Summary
- The fiat Federal Reserve indicates no rate cuts in March 2024, raising concerns about the US banking system's stability.
- New York Community Bank faces a drastic -45% loss in just two days following a Q4 loss of -$260 million.
- The banking sector is at risk with an unrealized $675 billion in losses on investment securities.
- Gold market news highlights 2023 as the second-highest year of central bank gold bullion purchases in history.
- China, Poland, and Singapore lead in reported gold bullion net buying, contributing to a record global gold demand of nearly 5,000 metric tonnes in 2023.
- Gold prices remain strong, closing 11 consecutive weeks above $2,000/oz, while silver struggles below $23/oz.
- The Bank of England's LBMA projects gold, silver, platinum, and palladium price ranges for 2024.
- Silver Institute predicts the second-highest silver demand at over 1.2 billion ounces, creating a potential 200 million ounce deficit in 2024.
- Despite current low spot silver prices, fundamentals suggest an imminent upward surge, driven by collapsing global silver inventories.
- The silver derivative market underwent a significant shift after March 2020, with eastern world silver trading at $342/oz, reflecting a stark mispricing compared to the western spot price.
The fiat Federal Reserve talked tough this week, suggesting there will likely be no rate cuts in next month's March 2024 meeting.
Astute onlookers noted that the fiat Federal Reserve struck this language from their statement this week.
While at the same time this week New York Community Bank, the bank that acquired last year's collapsed Signature Bank, extended losses to -45% in 2 mere days.
This after the bank reported a Q4 loss of -$260 million while a gain of $250 million was expected.
The bank also reduced their dividend by -70% "to meet regulatory requirements."
That stock just hit its lowest level since August 2000.
If the US banking system was indeed sound and resilient it wouldn't be staring down the barrel of an unrealized $675 billion unrealized losses on investment securities. All while increasingly taking emergency BTFP loans, an emergency program set to expire, next month on March 11th.
Of course we highlighted here on this channel a few weeks back how the US Treasury's OCC, the Office of the Comptroller of the Currency, has been trial ballooning a coming plan that all US banks will be forced to begin borrowing from the discount window by mandate to supposedly end the stigma.
You can see the failure of the last attempt to do so in the bottom half headline just before the Covid crisis hit in full early 2020.
Bank analyst Richard Whalen recently on the Forward Guidance podcast explained why the discount window idea often becomes a bank bloodbath.
In November 2022 the FDIC published a meeting they had about bank resolution policies which forewarned the beginning bank crisis that kicked off only a few months later in March 2023.
Although it has since papered over by increasing emergency loan programs, the US bank system is neither sound nor resilient. More bank troubles in the US and abroad are likely on the near horizon.
It is not so much a question of precisely when the fiat Federal Reserve will begin cutting rates again. But under the coming crisis it will likely be forced to do so.
The reported fiat Fed balance sheet is only down -$1.3 trillion from its peak in April 2022.
How much more Quantitative Tightening is needed to unwind the Covid QE from March 2020-April 2022?
$3.5 trillion.
And so while the market awaits and seemingly begs to see the white Fed funds rate line go down, I'm left wondering how high the blue fiat Fed balance sheet line will eventually balloon to in the next infinite QE easing cycle that follows.
Turning to gold market news this week. The lead story is simply physical demand. Most noteworthy is the collective admittance by government central banks and ongoing IMF data that last year 2023 was the second highest amount of gold bullion bought by central banks in history, only just shy of the record number hit in 2022.
Over 1,037 metric tonnes or 33.3 million ounces of gold bullion was reportedly bought by central banks collectively last year. Since 2010, reported net buying of gold bullion by mostly central banks in the east, has accumulated to just over 7,500 metric tonnes.
China, Poland, and Singapore led the list of officially reported gold bullion net buying last year.
Total global gold demand in 2023 is also reported to be a new record high of nearly 5,000 metric tonnes worldwide. One of the key drivers was also China's private physical gold market which was up +30% last year compared to 2022.
If we stop to look around the world at the moment, respective gold prices denominated in most major fiat currencies, price breakouts up and to the right are becoming more and more universal.
And historically where gold goes, eventually silver follows and outperforms.
Following this break, we will get into major silver news from the week. Examining just how ridiculously mis-priced spot silver remains at the moment especially given the increasingly bullish fundamental underpinnings of its relatively tiny physical precious metal market.
A bit mixed for silver and gold respectively, as the week's price trading action ended downward after another phony jobs report by the Bureau of Lying Statistics and future revision admissions.
The spot gold price closed its eleventh week in a row above the key $2,000 oz level while the spot silver price finished below $23 oz on the week.
Gold's relative strength led to a rising spot gold silver ratio closing this week at 90.
The Bank of England's late 1987 founded London Bullion Market Association or LBMA published precious metal analyst price guesses for 2024.
Gold price range guesses range from 1,800 lows to over $2,400 oz highs.
Silver price range guesses range from $18 oz lows to over $32 oz highs.
Platinum price range guesses range from $800 oz lows to over $1,300 oz highs.
And palladium price range guesses range from $550 oz lows to $1,650 oz highs.
Many of these educated fingers in the wind are of course based on our current world where outsized paper derivatives on the highly leveraged COMEX and in the seemingly lawless City of London still have outsized say on spot prices for precious metals in the short and even medium terms.
Never mind that former London precious metal derivative market traders from the 1980s went on record in July 2022, warning investors worldwide to get their bullion physically. As the western world's current paper gold price discovery holograms and failures become common knowledge.
We will be able to look back at this full fiat currency era chart, and better understand the exact timeline of how the western world was forced to rig gold prices to better steal the world's resources on the cheap.
The Silver Institute this week published projections for the second highest demand for silver the year at over 1.2 billion ounces citing "stronger industrial off-take as the principal catalyst for rising global demand" in 2024.
In the same press release they forecast that annual silver supply for 2024 will squeak in at just over 1 billion ounces, basically an over 200 million ounce deficit projected in other words.
According to theirs and Metals Focus' ongoing data that would be the 6th year in a row where annual silver demand has outstripped annual supplies.
And while spot silver prices are up and have been building a consolidating base for the inevitable move higher ahead. These current spot price levels are a joke in terms of where they are spring loaded to go.
With world physical silver inventory levels globally projected to collapse even further as we move through this decade into 2030.
In order to attract private silver bullion back into increasing industrial silver use inputs, it's going to require exceptionally higher silver spot prices ahead. This coming era is likely going to coincide with a long secular bear market in the fiat US Dollar and fiat currencies generally around the world relative to increasing silver values.
I'm not just talking about simply getting back beyond the CFTC stamp down $30 os Mendoza line, nor even back to the seemingly ancient $50 oz record silver price high from 1980 or 2011.
When people are worried about storing value they don't sell their bullion in mass cause the spot price merely doubled. In fact under those circumstances a larger crowd piles on top and things get disorderly to the upside.
You see, something broke in the silver derivative markets following March 2020. And authorities have been pulling seemingly every lever since to not let the store of value confidence damn break.
But since 2020, the eastern world silver's trading price trading action has basically gone to the moon. To the tune of now $342 oz aggregated, four fold where it was before COVID hit in early 2020.
Meanwhile, reported silver exchange warehouses have had mass silver bullion head east and here in the west, into persistent silver bullion buying crowd's private stacks.
What I'm suggesting is these ongoing disconnected silver fundamentals are not to be ignored.
This already mooned blue colored eastern aggregated price is reflecting just how truly clownishly mis-priced our current red spot price is.
Hell or high water, global free market forces will inevitably reconvene the blue and red lines as they have four times prior.
Fellow silver bullion bulls, get your prudent positions right and hold tight. The best parts are much higher and ahead.
That will be all for our weekly SD Bullion Market Update.
As always to you out there, take great care of yourselves and those you love.
