Summary
This week's update dives into the recent gold and silver price falls, amidst a backdrop of ongoing tensions in the financial markets. Here are the key takeaways:
- Spot gold and silver prices dropped significantly, attributed to manipulation by short sellers and China's pause in gold reserve buying.
- Don't day trade precious metals; focus on long-term investing through physical bullion ownership.
- Central banks continue to accumulate gold, while the US dollar's reserve share shrinks.
- Upcoming week might see further price fluctuations, with support levels at $2200 and $2100 for gold.
- China's recent gold buying halt and potential silver supply constraints raise questions.
- Analysts predict this year's central bank gold buying to be the third highest ever.
- The gap between Eastern and Western silver prices continues to widen.
- Shanghai Futures Exchange silver inventories are at 8-year lows.
- This situation could lead to a dramatic convergence of Eastern and Western silver prices.
- Take advantage of the current dip in spot prices to buy physical gold and silver.
With today's phony US Gov't BLS Jobs report (called the Non-Farm Payrolls or NPLs) — It was not hard to know that gold silver shorts would use that fake US government report at 8:30 AM eastern time this morning, to come flooding in with mass trading volume sales, looking to break gold silver long's stop losses.
What was hard to guess was that China's PBOC would overnight halt what was 18 months of straight Chinese Gold Reserve buying. Of course reporting during seemingly lawless City of London hours, to help kickoff waterfall price declines of nearly -$100 an ounce price decline in today's spot global gold market trading.
Shortly we'll get into educated guesses about where in the short and medium term we might go.
But today's bloodbaths in spot Silver and Gold markets is yet another reminder about trying to day trade around and or speculate on short term hyper levered price discovery volatility.
The insiders have the inside information. We plebs, do not.
In the long run, the rubber eventually meets the road as physical fundamentals run into brick walls, where shortages become more common throughout various layers of our industry. That doesn't mean the road from here to there is neither straight nor smooth. Nor without casualties falling off cliffs. Don't be one of them.
This is why dollar cost averaging into directly owned prudent bullion positions is the foundation for any intelligent precious metals bull. That which is on paper, can often turn out to be just that, merely paper or digital worth nothing in short order.
In the ongoing Gold Silver spot price battles. Remember what we are caught between whether we like it or hate it. A not all that very covert financial War, and in fiat financialized Wars, for the most powerful entities, there are literally next to no rules.
At least for them. For us, wise long term plebeians, we know to at the least respect their rigged rules and position our long term savings accordingly.
The amounts of silly financialized market bloodbaths today were widespread, and even served live on youtube in colorful kooks-ville attire with over a half million many soon to be bag holders cheering it on.
But we're not wasting that time with a sordid story, not today's Hollywood pie to the sky.
And we're not getting over emotional, over today's spot gold silver bloodbath either.
We'll simply put into proper short, medium, and longer term context this week's most important bullion related news items, as this weekly bullion market update proceeds right after this short message.
The spot silver and gold markets were slammed to close this week.
The spot gold price closed just under $2300 oz bid while the spot silver price finished just above $29 oz bid.
The spot gold silver ratio climbed to close at 78.
We alerted our bullion buying customers today on the spot price sell off. Luckily inventories are pretty flush for the moment, and thus price premiums over spot for many proper silver and gold bullion products are thin for customers to prudently acquire over this weekend.
In terms of the potential for further spot price selloffs, we're going to focus on gold because she is the leader of silver at least until the later mania phase moves into high gear.
Short and medium downside support beams are as follows.
Spot $2200 and just below are both psychological and technical support zones.
As well it is the 100 day moving average support level which is often the downside support when gold is in a bull market.
The spot 200 day moving average is currently just under $2100 oz. We would probably need to see a bank derivative deflationary bomb to go off to see those levels, but yea 63 US banks on a real mark to market basis are technically insolvent according to the FDIC's latest report with something like a half trillion in unrealized losses marked down. I would argue the number is more like in the 100s and if things go real wrong in the 1000s potentially with commercial banks coming into the crosshairs.
This all said, it is not uncommon to see gold bullion bull markets run from near a 25 to 20 handle as occurred in late 1978 for example. This time though, the growing phenomenon is global so good luck getting all the players on the bear side of the boat for a tip over.
This coming Monday is a holiday in China so eyes to the charts as spot selloffs might continue Monday.
Bottom tweet was kind of interesting today, a random Chinese onlooker spread the rumor that China is having a tough time acquiring large quantities of gold at the moment. Again, in this covert financial war ongoing take anything you hear and or read with grains of salt.
Commodity investors Goehring & Rozencwajg have a recent Q2 quarterly update for readers.
Allow me a minute to read their most prescient points about the gold bullion bull market ongoing.
They wrote,
This week Poland admitted to adding another 10 tons of gold bullion to her growing gold bullion reserve pile.
That is basically a 737 cargo plane full of gold bullion that went to their growing central bank within her sovereign borders.
And while the eastern world's citizens and many of her major nation states have been buying gold bullion in gigantic size compared to the west since the spot price of gold was about 20 to over 50% less than it currently is priced.
Commercial bank UBS after having recently gobbled up bankrupting competitor Credit Suisse, admitted that their HNW investor clients have only about 1% globally allocated to precious metal investment in all forms or proxies.
Meanwhile, this week's US stock market algorithm glitch is fair warning as the 625,000 dollar per stock share Berkshire Hathaway melted down to a price of 185.10 on this chart. Of course no one was able to take advantage of this error. But my cynical side is wondering about how this works if we see something akin broadly.
You know, "Great Taking" like warnings actually coming to fruition.
Anyway US bubble HNW worth investors at UBS have even less than 1$ allocated so good luck.
The US bond bear market continues onwards. As the world central banks continue buying gold in record volumes (China recent pause aside). The fiat dollar's share of reserves continues to dwindle while the gold reserve share's value trends higher.
Even seemingly lawless City of London consultants have to forecast that this 2024 central bank gold buying bar will be the third highest in human history.
This is admitted government central bank buying and selling through April in 2024 thus far. Again take it all with grains of salt.
For anyone gold literate and market conscious doing research you would know that the nations are closing ties like the US Pentagon always feared they might. No coincidence they have coordinated their official gold reserve admittances pretty much since the 2008 GFC.
If you didn't know, both countries have large piles of gold already in their respective SWFs. While they both are neck and neck each year to be the biggest gold miners per year. Russian has two proven gold mines with over 3700 more metric tonnes to pull.
While China has conservatively doubled to four times or more what she admits at the moment.
Meanwhile or no gold reserve owning neighbors up north are watching their fiat looney melt away in value vs gold and silver as time proceeds.
The premiums above spot paid in China continue to remain robust and wide gapping out nearly $5 oz in this week's silver spot price weakness.
The Shanghai Futures Exchange Silver inventories are again at over 8 year low levels.
The Shanghai Gold Exchange's silver inventories are again at over 6 year low levels as well.
Their collective 71 million ounces is about half of what China imported in silver in 2023 through the mainland and Hong Kong.
Cut to the shadow Eastern price of silver back when the reddit Silver Squeeze phenomenon kicked off in late Jan early Feb 2021. The shadow Eastern price at the time was beginning to climb walls then just under $225 oz.
It has since ballooned to now just under $400 oz and why this matters so much is that this phenomenon is draining the western world of 1,000 silver exchange float and unsecured silver ETF inventories. When the physical rubber finally starts putting skid marks on the road, the red spot price line and the Eastern shadow price line will likely reconvene for a 5th time throughout this full fiat currency era.
Here is that same ongoing East vs West vs spot price data in a non logarithmic chart so you can better see the ridiculous situation at the moment in the world silver price discovery markets. This will have dramatic ramifications in time, so position prudently and hold tight. The ride promises to get crazier and more volatile than I could ever dream or fictionalize here.
For those buying the bullion market, take advantage of the spot price weakness this weekend and potentially into next week.
That will be all for our weekly SD Bullion Market Update.
And as always to you out there, take great care of yourselves and those you love.
