gold

gold

“The Perfect Storm in Silver is Coming.  Demand Could TOTALLY OVERWHELM SUPPLY in 2016. The Real Value of Gold and Silver Will Be RELEASED By the Bankers Once They’re Out of Their Positions.” -Steve St. Angelo

Is the Collapse of the Paper Gold and Silver Market at Hand? 

In This Special SD Metals and Markets, Expert Gold & Silver Analyst Steve St. Angelo of the SRSRocco Report Makes the Case:

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TND Podcast Spotlight: SilverDoctors Weekly Metals & Markets

By Eric Dubin

Steve St. Angelo from SRS Rocco Report joined Doc and I after Thursday’s US market close.  Now, with the benefit Friday’s regular session nearly complete, we see a continuation of the horizontal action in silver and even a small gold uptrend reasserting itself following general sideways “digestion” of the gains racked-up earlier in the week.

The upside action we’ve seen in precious metals since mid last month has been impressive.  But what’s even more impressive is the fact that, generally speaking, we’re seeing mostly sideways trading and consolidation after each big upward move.  That is traditional bull market behavior, and new buyers of both paper and physical are coming to this market at a rate that is exceeding the ability of the cartel to keep prices down.  It appears that last month, the cartel was forced into a “managed retreat” posture, to use GATA Chairman Bill Murphy’s term.

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Steve discusses the long-term trends of registered gold and silver at the COMEX.  Quite a few of our peers made arguments throughout 2015 that there’s nothing to see here.  Critics based their argument primarily on the fact that vault supplies can be adjusted, at will, thus alleviating any issue with “too little” registered bullion.  This sophomoric argument was compounded by some, as they erected a specious “straw man” supporting argument regarding COMEX default and force majeure, as if to suggest that anyone spotlighting the insane blow-out of registered bullion against historical trends could only be relevant in the context of a COMEX default.  Tune into the show for more discussion and click here for Steve’s recent article on this subject.

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Decoding Bond Market Trends

During 4Q-2015, the Federal Reserve attempted to convince the world that the US economy would turn in a healthy 2016 performance, and that interest rate normalization was justified on economic grounds.  Pulling the trigger on a piddly “for show” rate hike in December came and went.

But a funny thing has been happening ever since.  A growing percentage of the conventional financial world has recognized that the Fed is trapped, and if the Fed attempts to push rates higher while the solvency crisis in the shadow banking system persists along with other global macro deflationary drivers getting worse, the numskulls pulling policy levers might very well amplify asset market corrections and crashes.  We can see the shift in thinking among market participants in the US 10 year bond’s trading over the last 3 months.

ten year yield

Through December, complacency remained.  But check out the crash in yields as money rushed into bonds, driving the price of the 10 year bond up.  That’s a big move, and it reflects a growing fear, at the margin, of a major economic downturn if not an outright financial market crash triggered by the ongoing problems in the shadow banking system, and the associated and causal dynamics of crashing energy prices and commodity prices in general (serves as collateral, as well as source of debt service financing cash flow), credit and industrial capacity bubbles in China (compels China to let the renminbi fall relative to the dollar, which creates deflationary dynamics worldwide), and other contributing dynamics.  In sum, the US ten year bond market is calling bullsh*t on the fantasy the Fed has been peddling.

What’s more, I’d make the argument that the snap-back in the 10 year bond and the short-term rise we saw in the 10 year yield in February was partially explained by the growing realization that the Fed’s fantasy of interest rate normalization will soon become untenable, and that even the Fed’s jawboning and propaganda in support of this fantasy will soon shift.  It’s not a coincidence that the bounce of the 10 year yield to over 1.80% came around the same period when Yellen was forced to launch a trial balloon about negative interest rates during her recent Congressional testimony.  Obviously, the Fed’s fantasy plan launched last December didn’t call for talking about the possibility that negative interest rates might be necessary.

During previous QE cycles, longer duration bonds fell in yields as the “official” purchases of said bonds and mortgage backed securities helped to push bond prices up and yields down.  That market intervention and acquiescence by bond investors created an unusual price/yield picture in the US bond market – and beyond.  On a going forward basis, Yellen and central banker numskulls are going to find that the “long end” of the Treasury Yield Curve – and investors that drive it – is not going to be so easy to influence.  We’ll cover these trends on future broadcasts.

Weekend Links

Next week should be a positive week for precious metals.  Here are important stories to consider, with a heavy emphasis on geopolitics given the rising tensions in the Syrian war theater:

Thanks for checking out this week’s show.  — Eric Dubin, independent analyst and managing editor, The News Doctors.

*Disclaimer: Neither The Doc Nor Eric Dubin currently own any shares of A-Mark Precious Metals, nor have any intention of acquiring a position in A-Mark in the next 7 days.