.

For more commentary and analysis on precious metals, click here to check out this week’s Dr. Dave Janda’s “Operation Freedom” broadcast.  Rob Kirby and I were guests.  I have tremendous respect for Kirby’s discernment.

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About the author:

Eric Dubin is the Managing Editor of TheNewsDoctors.com. He has 25 years of experience as an independent buyside securities and global macro analyst. He has well over a decade of experience as a financial journalist, editor and political analyst. He’s primarily an autodidact, but his formal education includes degrees in economics, international relations and MBA. He welcomes feedback on his articles and will make an effort to respond to comments. Email Eric by sending to “Eric” and then @TheNewsDoctors.com. He can also be “followed” on Facebook: https://www.facebook.com/EricDubin

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  1. The gold-silver ratio should retreat from the top of the impulsive channel, which suggests a trading opportunity.

    As of 1447 GMT on Friday, March 11, I see the prices of gold and silver at:

    Gold $1,269.00/oz
    Silver $15.665/oz

    So, as this note is being written, the gold-silver ratio (GSR) is 81.009, nearly as high as the peak of the 2008 financial crisis. In 2008, the GSR increased to a high of roughly 84 from below 50 in just two months.

    Looking back over the past 100 years, the GSR has only been this high three other times, all periods of extreme turmoil, namely the 2008 crisis, the Gulf War, and World War II.

     

  2. My article on Feb 23 regarding GTSR ratio echoes this information.  The other matter of critical importance is the volatility of the precious metal prices.  In the stock market and value of bonds,  volatility is a killer to value and safety.

    I think it was Wolf Street that  spoke about volatility as one of the most dangerous elements, one that will  be a leading factor, eventually helping to precipitate a severe market crash.  It reminds me of the  famous video showing how the Tacoma Narrows suspension  bridge  as it failed due to harmonic distortions created by  winds that were unplanned for in the design of the bridge.

    Whether volatility will whip silver and gold down much from their present levels, it’s still stomach churning if you don’t know what you’re watching. If you do and can take a breath, the movements are interesting and educational.   When the GTSR reverts to something approaching normal, silver price will move towards gold as the ratio becomes compressed toward 30 or 40 to 1

    I don’t think volatility will damage the precious metals values per se  It might actually help prices as people get out of equities and into something a bit safer and more sane in an increasingly insane world

    • @AGXIIK

       

      Traders LOVE volatility.  It is their bread and butter.  Investors?  Not so much.

      Never cared much for trading, even though I have done some.  It’s the basic nature of the activity that turns me off to it.  I’ve made money trading but much prefer to invest.  Investing seems to me to be wealth creation while trading seems more like wealth extraction… and the faster the algos go, the worse this description gets.

    • Ever since I heard the story of the SGE (to open in April), my gut told me that any new PM low would be just prior to the emergence of the first true free market PHYSICAL exchange.  Criminals tend to be so transparent at times.  I have plenty of dry powder.

    • @apberusdisvet

       

      Always listen to the gut.  It is right a lot more often than not.  This is so because the gut knows that it will suffer if it is wrong.  The brain?  Not so much.  It has MANY thoughts and it doesn’t always judge them especially well.  It’s better at creating them and filing them away for future reference.

      I too was thinking that we might have one more price smash before gold and silver head higher.  In fact, I am hoping for that so I can unload a good chunk of fiat and convert it into the shiny stuff. :-)

  3. One hundred bucks downside on gold is certainly doable. But odds are reasonably high that we’re not going to sustain that much damage.  More importantly, a very strong case can be made that the small amount of time necessary to repair whatever damage cartel dogs inflict will in fact be THE story.  This is just noise.

     

    I wonder how he calculates his odds? I think his odds-making is just noise?

  4. The bond market seems to be sending messages in bottles….

    The FOMC appears to be “clicking on an empty cylinder” too… No hike in anything this time!

    Last seen – the peoples of the EU were sending some of their own messages…ie: merky Murkel.

     

    Looks like a buying spree is in order IF we seen ANYTHING below 1200-1210 or so…for AU

    Doesn’t look like silver is going to bite on the bait…

    The “rebound” should be very interesting – as by then the Middle East will be back at it, with the Russki’s gone on vacation… Maybe it was vacation time for this bunch…30 days leave with the family…then, gear back up and go teach that fat funny guy over in N Korea something about following instructions, eh?.. They are due to ripple-fire 16 new birds out of one of their new boomer subs… Wonder where the impact zone is really going to be…loaded/armed or not…strong message follows, eh?

    Check-6 … There be movement on the streets… What did Buffalo Springfield say about that???

  5. New consumers are buying the shiny pms for the very first time. ASE ‘s are flying out the door. This trend will continue as more small investors start to buy in the pm market.

    India the King of silver, is buying by the Truckload. I smell curry. The gig is up.

    For those taxpayers that receive a nice income tax refund from Uncle Sam, where are they to put there money in?

    The bank? The stock market? There mattress? Physical Precious Metals?

    Land? Guns and ammo? Food? Water?

    As they say in Texas, keep stacking and always packing

    •  

      #Central Texan

      Stackers hope is that more than just 1% of the population accumulate PMS.

      Sadly this generation doesn’t have any understanding of real money, they’ve been thoroughly indoctrinated (conditioned) to think fiat notes are money.

      This Debt System has to collapse before commodity money returns to prominence. Until then the “barbaric metals” will languish in the shadows.

       

    • @Citizen i think is obvious the ‘interest to infinity’ debt slavery system is failing.. the janet yellen yelling out to everyone that negative interest rates is the new fix shows us how desperate ‘trusting in god’ has become . 

    • Could not agree more @aztecminer

      If only people today did consider fiat as money, but they don’t.  To them, debt is money, plastic credit cards are money, and waving their smart phone around is money.  HA!  None of these things are money and the incontrovertible proof of this WILL arrive in the form of an economic collapse where none of their magic money works  This is happening right now in Argentina, Brazil, and Venezuela.  The US media is whistling past the graveyard by refusing to mention this.  As we all “know”, if it is not mentioned on TV, it simply doesn’t exist.  😉

       

    • Agreed @GBS

       

      This is an interesting article and was well worth the read, but it also is not completely factual:

      In the case of the U.S. Mint, such production quotas are in direct violation of U.S. law, which requires the Mint to keep the market “fully supplied” at all times, period.

      This is out of date info because this law was amended such that the US Sec. Treas. now gets to decide what the market demand is, so in his or her view demand is always met.  An earlier change in this law that allows foreign-produced silver to be used to mint US silver coins was mentioned.

      Also, “Thus, obviously, the best way to “stop precious metals from being used to hide billions of undeclared black money” would be for our governments (and the Big Bank crime syndicate) to cease creating $trillions and $trillions of this “black money” (i.e. counterfeit money) — themselves.

      This is the very heart of the power base for TPTB, so they are not about to change this for any reason short of a full-blown economic collapse wherein they have NO alternative to changing it.  They would no sooner give this up voluntarily than US patriots would give up the US Constitution.

  6. I’m a relatively new PM stacker (6 months) and the first to admit I’m not the most investment savvy in terms of the technicalities of the market but I do trust my instincts.  PM’s have been out of fashion for some time now given the bubble buffet in the equities markets and cheap money floating about but now there is an underlying nervousness in the financial markets so we see a flight to PM’s but nothing happened so out of PM’s and back to the markets because they are not going to leave any of that money on the table.  The shorts might be the smart bets this time and I can see this pattern being played out a few more times before the wheels come off for real.  I may well be wrong but I don’t see the need for this to be the work of the cartel in this case.

    The real good news is that the ‘barbaric relics’ that are PM’s are proven still to be the ultimate safe haven when the pro’s get nervous and I’ll take as much cheap silver as I can afford to cram in my safe while it’s still cheap which won’t be forever.

  7. My Lawn Technician told me that without a doubt to watch what happens to China and it’s Gold, just sometime before summer sets in. Couldn’t get an exact date, he didn’t have one, but told me that we all would be smiling like Cheshire Cats!

     

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