Trillions More Dollars Coming = Massive Silver Bets Made

Soon to be confirmed, US Treasury Secretary Janet Yellen made the case earlier this past week for many more trillions in stimulus and infrastructure spending. All, of course, will be financed out of thin air and rationalized given the viral shock to the economy and still current historically low-interest rate regime.

Of course, ours is not the only privately owned central bank in the world, creating currency out of thin air and adding to their balance sheet.

This year 2021, we can again expect the private Federal Reserve's balance sheet to balloon as the US government rolls over and refinances a record $8.5 trillion in government IOUs.

Simultaneously this week, as Janet Yellen was selling our spending many more trillions we have not saved, a record-sized one day inflow of over $1/2 billion showed up in the silver derivative markets.

Silver bulls are again laying down long bets assuming silver spot prices will rise given all the upcoming trillion in stimulus behind and ahead.

Silver Investments Rising in Silver ETFs SD Bullion

This week we had the largest one-day silver derivative capital inflow in over eight years, mainly into the SLV (JP Morgan is the custodian). 

A half-billion bet in silver is currently over 20 million troy ounces or 600 metric tonnes. Humans produce about 2.2 million ounces of new silver ore per day for perspective (e.g., how much silver is there).

The monetary metals moved sideways and slightly up in this past week's trading.

The gold-silver ratio is still hovering in the low 70s at the moment.

The silver price in Mexican pesos is like the silver price in Indian rupee terms, beginning this year only a few good trading days away from record-high prices.

Silver Price Mexico Mexican Peso SD Bullion

Given that Mexico remains the world's largest silver producer, their soon new record silver price foreshadows where we are all headed more shortly than later denominated in every fiat currency around the world.

General commodity values appear to be turning up after a 12 yr downtrend; it is no surprise to see platinum showing buoyancy above $1,000 per troy ounce to begin the year.

Platinum Price long term chart SD Bullion

If we are indeed turning the corner for a coming commodity bull market, this now 100 years historical premium of gold over platinum will likely tighten back towards historic norms later this decade.

Turning to the ongoing mania in US stock markets, insider stock selling vs. buying by corporate executives has recently hit an all-time high level. This chart's data goes back thirty years. 

Stock Insider Selling All-Time High SD Bullion

Today we witnessed Gamestop's stock hit a record price based on a short squeeze mainly pushed by call option buying crowds from a subreddit called WallStreetBets.

Based on next to no real company fundamentals, but more so a short squeeze on call option market makers and shorts, this stock's price within a handful of months went from its all-time low to an all-time high price reached today in the speculative stock market.

At the start of the year, Berkshire Hathaway billionaire Charlie Munger had a gloomy take on where the US stock market is headed this decade in real value terms.

So as we look out to the other building wall of debt and seemingly infinite stimulus about to be imposed into our financial system in the years unfolding. 

We thinkers about the future are left to ponder.

How in the hell are were going to get out from the $100s of trillions in unfunded liabilities (debts and promise piles) collectively coming due this decade and into the next?

US Debt to GDP divergence since the end of Bretton Woods SD Bullion

What happens once the interest on this growing debt overwhelms the diverging revenue growth and our collective faith in this system?

Well, an over five-decade Wall Street market veteran, Victor Sperandeo, last year expressed his take on the endgame or transition phase for the US ahead.

And on his website, he writes he is 100% certain it will not end in bankruptcy. 

His certainty and confidence make sense. After all, the Federal Reserve and US Treasury have an infinite fiat currency creating keyboard at their disposal.

Instead, his belief is this system's end, and the transition will be through eventual hyperinflation where we nominally devalue these seemingly ever-growing promise piles in a handful of painful months.

Victor Sperandeo US Hyperinflation Endgame for this fiat Fed Note regime SD Bullion

Of course, Victor's endgame thesis is likely years out into the future. 

But it is a real possibility given that record-in-debt governments often choose inflation over bankruptcy as the easier way out when cornered by their collective action's comeuppance.

That is all for the week. As always, take great care of yourselves and those you love.

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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...