Buyers of silver are rejoicing. They can now get more money (silver, like gold, is money) in exchange for their dollars than before. However, as we see from the reactions in the community, there were few buyers.  Cries of woe are heard everywhere. Those who are crying are sellers, including those who say they don’t plan to sell but who really want a high price in case they change their mind by Monday morning.
The purpose of this article is to look deeply into the trading action at the time of the crash.
This episode was not about physical metal:

What is the new silver fundamental saying? Well, remember that technical analyst we’ve been writing about since the beginning of May? Well let’s just say that the new silver fundamental calculation definitely does not suggest that one ought to have shorted silver or ought to be shorting it now…

This question is no longer moot. As the world moves inexorably towards the use of metallic money, interest on gold and silver will return with it.  This raises an important question.
Which interest rate will be higher?

silver rocket downKeith Weiner says buying silver at today’s prices is the “textbook definition of a Ponzi scheme”:

letter jul 10 pricesGold has gone up from £834.05 just before the BREXIT vote tally to £1054.55 at Friday’s close, or +26%. In US dollars, the price of gold has gone up in the same period 9% to $1365.85.
Gold does not go up or down.
Gold owners in the UK are not richer than they were on June 23. They merely avoided the losses incurred by their non-gold-owning countrymen. To get richer, you need to increase the amount of gold you own.
If you’re just watching the price go up, then you’re merely witnessing the national currency go down.

keith_weinerIf the silver speculators let go and the market price snaps to its fundamental, it will rapidly drop about $2.70.   If it overshoots by the same magnitude to the downside, we may get to enjoy $11 silver.  At least, it will be enjoyed by those who haven’t lost too many dollars betting on silver.
Perhaps that mobile phone manufacturer, driven by falling volumes and compressing profit margins, is pressured to approach silver mining companies (and all other suppliers) to see if they can cut their costs.  Perhaps they were not bidding up scarce silver at the source, but putting in a low-ball bid below market.  We don’t have that information, but one thing’s for sure:
Silver demand is weak while silver supply is robust.

end dollarWe continue to read stories of the “loss of confidence in central banks.” We may not know the last detail of what that will look like—when it occurs one day. However, we will wager an ounce of fine gold against a soggy dollar bill that it will not look like today with the market bidding dollars higher….