Summary
- Fed Rate Cut Pivot: The Federal Reserve announced a rate cut cycle despite admitting to overstating US job growth. This follows historical patterns of rate cuts preceding recessions and stock market crashes.
- Silver and Gold Bull Market: The author predicts a bull market for precious metals, pointing to central bank gold buying and historical trends.
- Sovereign Debt and Devaluation: The high global debt level suggests devaluation of fiat currencies, making gold more attractive.
- Central Bank Strategies: Central banks are reducing exposure to the US dollar and increasing gold reserves to offset potential losses.
- Gold Price Prediction: The gold price is expected to rise significantly in the coming years and decades.
- Gold Silver Ratio: The gold-to-silver ratio is expected to decline, potentially reaching historic lows.
- Silver Fundamentals: Strong industrial demand and supply deficits are driving silver prices higher.
- Manipulated Silver Market: James Anderson argues that the COMEX silver market is manipulated, suppressing the true price.
- Silver Supply Shortage: Declining silver supplies and growing demand point towards a future shortage.
- Silver Price Prediction: Silver prices are expected to reach multi-triple digits per ounce in the long run.
It's Jackson Hole week, the fiat Federal Reserve has announced its rate cutting cycle pivot.
Fiat Fed Chairman Jerome Powell cites rising unemployment as a key reason for kicking off this cutting cycle. This the same week the US government data rigging Bureau of Labor and Statistics admitted they have recently overstated US job growth this year through March 2024 by nearly 1 million phony job hires.
This is the largest job rigging number admittance since we were in the heart of the Global Financial Crisis stock market bear bottom in 2009.
How large will the first rate cut be on September 18th? Hard to know.
What we do know is the last two times the fiat Federal Reserve cut rates into escalating unemployment numbers the US economy ran through deep recessions and massive stock bear market crashes in both nominal terms and in terms of valuations versus silver and gold respectively.
Both the 2000 stock bear and the 2008 stock bear cycles were followed by massive spot price and relative valuation rallies for silver and gold.
Not coincidentally former silver bullion bull, Warren Buffett's Berkshire Hathaway has increased its cash hoard to the highest level it has ever stacked. One fourth of all their assets are in cash, likely awaiting to deploy said cash after the next US stock market bubble crash has arrived in full.
How far up the chain is behind the scenes coordination going to help quell coming financial instability? Supposed enemies China and the USA, agents within the PBoC and the US Treasury have been signing deals on bolstering coming collaborations for managing periods of upcoming stress.
So what does the uncommon man increasingly know if they have bothered to look?
Central Banks increasingly know this and have been buying gold bullion in record amounts over the last two and a half years.
And while sovereign nation gold bullion reserve buying and building has been mostly an eastern phenomenon since the 2008 Global Financial Crisis, even western nations like Poland are admitting that they are targeting to own a 20% allocation to physical gold bullion for their liquid sovereign savings long term.
This basically mimics what the Russian Federation already achieved and has been maintaining since the 2020 Covid crisis.
As the world increasingly wakes up to the fact that the bullion over bonds trade era has indeed arrived. All they have to do is look at collective central bank balance sheets to confirm this is indeed coming true.
In a world awash with an estimated record high $315 trillion in debt to the tune of 333% of global GDP, the typical answer to such heavy debt loads is to devalue the underlying fiat currency units owed.
One reason for such record central bank gold buying over the last few years.
When we look at world central bank reserves throughout this full fiat currency era, the proliferation of fiat currency reserves gobbled up in the 2000s and the first half of the 2010s stands out.
In order to offset the coming losses on those fiat currency bags, central banks have not only been reducing their exposure to the fiat US dollar, but most importantly they have been adding to their gold reserves on net.
And while central bank gold buying has been growing increasingly so since the 2008 global financial crisis. In order to offset the coming losses on their devaluing paper fiat currency holdings, the spot price of gold is going to have to multiply many fold from here as the years and decades progress.
If we take the long view on central bank gold reserve ownership, the recent surge in buying is but a blip on the radar. What is most important to remember is that as gold gets rerated higher over time, it will again prove itself to be the very foundation of all things financial globally speaking.
This current gold bull market price breakout beginning in October of last year 2023, if we analogue or match it against prior bullion bull market runs. It is calling for dramatically higher spot prices in the coming three years.
So yea, the uncommon man on the street and I both agree.
On the other side of this break we are going to talk specifically about the spot Gold Silver Ratio and the building bullish fundamentals for silver and its globally desegregated pricing signals are likely to make this the greatest silver bull market the world has ever seen.
The spot silver and gold markets traded up to close on the week's ending news of the fiat Federal Reserve's interest rate cut cycle pivot.
The spot silver price closed just under the nose of $30 oz. I wonder how long it will take China to blow again through the old Rostin Behnam TAMP line? Perhaps early next week?
The spot gold price closed the week again above $2500 oz.
The spot gold silver ratio fell to close the week at a still high level of 84.
Speaking of the still historically elevated level of the spot gold silver ratio. Here is a quick clip by the COMEX CME Group on why the historic ratio means much to traders in a bullion bull market.
Bloomberg Gold Silver Ratio Clip https://youtu.be/d02Uhub-Ebk?si=K9bTlk5hnCoMOGcw
The spot gold silver ratio throughout this full fiat currency era has bottomed as low as 15 and ballooned as high as Great Depression levels above 120 during the 2020 Covid crash.
But pretty much since the 2011 price high for silver in the early spring where the spot gold silver ratio bottomed out near 30 we have pretty much been in a rising channel back toward 1990s silver bear market levels.
At some point this ratio will roll over in earnest and begin tightening and it is conservative to think that ultimately before this building gold silver mania phase peaks out globally, we will fall below the old 2011 low of 30 and perhaps back down towards what we saw in the late 1970s and early 1980.
After all this bullion bull market is not a pip squeak western driven version from 45 years ago.
This is one in which wealthier nations like India and China must have bullion.
And they don't care if gold is at local nominal record price highs, they are still buying in heavy volumes to the tune of over 100 tons last month July 2024. I expect Indian silver importing to pick back up during harvest and wedding season, our North American fall season. Every now and again that country imports over 50 million ounces of silver in just one month.
Silver solar industrial demand figures are still climbing walls sucking remaining silver supplies into deficits that will now be six years running. The underlying supply demand mismatch fundamentals are going to meet the spot price road at some point sooner than later.
And much of the coming silver shortage era will be largely due to decades of systemically rigged price signals globally.
The aggregated shadow eastern price for silver since 1970 has recently ballooned to near $400 oz.
This is the same price chart but in logarithmic format so we can see the black intra-COMEX silver hours starting all the way back in 1970 at $1.92 and 1/2¢ oz for silver. Remembering that number it will help explain how the silver market eventually comes back into equilibrium.
You see without outsized derivative paper price slamming during COMEX hours keeping spot silver price discovery markets suppressed, especially since the 2020 Covid crash. Well the red spot price line would have already ramped. But this situation will change, again as it always has.
Phony price signals and fraudulent derivative leverage eventually have blowback eras. We're bumping into the next one now.
We're rapidly dwindling available silver supplies to the tune of another near -300 million oz deficit this year 2024, in a global market that supplies about 900 million oz a year being hit by demand near 1.2 billion oz annually and growing.
The coming 5th era of silver price equilibrium awaits this market. When those times come, it will be time to offload some silver winnings and move elsewhere with some of that wealth.
Far from it now, rather this is the time to be getting positioned if you have not already.
Basically that black colored COMEX line has flattened of late. But what we will eventually see again is it turning up into a building silver bull market.
Here is that same COMEX silver trading black line close up throughout this full fiat currency era.
Since 1970 starting at $1.925 oz the silver price within COMEX has dwindled down to 15¢ over the last 54 years running.
You might need to pause and listen to that again. It is the most crooked COMEX market and that's saying something.
But there are eras where silver future long betters do in fact win versus the COMEX silver shorts and it results in this blue line running up a wall.
All the way back to the starting line of $1.925 oz for silver intra-COMEX hours back where it all started in 1970.
My contention is when this repeating phenomenon reoccurs it will be likely at or nearing the coming peak of the coming silver bull market mania. Most likely at multi-triple digit per ounce silver spot price points where the Eastern blue and red spot price line converges for the 5th time. Many years and multiples in price from where we are now.
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.
