Gold Silver Face Unprecedented Data, Infinite QE Fuel

 In the shortened holiday week we saw yet another batch of historic economic data.

Some 16 million US workers have officially lost their jobs in the last three weeks of time. 

We are beginning to see major media outfits forced to acknowledge that we are on an unemployment trend which may meet that of the Great Depression which officially peaked at 25%.

Even the Federal Reserve blog glibly states a potential of near 50 million US workers may lose their jobs by the end of June 2020. 

That will result in an unemployment rate of over 30%.

Full employment is but one half of the Federal Reserve’s consistently failed mandate. And even before this viral crisis and the economic shutdown began, the nation’s Labor Force Participation Rate was already at low levels, not seen since the last time gold was threatening the fiat Federal Reserve note’s credibility in the late 1970s western driven bullion bull market.

In the embedded video you can see the private Federal Reserve is again exponentially hockey sticking their balance sheet. Updated yesterday to over $6 trillion, and likely headed to $10 and beyond in the months and years to come.

At this pace, the Fed will have doubled its balance sheet since the start of the September 2019 REPO loan ramp which we started covering from the beginning of these SD Bullion Gold Silver Market Update videos late last year. 

We’ll leave the entire playlist of our work thus far, in the comment section below in case you missed some episodes along the way.

The last time we saw a financial crisis of slower, and shallower magnitude than what we are seeing today. 

The QE1 program was announced by the Federal Reserve in late Nov 2008.

Spot gold at the time was around $800 oz while 1 oz American Gold Eagles were selling then on average at about $1,000 apiece.

Spot silver at the time was around $10 oz yet 1 oz American Silver Eagle coins if you could find them were selling almost double the then silver spot.

So with QE unlimited now unleashed, one might wonder how our somewhat recent history might further rhyme in the future upcoming?

In our last video, we dug into how the still gapped out price discrepancy between the over the counter spot gold price vs the COMEX gold futures price is now at near 50 year high levels both nominally and in underlying percentage terms.

The gold spot vs gold futures market ended this week with an over $50 oz divergence.

The silver spot vs silver futures market ended this week with an over 70¢ or near 5% difference.

That is totally irregular over the last 50 years of COMEX vs spot price action.

The LBMA effectively again used Reuters as a press release conduit.

A snippet in from their latest gold shortage update yesterday reads,

“Worries that it may be impossible to ship gold quickly from London, a major storage center, to New York have pushed U.S. gold futures prices far above London spot levels.

Dealers in bars and coins have also faced shortages, with demand for gold, traditionally seen as a safe-haven asset, accelerating as the economic impact of the virus becomes clearer.

“Charter flights have now been approved by insurers in terms of shipping gold,” LBMA CEO Ruth Crowelldevelopment”.

Yet one has to look at the last over 20 years of UK to USA import-export data to realize (which we show in this week’s market update) that London gold exports to the USA are only a recent last year 2019 into this year's 2020 phenomenon.

The east vs west gold price over the last fifty years taking into account the London gold price fix data calls into question how encumbered gold price discovery (15:42 in the video below) has been for decades compounding.

Many London Gold Traders Have Never Even Touched Bullion

Meanwhile this week, I am getting messages from those who actively trade physical precious metals in the City of London that this divergence reflects that COMEX is broken, not London.

Judging by the latest unprecedented COMEX rules changes, that anonymous trader may be spot-on (pun intended).

With time unfolding, and physical bullion demand perhaps escalating, the truth will become more obvious as to what we’re witnessing here. 

Stand by in the weeks and months to come for more smoke to clear.

Finally some notes from respective macroeconomic and technical stock bear market analysts I keyed in on this past week.

There are many respected analysts who flat out called these recent strong downturns in the financial markets, well-timed and in advance. 

They are often using 1929 models (perhaps sped up) for where this current depression may go in terms of the nominal stock market and the general economy.

While unlimited QE may still give stock bubble bulls or the return to normal crowd hope, our polite suggestion that they consider what if they’re wrong. 

What if an economic rebound doesn’t come for years?

Worse of all the 1929 crash, which took decades, all the way until the 1960s nifty-50-era, valued in gold bullion terms, for the US stock market to return to its three-decade prior valuation level.

We’re not saying we’re headed to another World War, or that this economic and potential structural reset will take as long as it did back then (e.g. Bretton Woods). 

We could very quickly perhaps nominally find ourselves with new inflationary jacked up stock market highs. 

What we are asking is measured in gold. How long will it be until we return back to this median level right here?

Why not consider a prudent gold and other bullion position if we are indeed to fall further down this slope for many years upcoming?

Have a blessed weekend you yourself, your family, and your loved ones out there.

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James Anderson
James Anderson
Senior Market Analyst & Content

A bullion buyer years before the 2008 Global Financial Crisis, James Anderson is a grounded precious metals researcher, content creator, and physical investment grade bullion professional. He has authored several Gold & Silver Guides and has been featured on the History Channel, Zero Hedge, Gold-Eagle, Silver Seek, Value Walk and many more. You can pick up Jame's most recent, comprehensive 200+ Page book here at SD Bullion.

Given that repressed commodity values are now near 100-year low level valuations versus large US stocks, James remains convinced investors and savers should buy and maintain a prudent physical bullion position now, before more unfunded promises debase away in the coming decades...