Precious Metals
Numbers from Bizarro-World
The past few months have been really challenging for anyone invested in gold or silver; for me personally as well. Despite serious warning signs in the economy, staggering debt levels and a multitude of significant geopolitical threats at play, the rally in risk assets seemed to continue unabated.
Bizarro-World intrudes into our reality, courtesy of central banks. [PT]
A Rocky Road
The price of gold rose $26, and the price of silver rose $0.44. And bitcoin fell $560. Somebody should look into if the Fed and the Plunge Protection Team and the Bitcoin Banks are in cahoots to sell bitcoin naked-short…
No PPT for Bitcoin – after breaking a long-standing lateral support level, the cryptocurrency went into free-fall. You may notice the little remark in the annotation at the top of the chart: we believe BTC is highly likely to continue to lead the stock market, as it has done since the turn of the year. This is because both markets are under the sway of the same driver, namely rapidly weakening money supply growth. [PT]
The Last Thing to be Left Standing – Alas, Not Yet
The price of gold was about unchanged this week, whereas that of silver fell another nine cents. All Serious Right Thinking people agree that the world does not need gold. Indeed our monetary system produces Great Moderations that are totally unlike the incredible volatility of the gold standard era. They wish they could kill all memory of gold as money.
Ben Bernanke, the inventor of the “Great Moderation” fairy tale, somehow felt compelled to explain in 2012 “why the world will never see another gold standard”. One day this will probably turn out to have been an unwise deployment of the word “never” – since is not exactly known for the accuracy of his forecasts, regardless of their time horizon. Although he dismissed gold as an unimportant residual of tradition, the very central planning agency he led at the time for some reason does keep quite a bit of gold under lock and key behind a 140 ton steel door, both for itself and similar agencies domiciled abroad. [PT]
Battles for Civilization
A major theme of my work — and raison d’etre of Monetary Metals — is fighting to prevent collapse. Civilization is under assault on all fronts.
Battling the barbarians at the gate… [PT]
The “Risk Asset” Dip Not Worth Buying is on its Way
The prices of the metals rose, gold by +$11 and silver by +$0.25. The question on everyone’s mind (including ours) is: what will cause a change in the gold price trend, or what will make gold go up in a large and durable way? And that leads to another way of looking at this question.
Here is a very good technical reason to adopt a constructive attitude toward gold despite the fact that its nominal price in USD terms is seemingly not going anywhere of late. By remaining fairly stable in recent weeks, gold is rising relative to the S&P 500 index (SPX). In other words, the purchasing power of gold is increasing – and not only relative to the stock market. Similar trend changes can be observed elsewhere (e.g. in gold vs. industrial commodities). We will soon discuss this in greater detail. [PT]
Precious Metals Patterns
Prices in financial and commodity markets exhibit seasonal trends. We have for example shown you how stocks of pharmaceutical companies tend to rise in winter due to higher demand, or the end-of-year rally phenomenon (last issue), which can be observed almost every year. Gold, silver, platinum and palladium are subject to seasonal trends as well.
Although gold and silver are generally perceived to trend in the same direction, there are actually big differences in their seasonal trends [PT]
Degrees of Urgency
Monday was Veterans Day, a bank holiday in the US. The prices of gold and silver dropped $23 and $0.61 respectively. “But isn’t gold supposed to go up when…?”
Warren Buffet and Aragorn discuss what to do with the gold. Aragorn wants it, because he knows that even if it’s not today, “that day” will come. [PT]
The Last to Go
Terry Goodkind wrote an epic fantasy series. The first book in the series is entitled Wizard’s First Rule. We recommend the book highly, if you’re into that sort of thing.
An image from the title page of Terry Goodkind’s best-selling fantasy epic “Wizard’s First Rule”. We’d be at bit wary of standing around on that stone-slab bridge to be honest. [PT]
While Not Saving The Planet, Let Us At Least Have A Good Time
The price of gold went up seven bucks, and that of silver rose eight pennies.
For many people, the attraction to gold and silver began with a desire to protect themselves from the monetary train wreck of 2008. That often grew into a sense that gold is the solution to that problem.
The post 2008 GFC monetary train wreck: US true broad money supply is expanded by more than 153% in a mere decade, as the Fed takes over “money creation duties” from a banking system reluctant to expand credit further. [PT]
Aiming for Knowledge and Better Decision-Making
The price of yellow metal went up nine bucks last week. And the price of silver three rose cents, which is back to where it was two weeks earlier. We need to rant, and promise to tie it back to the prices of the metals. We have written these past several weeks about the fact that the franc has been rendered useless. Owning a franc does nothing for you, other than to trade to the next person at hopefully a higher price.
When the money of the realm becomes literally useless as money – the charts and data example above shows excerpts of what happened in Germany from WW1 to the hyperinflation blow-out of 1923. In the end, one simply could no longer use the Reichsmark as a medium of exchange. [PT]
A Chirp from the Deep Level Mines
Back in late 2015 and early 2016, we wrote about a leading indicator for gold stocks, namely the sub-sector of marginal – and hence highly leveraged to the gold price – South African gold stocks. Our example du jour at the time was Harmony Gold (HMY) (see “Marginal Producer Takes Off” and “The Canary in the Gold Mine” for the details).
Mining engineer equipped with bio-sensor
Photo credit: Hulton Archive
You Actually Can Eat Gold, But Its Nutritional Value is Dubious
“You can’t eat gold.” The enemies of gold often unleash this little zinger, as if it dismisses the idea of owning gold and indeed the whole gold standard. It is a fact, you cannot eat gold. However, it dismisses nothing.
Over-the-top garnish: Gold leaf-laced donut (reportedly costs $100), gold-laced cakes, sushi roll with gold leaf (according to Japanese lore, eating it is supposed to bring luck), gold-cake eater in Dubai. Nutritional value of the gold leaf is zero, but at least it isn’t toxic. So yes, one can eat gold, but it won’t relieve hunger pangs. We would like to point out here that absolutely no-one is trying to eat bank note-laced cakes. [PT]
Most read in the last 20 days:
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A Global Dearth of Liquidity
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The Federal Punch Bowl Removal Agency
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The Zealous Pursuit of State Sponsored Wealth Destruction
How to Blow $9 Billion The life cycle of capital follows a wide-ranging succession. It is imagined, produced, consumed, and destroyed. How exactly this all takes place involves varying and infinite undulations. The Stroh Brewery in Detroit. The company provided an example of how wealth that has been accumulated over generations can be completely destroyed due to just a handful of really bad decisions. [PT] One generation may produce wealth, while the...
Debt, Death, and the US Empire
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The Bien Pensants Agree: The World Doesn’t Need Gold – Precious Metals Supply and Demand
The Last Thing to be Left Standing – Alas, Not Yet The price of gold was about unchanged this week, whereas that of silver fell another nine cents. All Serious Right Thinking people agree that the world does not need gold. Indeed our monetary system produces Great Moderations that are totally unlike the incredible volatility of the gold standard era. They wish they could kill all memory of gold as money. Ben Bernanke, the inventor of the “Great Moderation” fairy tale,...
How To Give Thanks Like Socrates
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Paper Lanterns
Mud Volcanoes There are numerous explanations for just what in the heck is going on with the economy. Some are good. Many are bad. Today we’ll do our part to bring clarity to disorder... Two data series it is worth paying attention to at the moment: the unemployment rate (U3) and initial claims. As the chart at the top shows, when the former makes a low it is time to worry about the economy. Low points in the U3 UE rate slightly lead the beginning of recessions....
Trump or Seasonality: Which One is Going to Prevail in the Dollar's Late Year Surge?
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Where is the PPT? Precious Metals Supply and Demand
A Rocky Road The price of gold rose $26, and the price of silver rose $0.44. And bitcoin fell $560. Somebody should look into if the Fed and the Plunge Protection Team and the Bitcoin Banks are in cahoots to sell bitcoin naked-short... No PPT for Bitcoin – after breaking a long-standing lateral support level, the cryptocurrency went into free-fall. You may notice the little remark in the annotation at the top of the chart: we believe BTC is highly likely to continue to...
The Big Picture: Paper Money vs. Gold
Numbers from Bizarro-World The past few months have been really challenging for anyone invested in gold or silver; for me personally as well. Despite serious warning signs in the economy, staggering debt levels and a multitude of significant geopolitical threats at play, the rally in risk assets seemed to continue unabated. Bizarro-World intrudes into our reality, courtesy of central banks. [PT] In fact, I was struggling with this seeming paradox myself. As I...
Austrian Theory and Investment
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