silversky

A game of musical ounces. Still lots of people who can hear that imaginary music. It all works until suddenly it doesn't. Just look at Sri Lanka. Any and all debts of their government are pretty much wiped out now. It happened slowly and obviously over a very long time (just like the corrupted financialisaton of the metals markets), before all of a sudden snapping. Metals will have their day. It'll be nice if I'm not six foot under when it finally happens!!!

If by some strange miracle it is available at that price point, it would be time to sell the house and back the truck up... assuming the housing market hasn't tanked as well...

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I reckon it's fear of an everything crash. People are starting to shore up liquidity before the inevitable. I don't blame them personally. Only gold is holding up to this proxy war environment, and it makes sense. Having said that there might be an oversold bounce at some point, but I don't think it'll last. Scrap cars for the crusher have been dropping for a while now, and they took a huge drop down yesterday. With all the energy price increases just around the corner, there's absolutely no doubt that there's going to be some very serious economic problems if we don't change course soon. Unfortunately, I don't think gramps or the flying fatman are in any mood to change their minds. And this means that there will be serious economic damage for certain. I'm not sure how the pound will hold up, but I now expect another equal leg down for Silver, despite roaring inflation. It's only at the end of the crash that silver will play it's phenomenal inflation catch-up game. Not before. No idea when that will be, but I can see the miners getting hammered soon. There isn't a market for silver in a crashing economy, and it doesn't matter what the price is, there won't be the volume. There just isn't a market for high value items that need Silver, when no one can afford food or heating. I expect a hunkering down this winter, as people choose between heating their homes, or eating something better than spam. All I've been hearing locally, is concern over energy and food bills. This is IRL, not on the internet. There's real concern, and I think this means there's real trouble coming. The market has completely fallen out of second hand commercial vehicles, according to a trader I know, and this indicates to me that all sorts of people are experiencing a contraction in their own personal money supply. I just don't see much demand for Silver in this environment, and I think that inflation and the cost of energy to mine, are pretty much all that's keeping a floor on the price just now.

Interesting to see how platinum has reacted to the news on Sunday. https://www.reuters.com/world/uk/britain-increase-tariffs-russian-platinum-palladium-new-sanctions-2022-05-08/ With the announcement that Britain would be applying a 35% tariff to Platinum and Palladium, it's interesting to examine how their prices have reacted. Down initially with Silver on Monday, but they have now diverged and are rising. I'm not really sure how Britain alone charging its own consumers an extra 35% for Russian Platinum and Palladium, will make any difference. It appears to me that the only effect will be that the UK economy will run short of Platinum and Palladium, or have to put in place very strong commitments from South Africa. The Chinese will no doubt buy it at a slight discount from Russia. The scrap car market is an interesting proxy for the price of physical. One year ago, I could scrap my old banger for £300. Three months ago that was up at just under £400. After the war started it reached £585 then fell back to £550. I'll have to get another quote again, but I imagine that the application of a 35% tariff can't have done much to alleviate the pressure on those metals. As far as the overall price on the world market, I can't see that changing much to be fair. If the UK ends up sourcing all its Platinum demand from scrap cars and South Africa, the Chinese would have to be muscled out of some of their supply from there. If so, they'll just increase their deliveries from Russia. It seems to me that the same amount of Platinum will get used worldwide (after all the old cars in the UK have been stolen and crushed (yes that's happening!!)). And the impact on the global price won't be terribly large. The UK consumer will lose out to higher prices when manufacturers (if we have any left) are forced to source it from Russia. The Chinese will resist fully any attempt to lower their supply from South Africa to facilitate increasing the UK supply, and we'll end up recycling things that aren't old enough to be recycled. All in all, I expect little change to the price because of this move, unless it becomes a western wide push, in which case, car manufacturing in the west will take a massive hit. Interesting times to see tariffs used as offensive weapons. They're normally applied as defensive strategies, to protect a domestic market. But in this case they are being applied without heed to the result domestically. Most foolish in my opinion. I expect the local price of physical to end up higher than the published paper price. One to watch...

The paper markets for metals allow miners to sell their silver today, and then supply it in a couple of months time. So the miners in a way can be considered as shorting the market. They are sellers. But they don't really care what the price does after they've sold their contract to supply, because they've committed to honour the contract at that price and deliver the Silver after they've got it out the ground. The complication comes in where other investors are allowed to trade those contracts between the miners and the consumers. Because these are paper contracts, other investors can buy and sell those paper contracts without having to handle the dirty metal stuff at all. That all sounds well and good if it was just like that, but it's not. What is allowed, is for large investors to sell contracts effectively as if they were miners and going to supply, and then to close the contracts out by buying other contracts back before they have to make the delivery. The contracts come into existence and go out of existence without any of that promised future Silver ever leaving the ground. This could obviously get a bit crazy, so its supposedly kept in check by backing the made up paper contracts against a bunch of real ounces sat in a vault in the COMEX (the exchange who make the paper contracts), just in case any of the buyers of the made up paper contracts, actually want the dirty metal. Even that sounds sort of okay in principle, but like everything in the financial world, the further you get away from the basic deal of two people bartering a commodity amongst themselves (capitalism rather than financialism), the shadier things get. The amount of real Silver sat in that vault backing the temporary paper you would imagine should be about 1 : 1 ratio. But it's not. It like bank loan leverage, and it has been allowed to climb to very high multiples. The excuse is that no one want's the real stuff so there won't ever be a bunch of claims on it all at once. I seem to remember reading somewhere that there were around 400 potential claims for every real ounce sat in that vault. Not exactly a stable position. This is the reason for the monkeying around near the end of a delivery month. Sometimes, more paper contracts are blasted into existence to try to push the price around before the close. If you can print up imaginary metal in vast amounts, you can force the paper price of that metal down, making a fortune. It also fleeces the miners, who often end up having to sell at low prices in the subdued paper market, while the financial industry "wizards" in nice offices make bank with ones and zeros. The system is creaking and groaning under the weight of the parasites. It's unclear how much longer this imaginary future product market can continue. The leverage is what makes it a joke. It's unfixable, and it needs to be swept away. But that isn't going to happen until the entire system melts down for real. And Central bankers will bet all of our lives away before they roll over and accept that.

Silver is split somewhere between monetary protection against currency debasement (what you are referring to above) and industrial demand which requires a functioning electric economy to flourish. Good Silver deposits are becoming rarer to extract at profit so the story goes. The confluence of rising demand for Silver and falling ore grades are imagined to one day cause a big price increase. The cost of extraction is heavily energy price sensitive, so Silver is an indirect and somewhat delayed bet on the energy price as well. When energy gets too expensive, mines shut down, and Silver demand outstrips supply. But this is only true if the world continues to want iphones, solar panels and small electronics which all benefit from the use of the best conductor on the planet. If we choose instead to destroy all that demand, by prosecuting a pointless economic war (as we're currently hell bent on doing), then perhaps Silver will not turn out to be such a good investment. The white metals are all waaaaaaay down below pre war levels, and only gold with its purely monetary uses is acting as monetary protection in the scenario you describe above. Gold's industrial uses are limited to only a few certain space applications along with specialist industry, so it has essentially zero force on its price other than monetary anxiety. Aaaaaaaand of course central bank manipulation! The last thing they like to do is publicly accept that gold is anything other than a relic from "uncivilised" times before the printers and credit creation made them into gods.

Thanks for sharing this. It's quite eye opening in terms of what's to come this year. Most of us have been aware for a while now that CPI is much higher than reported. Most people can just feel it in their daily lives, their money is not going anywhere near as far as it used to. The statements last year about inflation being transitory were obviously laughable at the time.

Selling at cost is not a good long term plan. Some will eventually be forced to reduce capacity and lay off staff to stay afloat. There's already a sanctions supply reduction artificially imposed on the market, so there simply must be tighter conditions now than there was a couple of months ago. If they keep producing at a loss, eventually mines start to go bust. With energy prices high, basic metals of all sorts will have to command higher prices. Perhaps they need to run out first though.

Happy to sell you a tube of 2016 Britannias £25 cheaper than Atkinson when you decide the price is right. I personally think the predicted bloodbath won't last for long though. Same with platinum. It might put in a dramatic short lived spike, but I can't see physical being delivered at a loss. The miners can't afford to pay the high energy costs and subsidise wall street traders with delivery at a loss. They might just get away with it this month, but it'll cause cutback decisions to hunker down until physical can be delivered at a profit. I read somewhere that Germany had the highest producer inflation last month since the 1940's. Literally everything is rising fast. Unless miners are planning to desperately sell product at a loss to stay afloat, I can't foresee anything other than mines scaling back at these prices vs energy costs. Pure speculation on my part of course!!

No doubt the "story" is that due to inflation no one can afford to buy anything that requires silver for manufacturing, and therefore silver is worthless.

Gold sneaking up against $2000 as well

Brent has dropped sharply, probably on news of the slightly positive talks in Turkey. But no matter what happens, I can't see the sanctions being lifted anytime soon. And nor do I see a change to the planned requirement by Russia for their energy sales to be paid for in Roubles. You can't just steal a nations foreign reserves and make a blatant attempt to destroy their currency, then expect to say it's all cool now and put that genie back in it's box. This is now about escaping the leverage of the USA for many nations. Having set up alternative payment methods, they're not about to abandon them on a whim. The west is refusing to pay in Roubles, and this will be the next big clash if Russia turns off the O&G because of non payment issues.

Gold and Silver now back at pre war levels! No idea where this spike low will stop out. All the stops on paper Gold and Silver longs must be getting smashed right now. Once cleared I don't imagine the low lasting for too long.

Not sure how that will help kitco's chart error from 36hrs ago.

Yeah it was originally showing a drop to the 24.2 area where it wandered about for a bit. Certainly not an instantaneous down and up. The charts here on tsf definitely did not show that drop for the same time period. Almost like a different commodity's chart. Odd.

It appears that the kitco chart has "fixed itself". It must embed as a live updating window, because I distinctly remember the vertical drop on it when you posted it earlier. And that has disappeared!!!

It certainly looks like a trip back to 18 and possibly lower is on the cards. Amazing really that gold hasn't got further than it has over the last month. Especially given the world changing economic sanctions. The implications are probably bigger than anything since august 15th 1971. It's hard to comprehend a world where silver is cheap, inflation is roaring and energy is seriously expensive. I guess that world is one where there isn't enough food and finished products and savings become less important. You can't eat those Britannias after all. Production costs must be way up and yet paper silver is down. I guess it'll take a few months for production cuts to feed through, and then it'll suddenly and rapidly change.

Perhaps they were feeding the AI with its manipulation orders for todays close, and they accidently hit 'execute now' instead of 'perform gradual decline'

Click on the charts tab here on tsf. These charts don't show that. Must be kitco glitch.

Oil, Platinum and Palladium have fallen hard in the last few days. Silver less so, but still significantly. What does this mean for Gold and Silver? Could it be that traders anticipate a resolution and normalisation of relationships with Russia? Seems very unlikely to me. More likely, they envisage a massive worldwide economic downturn, and are pricing everything down in case demand craters. Less demand for oil indicates less demand for manufacturing and less demand for catalytic converters. But where does this leave Silver? Somewhere in the middle perhaps? Propped up by golds monetary value, while simultaneously being dragged down by reduced industrial demand? Interesting to try to piece together what traders expect in the next few months. Oil is obviously a big tell today, it dropped through one hundred a barrel. Hard to see it going below 80 though. And what of China? Now would be the perfect time for them to insist on some sort of unification deal with Taiwan. A conflict or seizure there would bring to a halt the worlds supply of microchips for cars. Perhaps that angle is why Platinum and Palladium are at or below pre-war levels. No point making cats if there aren't any cars to fit them into! Thoughts on price action?

They have to issue steelies to replace the copper ones from circulation.

My collection pales in comparison to yours. When I started collecting them a few years ago there were plenty of them. But it's getting much harder to find the copper ones. Either there's a bunch of hoarders like us, or the bank must have been quietly sifting them out and replacing them with steelies. Finding a copper one these days is getting rare. I've got a magnet sitting on the desk specifically for going through the pocket change. Steelies go in bags to be added up to a pound and swapped back in the local shop. Coppers go into the savings melt pot. Won't be long now before they take them out of circulation and they're worth more than face value.

I've been sifting the copper ones out for years. A fun way of saving cash that will be worth more than face value when it becomes legal to melt them. Not long now at 8% inflation!!! Tick tock.

Such a shame that I lost most of my metals in a boating accident. Still, they can have my stack of copper 1's and 2's. I've been waiting for them to fall off from being legal tender so I can scrap them...