Precious Metals

     

 

 

Inflation and Gold: What Gives?

In the last Supply and Demand update, we discussed some different theories which attempt to explain what causes the gold and silver prices to move. We mentioned the:

“…attempt to hold up a famous buyer of metal, while ignoring the thousands of not-famous sellers who sold the metal to said famous buyer.”

Since then, Ireland has bought gold for the first time in over a decade. And predictably, most voices in the gold community see this as a bullish sign.

By the way, we did not see any data about the prices paid on what dates, but the articles on December 1 mention a series of buys over a few months. Assuming a few means two, it looks like Ireland may have paid more than the current price.

 

 

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I write this with sadness, still, at the news of the death of my friend Heinz Blasnik. He is better known by his nom de plume, Pater Tenebrarum, who published the economics blog Acting Man and wrote for many other financial sites.

I met Heinz twice, at his home in Vienna. He was a kind and gracious host, sending his driver to pick me up and serving Austrian delicacies for lunch. When I met him, he was struggling near the end of a long illness which was the result of a youthful adventure. Even so, he retained a benevolent sense of life, and a positive spirit.

But this is not why I wanted to write this. We were friends because we shared some ideas. Important ideas. Ideas about the nature of the world, and mankind, and how man can work together and coordinate their productive activities. Economics and business are my life, and Heinz was the same way.

What better basis for a friendship than sharing important values?

Heinz was deeply, passionately interested in helping people understand economics. I know not how much time he gave to this cause—unpaid, as blogs do not make money—but it was surely more than I spend. He engaged with those who were interested. Sadly, Austrian economics is not mainstream, though there are more than enough people to keep a teacher—or sensei—busy. He was willing to correspond with me, and I credit his articles and emails for helping shape my own views.

We did not always agree. If you put 3 economists in a room then you have at least 4 opinions. But even when not, he listened with benevolent intention and did not make it personal. It was always about the ideas. I think this is an important and uncommon virtue.

On one of my visits, we discussed life, the universe, and everything. And he told me a bit about the Austrian welfare state. Which led me to write The Service Economy. I have traveled around the world, and I have shared food and drink with friends in many countries. Yet that one conversation with Heinz stands out as interesting and important. I can only recall one other discussion with one other friend that led directly to me writing an essay.

I don’t think Heinz believed in Heaven, but I hope everyone will understand when I say this. I would look forward to a day—many years in the future, I hope—when I could meet Heinz for beers in Heaven, and continue our conversation where it left off in 2021.

Adieu Heinz.

 

Dr. Keith Weiner is the president of the Gold Standard Institute USA, and CEO of Monetary Metals. Keith is a leading authority in the areas of gold, money, and credit and has made important contributions to the development of trading techniques founded upon the analysis of bid-ask spreads. Keith is a sought after speaker and regularly writes on economics. He is an Objectivist, and has his PhD from the New Austrian School of Economics. He lives with his wife near Phoenix, Arizona.

 

     

 

 

Putting the World on a Paper Standard

Half a century ago one of the most disastrous monetary policy decisions in US history was committed by Richard Nixon.  In a television address, the president declared that the nation would no longer redeem internationally dollars for gold.  Since the dollar was the world’s reserve currency, Nixon’s closing of the “Gold Window” put the world on an irredeemable paper monetary standard.

 

Richard Nixon during his televised speech on the “temporary” closing of the gold window (effectively a debt default). [PT]

 

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Silver Yo-Yo

The price of silver is going up and down like a yo-yo. On Sunday and into the first part of Monday, the price skyrocketed on news that Reddit was touting the metal. But as the data clearly showed, the price was not driven up by retail buying of physical metal.

 

Silver, March futures from Jan 27, 30 minute chart: a lot of volatility, but silver seems to have established a higher low after coming down from the initial spike. [PT]

 

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Sticking it to the Man

A certain Reddit group has recently become very popular. For many people, the group has emerged as the savior of humanity. With their collective might, this group has brought a few hedge-funds close to bankruptcy.

 

GME daily, log and linear view – a brief surge, but quite a painful one for hedge funds that were  short the stock in size. [PT]

 

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The Sage Does a 180

The big news in the monetary metals is that Warren Buffett — famed disliker of gold — sold bank stocks to buy gold mining shares. What is interesting to us is not that we think he has any special powers to predict the gold price. After all, he famously bet on silver, and lost.

 

GOLD, daily, over the past two years. The Sage is a bit late to the party, but his entry confirms that the sector is now entering the “recognition phase” – the stage at which the investoriat-at-large realizes something is afoot. [PT]

 

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Explosive Days in Silver

The silver market witnessed another explosive day!

At midnight (in London), the price of the metal was $26.90. By 9pm, it had rocketed up to $28.95, a gain of 7.6%. This is not normal.

But then, we are not in a normal world.

 

After several years of going nowhere and a downside fake-out in March this year, silver has come to life rather dramatically… [PT]

 

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On Monday, Silver got Scarcer – and Simpler

On 23 July, we said:

 

Well, it’s complicated.”

 

The action on 27 July was not.

 

Silver spot price vs. September basis

 

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Gold’s Little Brother

Today I want to put a popular precious metal under the magnifying glass for you: silver.

Silver, often referred to as the “little brother” of gold, has a particularly interesting seasonal pattern I would like to share with you.

 

Shiny large good delivery door stops made of silver – about to enter interesting seasonal phase. [PT]

 

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The New In Gold We Trust Report is Here!

The In Gold We Trust 2020 report by our good friends Ronald Stoeferle and Mark Valek was released last week. It is the biggest and most comprehensive gold research report in the world. As always it contains a wealth of new material, as well as the traditional wide-ranging collection of charts and data that makes it such a valuable reference work for everything of interest to gold investors or indeed for anyone interested in precious metals (a download link to the report is provided below).

 

Left: casting gold bars. Right: using gold as a shield against assorted slings and arrows.

 

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Incrementum Advisory Board Discussion of April 8, 2020 with Special Guest Rick Rule

The Incrementum Fund’s Advisory Board held its quarterly meeting on April 8. This time renowned resource stock investor Rick Rule, the President and CEO of Sprott US Holdings Inc., joined the discussion as a special guest. As always, there is a download link to a transcript of the conference call in PDF format at the end of this post.

 

Rick Rule, CEO of Sprott US Holdings Inc., and renowned investor in the commodities sector.

 

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Gold Sector Outperforms Broad Market

The gold sector is in an uptrend since September 2018. The initially rather labored move accelerated after a secondary low was established in May 2019 and the 50-day and 200-day moving averages were breached for the second time. Last week the two moving averages were once again overcome in the course of the post-crash rebound. Here is a chart showing the entire move since 2018:

 

After a rather harrowing decline in sympathy with the February-March stock market crash, the HUI has swiftly moved back to its previous high for the move and is now trading above its 50- and 200-day moving averages again.

 

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