Summary
- Silver price broke out of a long consolidation period and is now at an 11-year high.
- The silver-to-gold ratio is falling, indicating silver may outperform gold.
- Global silver demand is exceeding supply, leading to a shortage.
- Large amounts of silver have been leaving western derivative exchanges.
- Eastern demand for silver is strong, with China and India being major buyers.
- The price of silver in China is significantly higher than the spot price.
- Central banks and large investors are accumulating gold.
- The copper market is also experiencing a squeeze, with prices rising.
- Many countries are developing Central Bank Digital Currencies (CBDCs).
- The future of cash is uncertain.
The nominal price of silver in fiat US dollars ripped red hot higher today, and we are now in price breakout mode.
Silver closed this week at 11 year price high levels. After nearly 4 long years of grinding sideways consolidations and frustration over the stought $30 oz overhead TAMP resistance.
Silver rolled out of bed this morning in the leveraged western derivative markets, and made a major move for the momentum longs now piling in on the trade beyond $30 oz spot.
Shortly we will get into technicals on where this latest move could run to before profit taking and price consolidations.
But first the SilverSqueeze Meme'rs were out on Twitter today, and we should briefly celebrate this moment with a +5% price jump green candle on silver.
Nice after pounding the table for so many years making the bull case for acquiring prudent bullion positions to finally be witnessing gold lead, and now silver following worldwide.
Yes, I am not talking about just here in the USA.
Earlier this week I posted this monthly local silver price chart from around major economies around the world. And what it screamed visually to me was a silver breakout beyond $30 was inevitable and potentially imminent.
You remember the spot gold silver ratio technical formation and potential cliff fall I was suggesting might occur. Well it appears we are now in falling GSR mode. It looks like 75, 70, even the lower 60s could be ready to come back into fruition if silver keeps running in value escalations relative to gold.
Of course this is a large rather high cliff we are now descending off. The last time a silver bull market run caused the GSR to fall from heights like this was the beginning of the infinite QE late 2008 GFC fiasco which ran down to the low 30s by April 2011.
We'll have to keep our heads on swivels as the next bank crisis and consolidation phase crashes into financial markets.
The size of the underlying stealth bank lending facilities brought on since the 2023 digital regional bank runs now dwarf what we saw back in the 2008 GFC.
Looking back east, we first head to China and see their fiat yuan silver price breaking out as well.
Inventories of underlying silver bullion bars on the SHFE are at over 8 year low levels.
Price premiums for silver locally in China continue around the +$3 oz above the western derivative driven silver spot price markets.
Silver speculators on the SHFE are again piling on bets for silver options and leveraged futures contracts.
Bloomberg posted the chart above today.
Note the use of the word shortage when referring to silver, as opposed to a more simple innocuous sounding term like supply deficits.
Global silver demand out stripping supply, those four consecutive bars basically add up to just under 1 year of new line silver mined around the world. Nearly 800 million ounces of more demand than new mine supplies during this 2020s price consolidation until this week.
So where is all this outsized silver coming from to make up for the deficits in supplies these last 4 years of price consolidations?
Well, about 400 million ounces of silver flowed out of these combined warehouse exchanges. Many of those bars were redeemed from unsecured silver ETF piles and I bet a lot of them were exported to the east, China and India.
Let's check in on the aggregated eastern shadow price of silver at the moment.
It has now ballooned beyond $376 oz in data added up starting at $1.925 oz silver in 1970, up until the closing date yesterday.
Silver's aggregated price data from 1970 until today within the leveraged COMEX casino has floundered from $1.925 oz silver in 1970 to now 15¢ oz adding up all the data over more than 53 yrs.
My contention is that the red spot price and eastern blue lines will meet again for a 5th time much later down the line in the silver bullion bull.
Manisha Gupta confirmed this week that India imported 120 million ounces of silver Q1 2024.
Given their local silver price in fiat rupee terms has broke out to all time highs, it is no surprise to see their imports in April come down from their Q1 record pace. Local premiums are negative meaning more sellers than buyers locally at the moment.
The spot price for industrial silver users in fiat Japanese yen terms is also climbing a wall of late. Its local price still needs to more than double to reach levels peaked back in 1980, over 44 years ago.
The sucking sound for physical bullion from underlying western derivative exchanges like the COMEX continues with still literally no one trading the COMEX 400 oz 4GC contract. Which I contend was used in March 2020 to flood the system with unsecured ETF 400 oz bars held between London and New York warehouses, in order to give off the impression that the system is flush with deliverable gold bullion. It's not and the remaining pile is quickly collapsing with record central bank gold buying on net worldwide the last two years and the first quarter of this year 2024.
Governments aren't the only large players buying gold and allocating in size. Famous investor Michael Burry just disclosed adding $7.6 million in the Sprott closed end gold fund.
On the other side of this break, we will hear again from a long ago silver bullion bull who warned us of the coming systemic financial world changes yet to come. All the way down to the very fiat currency cash notes debasing away over time.
The spot gold price in fiat US dollars finished this week at over $2,400 oz while the spot silver price blew through its old $30 oz resistance dome, silver closed this week priced at over $31.50 oz bid. The spot Platinum market is beginning to show strength closing the week just under $1,100 oz.
The strength of silver caused the spot gold silver ratio to go falling back down to 76.
China sold a record volume of nearly $60 billion in US debt denominated assets this past quarter 2024. A record size in nominal US debt sold. With their real estate market still floundering, and a trade war ratcheting up with exploding tariffs to come, surely China is piling into physical commodities stockpiling while they still can at reasonable relative values.
Copper prices are again near all time nominal levels as an apparent short squeeze on the Comex has dislocated their copper price now over $1,000 more per ton in NY vs London. Problem is much so the remaining diminished copper inventories remaining are Russian and Chinese manufactured, so energy infrastructure or trade war?
Pre 1982 copper pennies are now worth three times their face value in melt. Even the zinc replacements will become more valuable in time as zinc values inevitably climb at some point down the line.
This chart of EU and other nearby western nations' respective unfunded entitlements is rather alarming. Spain at the end of 2021 led the way with over 5 times their GDP owed to unfunded entitlement programs. Only a smattering of blue bars representing private / funded entitlements.
Turning now a worsening economic situation on the island of Cuba which has put limits on cash transactions and access to ATMs. The government is encouraging the use of 'electronic payments' as cash has seemingly gone into hiding.
Checking in on CBDC Tracker dot org and what is apparent is that many of the largest BRICS nations are in the lead with India, China, Russia, Turkey, & Saudi Arabia all having launched pilot CBDC programs within their jurisdictions.
To close this week, we're gonna look back at Scott Minerd's forewarning about the future of cash in late 2011, back when spot silver was at $32 oz.
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.
