Frustrated by the Dormant Silver Price? Don’t Be, Says History, the Upsurge Is Coming

By Jeff Clark,
Senior Precious Metals Analyst, GoldSilver.com
Dormant Silver Price
Frustrated by the Dormant Silver Price? Don’t Be, Says History, the Upsurge Is Coming. An article by Jeff Clark.

Frustrated by the comatose silver price? Tired of it going nowhere and being held down?

Well, history has a message for you: This trading behavior is normal. Furthermore, similar scenarios from the past say the next price explosion is on the way.

I know from past studies that silver doesn’t always shoot up when gold does, in spite of the fact that it almost always gains more than gold before the uptrend is over. I decided to put the data to a chart and see what it showed.

I listed gold’s five biggest bull markets, then added silver’s performance to see how closely it tracked gold throughout the uptrend. What it showed confirmed my suspicion: Silver usually (though not always) trails gold in the beginning stages of a bull market. Take a look.

Gold Price Vs Silver Price

In three of gold’s five biggest bull markets, silver clearly trailed the gold price in the beginning stages. It caught up and eventually surpassed gold’s total return, but it usually got off to a slower start than gold. Sound familiar?

In the 1992-1996 and 2008-2011 markets, silver did advance with gold and even jumped ahead of it fairly early in the trend, but in the other three bull markets it lagged until later. So we have historical precedents for silver’s current price behavior—remaining flat while gold creeps higher. In other words, what we’re experiencing now has happened before.

· Since precious metals bottomed in December 2015, gold has risen 26% (through April 20), but silver has only gained 24%.
· Gold has advanced 3.4% YTD, but silver is up only 1.3%.

This is all very similar behavior to three of the bull markets listed above.

But you can also see this lag in performance is only temporary: As history shows, silver has outperformed gold in every major modern-day precious metals bull market (though it did fall below gold before the mid-1980s uptrend ended). There is no reason to expect this won’t be the case the next time around.

Although the gains vary widely, silver’s average advance was 378%. But since Mike is calling for a new world monetary system within two years, silver’s gain will be anything but average. It’s more likely to resemble the latter half of the 1970s: add a zero to the price (and your net worth).

This data signals that we should hang on, and not fret silver’s lackadaisical price behavior. We already know from history how this story ends—silver will sell at multiples of what it sells for today.

Mike and I and everyone else at GoldSilver continue to buy silver while it’s deeply undervalued.

Jeff Clark
Senior Precious Metals Analyst

 

 

This article was originally posted in the Strategic Wealth Preservation Blog and copied here with permission of the author.

The Precious Metals Week in Review – April 20, 2018

1. Markets remained volatile this week, with stocks swinging between positive and negative on geopolitical and macroeconomic uncertainty, despite what appears to be a relatively strong start to earnings season in the U.S. Trade disputes continue to rattle global markets as the U.S. and China apparently have yet to sit down at the negotiation table and come up with a compromise to their differences on trade matters.

The Precious Metals Week in Review - April 20, 2018
The Precious Metals Week in Review – April 20, 2018

2. The seasonally adjusted number of Americans filing initial claims for state unemployment dropped by 1,000 claims to a new level of 232,000 for the week ending April 14. The previous week’s level was unrevised. The four-week moving average of claims increased by 1,250 to a new level of 231,250 from the previous week’s unrevised average. Claims taking procedures in both the Virgin Islands and Puerto Rico have still not returned to their 2017 pre-hurricane norms. In fact, Puerto Rico suffered an island-wide blackout for over 24 hours due to a damaged transmission line this week, lending evidence to the concern that its power grid is growing increasingly unstable instead of improving.

3. Last Friday night, April 13, President Donald Trump announced that he had ordered precision missile strikes against military and chemical weapons infrastructure targets in Syria. The U.S. coordinated with France and the U.K., who both launched similar strikes, in retaliation for the Assad regime’s recent alleged use of chemical weapons against the Syrian people. In an address from the White House, Trump said “We are prepared to sustain this response until the Syrian regime stops its use of prohibited chemical agents.” Trump also seemed to call Russia and Iran to task as well, saying “To Iran and to Russia, I ask: What kind of a nation wants to be associated with the mass murder of innocent men, women and children? Hopefully someday we will get along with Russia, and maybe even Iran, but maybe not.”

4. Russia’s ambassador to the U.S., Anatoly Antonov, responded to the news of the joint missile strikes on Syria via twitter, saying “The worst apprehensions have come true. Our warnings have been left unheard. A pre-designed scenario is being implemented. Again, we are being threatened. We warned that such actions will not be left without consequences. All responsibility for them rests with Washington, London and Paris. Insulting the President of Russia is unacceptable and inadmissible. The U.S. – the possessor of the biggest arsenal of chemical weapons – has no moral right to blame other countries.”

5. Trade war fears between the U.S. and China escalated again this week with China announcing on Tuesday that grain handlers could be faced with a deposit of up to 178.6 percent of the value of any sorghum grain shipments coming in from the U.S. Within hours of the announcement, 5 ships headed for China from the U.S., already loaded with sorghum reportedly changed, or reversed course. Cargill and Archer Daniels Midland were two owners of the terminals where the grain ships were loaded and launched from. Bill Densmore, senior director of corporate ratings at Fitch Ratings company, said “For their overall trade businesses, this is not that substantial, but it’s a warning. If China really does start slapping tariffs on everything, like soybeans and corn, things could get really ugly, really fast.” Tom Sleight, president and CEO of the U.S. Grains Council, said “This tit-for-tat has to stop and talks to find reasonable and lasting solutions must begin, for the good of U.S. agriculture and the customers we have spent decades working to win as loyal buyers.”

6. In India, there appears to be another cash shortage underway. In 2016, Prime Minister Narendra Modi banned high-denomination bank notes in a bid to rein in widespread tax evasion across India. The move sparked an immediate shortage of cash which lasted several weeks as the government struggled to print enough new bank notes. On Tuesday, after reports surfaced that there were many ATM’s in India that were running short on cash, India’s government was apparently forced to ramp up printing of the new bank notes once again. Finance Minister Arun Jaitley tweeted “Have reviewed the currency situation in the country. Over all there is more than adequate currency in circulation and also available with the Banks. The temporary shortage caused by ‘sudden and unusual increase’ in some areas is being tackled quickly.”

7. President Trump confirmed this week that CIA Director Mike Pompeo, Trump’s pick to replace Rex Tillerson as Secretary of State, met with North Korea’s Kim Jong Un last week in North Korea. In a tweet early on Wednesday, Trump said “Mike Pompeo met with Kim Jong Un in North Korea last week. Meeting went very smoothly and a good relationship was formed. Details of Summit are being worked out now. Denuclearization will be a great thing for World, but also for North Korea!” It is expected that President Trump and Kim Jong Un could meet by June at the latest for their supposed summit.

8. North and South Korea are slated to hold their own summit next week between Kim Jong Un and South Korean President Moon Jae-in. A report surfaced on Tuesday that the two nations are in talks to possibly announce a treaty that would put a permanent end to the Korean War. The conflict ended with an armistice in 1953 but an official peace treaty has never been drawn up and ratified. Daily newspaper Munhwa Ilbo also reported that the two leaders might also discuss returning the demilitarized zone, which separates the two nations via heavily armed fortifications and fences, to its original state. If such events do truly come to pass, the apparent willingness of North Korea to deescalate hostilities could certainly help pave the way for productive talks between President Trump and Kim Jong Un later this year.

9. Crude oil surged again this week, as peak summer demand season grew even closer and it was reported that Saudi Arabia would be “content to see crude prices rally as high as $100 a barrel over the coming months.” Danielle Lacalle, Chief Economist at Tressis Gestion, told CNBC’s Squawk Box Europe program on Thursday that “Oil prices are high because the dollar is low.” Lacalle went on to say that “massive supply management” usually triggers an “artificial” upswing in prices, and in the case of oil that “is a big concern… Because oil prices don’t generate crises; the abrupt and unexpected rise of oil prices creates crises.” President Trump called out OPEC’s apparent willingness to send oil prices back near $100 a barrel late on Friday as “not fair”.

10. The euro started the week with a surge to the upside, then drifted higher through Tuesday afternoon before taking a steep turn to the downside. The euro’s fall was shallow and short-lived and by Wednesday afternoon the currency had recovered most of the ground that it had lost. On Thursday the euro experienced a steep plunge that brought it back near even for the week, and another steep plunge on Friday will see the euro close out the week to the downside against the U.S. dollar. The Japanese yen dipped at the start of trading for the week but began moving higher early Monday morning and trended higher all the way through late Tuesday afternoon. The yen had peaked by Tuesday and then began drifting raggedly to the downside. The yen bounced between negative and positive moves on Thursday, but a sharp plunge followed by further downward movement on Friday will mean the yen also closes the week out lower against the U.S. dollar.

The market response to last Friday’s launching of missile strikes into Syria by the U.S., France and the United Kingdom was oddly muted this week. Even with the cryptic response to the incident from Russia’s ambassador to the U.S., it seems that equity markets quickly shrugged off the risk of an escalation to hostilities early in the week and resumed trading as if no risk existed at all. New developments in the ongoing trade spat between the U.S. and China seemed to have the largest negative impact on equity markets as the week wore on.

China announced penalties on U.S. grains, particularly sorghum, on Tuesday which apparently triggered a change in course for some ships that were already loaded, on the water, and headed towards China. It is assumed that these ships are now searching for alternate buyers for their perishable cargoes. China also announced it was implementing anti-dumping tariffs on imports of synthetic rubber from the U.S., EU and Singapore on Thursday. The U.S. had banned American companies from selling parts to ZTE, a Chinese telecom equipment maker, for a period of seven years earlier in the week, which is apparently what triggered the penalties on grain shipments. To date, there have apparently been no formal discussions or negotiations in the ongoing trade dispute, but most analysts feel that the two will eventually negotiate a compromise that will put fears of an all-out trade war to rest.

In Europe, Brexit continues to add to uncertainty for both the EU and the UK. Fitch Ratings agency’s James McCormack hinted this week that Fitch could keep the UK on a negative outlook due to “risks related to Brexit” and uncertainty over the UK’s economic outlook after they exit the bloc. McCormack did note that “From a public finance perspective, things have been improving more quickly than we thought. There’s some scope for a more positive view of the U.K.”

Two events occurred this week which add to the evidence that the U.S. dollar could be losing both its appeal and its place as the world’s reserve currency. First: Turkish media reported that Turkey’s central bank has transferred the entirety of its gold reserves out of the U.S. Federal Reserve, and Turkish President Recep Tayyip Erdogan said, at the Global Entrepreneurship Congress in Istanbul, “Why do we make all [international] loans in dollars? Let’s use another currency. I suggest that the loans should be made based on gold. With the dollar the world is always under exchange rate pressure. We should save states and nations from this exchange rate pressure. Gold has never been a tool of oppression throughout history.”

Second: Iran announced on Wednesday that it will start reporting foreign currency amounts in euros rather than U.S. dollars as part of its effort to reduce its reliance on the dollar due to political tension with Washington, D.C. The International Monetary Fund (IMF) warned that global public debt was ballooning to levels that are even higher than they were at the peak of the 2008 financial crisis. China, on its own, has contributed 43% to the increase in total global debt since 2007, according to the IMF. In one chart projecting estimated debt-to-GDP ratios for advanced economies over the next five years, the U.S. stood out as the sole nation that expects to continually increase its debt-to-GDP due to increased public borrowing as a result of the recent tax cuts it passed. The IMF reiterated its warning from a year ago, saying that it was concerned that escalating private sector debts are making the global economy more susceptible to “an abrupt deleveraging process”. Should borrowers all decide to shut their wallets at the same time, shutting off the consumer component of global GDP, the debt bubble could abruptly collapse and thus trigger the next crisis.

As global debt levels continue to rise and geopolitical tensions become more and more uncertain, savvy investors continue to make efforts to diversify their portfolios to protect themselves from overexposure to any single asset class. Many of these investors choose physical precious metals as part of their diversification plans, taking advantage of temporary price dips to add more physical product to their investment portfolios at a discount. The growing focus by the world’s central banks on repatriating, and increasing, their gold reserves has also sparked interest in stockpiling physical precious metals as a hedge against global uncertainty.

Remember that precious metals should always be viewed as a long-term investment and that the key to profitability through the ownership of physical precious metals is to actually acquire and own the physical products and to hold them for the long term. Always remember that you should never overextend your ability to maintain ownership of your precious metals over the long term.

Trading Department
Precious Metals International, Ltd.

Friday to Friday Close (New York Closing Prices)

Apr 13th2018 Apr 20th2018 Net Change
Gold $1345.50 $1337.00 (8.50) – 0.63%
Silver $16.70 $17.18 0.48 + 2.87%
Platinum $931.00 $930.00 (1.00) – 0.11%
Palladium $987.50 $1039.50 52.00 + 5.27%
Dow Jones 24360.14 24462.94 102.80 + 0.42%

Previous Year Comparisons

Apr. 21st2017 Apr 20th2018 Net Change
Gold $1287.29 $1337.00 49.71 + 3.86%
Silver $17.93 $17.18 (0.75) – 4.18%
Platinum $976.00 $930.00  (46.00) – 4.71%
Palladium $796.00 $1039.50 243.50 + 30.59%
Dow Jones 20547.76 24462.94 3915.18 + 19.05%

Here are your Short Term Support and Resistance Levels for the upcoming week.

Gold Silver
Support 1320/1300/1280 17.00/16.80/16.65
Resistance 1360/1380/1400 17.20/17.48/17.70
Platinum Palladium
Support 910/890/875 1030/1010/990
Resistance 940/960/985 1050/1070/1090
This is not a solicitation to purchase or sell.
© 2018, Precious Metals International, Ltd.

The End of the Debt-As-Currency Era

“Gold is the currency of kings, silver is the money of gentlemen, barter is the money of peasants, but debt is the money of slaves.”
Norm Franz, Money and Wealth in the New Millennium, 2001

We are nearing the end of the debt-as-currency era.

This is quite a broad statement and, of course, since debt is the foremost currency of our day, it would be quite understandable if the reader were to regard such a prognostication to be utter nonsense.

The End of the Debt-As-Currency Era.
The End of the Debt-As-Currency Era. An article by: Jeff Thomas. Photo: Pixabay.

Indeed, many would say that, without debt, the world couldn’t function. Debt has always existed and always will. However, in eras past, debt often played a much smaller role and those eras were marked by greater progress and productivity.

We’re now living in the era of the greatest level of debt mankind has ever created. In fact, we’ve come to regard it as “normal.” Most governments are far beyond broke. And they won’t be saved by confiscation or taxation, as their people and corporations are just as heavily in debt. For this reason, a collapse is inevitable and when it arrives, it will be a collapse that eclipses all previous collapses in its severity. (The severity of a collapse is invariably directly proportional to the severity of the debt.)

The present uncontrolled level of debt is made possible through the ability of central governments to create more currency at will. And this is only possible through the existence of a currency that is fiat in nature – that has no inherent value.

Aristotle was right on the mark when he stated that for something to be appropriate as money, it must have intrinsic value – independent of any other object and contained in the money itself-.

The great majority of what passes for money today is digital, although, for daily use, paper currency is still widely used. But it must be said that paper currency is also fiat, having a far lower intrinsic value than the denomination printed on it.

In 1971, the US dollar went off the gold standard – it ceased to be redeemable in precious metal. From that date on, it existed as a promise only – a promise from a government. (Promises from governments tend to be somewhat less redeemable than promises from, say, loan sharks, or used-car salesmen.)

In time, the rest of the world followed and, today, no national currency is redeemable in anything that has intrinsic value.

Doug Casey has rightly called the dollar (since going off the gold standard) as an “I owe you nothing.” Exactly correct. He also describes the euro is a “Who owes you nothing?” since no one country in the EU is responsible to redeem the euro with anything that possesses intrinsic value.

It’s hoped by many today that cryptocurrencies will be the salvation of the soon-to-collapse monetary system. Unfortunately, cryptos can accurately be described as a “You have no idea who owes you nothing.”

Cryptos have distinct advantages over other fiat currencies – they allow quick transactions between parties anywhere in the world, independent of any reliance on banks or governments. Unfortunately, though, they have, in fact, even less inherent value than paper currency. Their inherent value is exactly zero.

This does not mean that they won’t become more popular, as people seek to extricate themselves from the control of banks and governments. However, cryptos only have a perceived value. Throughout history, whenever the perceived value of a form of fiat currency has collapsed, the currency has returned instantly to its intrinsic value.

An excellent example is the tulip mania of 1637, when the perceived value of some tulip bulbs became inflated to the degree that some were sold for ten times the annual income of a skilled craftsman.

Whilst we, today, might find this laughable, at the time, all, that mattered was that there was a general consensus that tulip bulbs would keep increasing in price. As a result, everyone jumped on the bandwagon… and inevitably, rode it over the cliff.

In every such case historically, whether it be tulip bulbs, the 1923 Reichsmark, the 2008 Zimbabwe dollar, or the more recent Venezuelan Bolívar, once the collapse comes, no one will subsequently touch a failed fiat currency with a bargepole.

What this boils down to is that we’re living in an era in which there are more forms of fiat currency in use than at any time in history and, more are being formed as we speak. So many cryptos are being created at present that we may soon begin to speak of “junk cryptos” as we once spoke of “junk bonds” to hopefully elevate the more reliable cryptos from their cousins. We may even come to speak of “investment grade cryptos.”

Returning to the subject of debt, the wise investor, when considering entering a debt relationship, should always ask himself, “Who issued the debt? What is it really worth? What is the likelihood that I’ll get paid?”

If the answer to these three questions is, “I have no idea,” it doesn’t mean that he shouldn’t become involved, but he should recognize that he has passed from speculator into gambler. Some gambles are worth the risk involved, but it’s a gamble, nonetheless.

Paper currencies have proven to be very risky indeed, particularly, as central banks have printed so recklessly in recent times and, should deflation occur (as seems likely) they’ve committed to printing as much as it takes to offset the deflation, endlessly devaluing the currency and very possibly leading to hyperinflation (again, as in Weimar Germany in 1923, Zimbabwe in 2008 and Venezuela in the present day.)

Similarly, Bitcoin, regardless of the fact that it’s always pictured as a gold coin, is actually an algorithm. It’s been promised to be “finite” – to be capped at 21 million. However, this is, once again a “promise.”

Tangible Versus Promissory Collateral

At present, we’re in the deepest trough of debt-as-currency that the world has ever seen. However, the writing is now on the wall that the end of this era is about to begin, and it may begin in the field of energy. Russia, one of the world’s foremost suppliers of energy, has agreed to sell energy to China, one of the world’s foremost purchasers of energy, to be paid not in US petro dollars, but in yuan, redeemable in gold. This is the first major step in a return to the world of tangible versus promissory collateral.

From that point forward, the trend will unquestionably expand to other forms of trade and, I would project, to currencies themselves.

But, assuming that the above is true, why should that mean the end of the debt-as –currency era?  Surely, debt has always existed and will continue to exist. Quite so. However, in other eras, debt was commonly treated as dangerous and was avoided as much as possible.

The acceptance of a currency as real money only exists as long as confidence allows it to. Once that confidence has failed, it’s very difficult to sell anyone on the idea of accepting it again. (After the tulip mania collapse, no one trusted tulip bulb speculation anymore.)

National debt is fraud. It creates no wealth. Debt is the monetary equivalent of the emperor’s new clothes. The ruse is only maintained as long as people have faith in it.

Those who survive the coming collapse will be those who have created an economic insurance policy for themselves, in the form of tangible assets.

Jeff Thomas
International Man and Strategic Wealth Preservation
jeff.thomas1066@gmail.com

 

 

This article was originally posted in the Strategic Wealth Preservation Blog and copied here with permission of the author.

The Precious Metals Week in Review – April 13, 2018

The Precious Metals Week in Review - April 13, 2018
The Precious Metals Week in Review – April 13, 2018

1. Market volatility continued this week as President Trump once again took to Twitter to make threats against Russia and Syria. The ongoing possibility of a trade war between the U.S. and China also contributed to market volatility, but the tension was alleviated somewhat when President Xi Jinping seemed to indicate that China would be willing to relax, and even review, some of the items that the U.S. considers barriers to free trade.

2. The seasonally adjusted number of Americans filing initial claims for state unemployment dropped by 9,000 claims to a new level of 233,000 for the week ending April 7. The previous week’s level was unrevised. The four-week moving average of claims increased by 1,750 to a new level of 230,000 from the previous week’s unrevised average. Claims taking procedures in both the Virgin Islands and Puerto Rico have still not returned to their 2017 pre-hurricane norms.

3. Early on Wednesday morning, President Trump appeared to threaten Russia over its declaration that it would shoot down “any and all missiles fired at Syria”. In an early tweet on Wednesday in response to news that another chemical weapons attack had allegedly been carried out in Syria over the previous weekend, Trump said “Russia vows to shoot down any and all missiles fired at Syria. Get ready Russia, because they will be coming, nice and new and ‘smart!’ You shouldn’t be partners with a Gas Killing Animal who kills his people and enjoys it!” The Kremlin responded to Trump’s tweet, saying that it did not engage in “Twitter diplomacy. We support serious approaches. We continue to believe that it is important not to take steps that could harm an already fragile situation.” Trump appeared to backtrack somewhat on his implied threat on Thursday in another tweet, saying “Never said when an attack on Syria would take place. Could be very soon or not so soon at all! In any event, the United States, under my Administration, has done a great job of ridding the region of ISIS. Where is our ‘Thank you America?’”

4. The U.K., responding to the alleged chemical weapons attack, has apparently ordered British submarines to move within missile strike range of Syria. The Daily Telegraph, quoting government sources, said that Britain was “doing everything necessary” to be in range to fire Tomahawk cruise missiles from its submarines against military targets in Syria. The paper went on to say that Prime Minister Theresa May has not reached a final decision on joining any potential [missile] strikes by the U.S. and France in response to the alleged chemical weapons attack over the weekend but wants to be in position to act swiftly in case the situation escalates further.

5. Late on Friday morning, Russian Defense Ministry spokesman, Major General Igor Konashenkov said that Britain was “directly involved in the provocation” in Syria over the weekend. Konashenkov released statements by medics from a hospital in Douma, the area in Syria allegedly hit by chemical weapons over the weekend, that said “a group of people toting video cameras entered the hospital, shouting that its patients were struck with chemical weapons and causing panic.” According to Russia, the medics then stated that none of their patients had been injured by any chemicals. Konashenkov did not elaborate further on the supposed evidence gathered by Russia and did not say why he assumed that Britain was “directly involved”. France countered the Russian’s claim, with President Emmanuel Macron saying on Thursday that France had “proof that last week, now 10 days ago, that chemical weapons were used, at least with chlorine, and that they were used by the regime of Bashar al-Assad.”

6. Russia’s Ambassador to the United Nations said on Thursday that Russia “cannot exclude war” between Washington and Moscow if military action by the U.S. or its allies against Syria over the latest suspected chemical attack causes casualties to Russian troops in the region. Vassily Nebenzia urged the U.S. and its allies to show some restraint, telling reporters that “The immediate priority is to avert the danger of war. We hope there will be no ‘point of no return’.” When a reporter asked if he was referring to a war between Russia and the U.S., Nebenzia said “We cannot exclude any possibilities, unfortunately, because we saw messages that are coming from Washington. They were very bellicose.”

7. In further news regarding Russian-US relations, Russia’s lower house of parliament is reported to be considering draft legislation that would allow the Kremlin to ban or restrict a list of U.S. imports, including food, alcohol, medicine and consulting services, in response to Washington’s latest round of sanctions against a group of Russian tycoons and officials that were announced last week.

8. The Wall Street Journal reported this week that the Trump administration may be planning to increase trade pressure on China by blocking Chinese technology investment in the U.S., possibly making the ban permanent. The paper also reported that details could be released as early as next week on which products might be targeted in Trump’s call for the placement of additional tariffs on a further $100 billion of Chinese imports into the US.

9. On Tuesday, Chinese president Xi Jinping announced that he would open China’s economy further and lower import duties on goods such as cars. In a speech at a business forum in Boao, Jinping also pledged to enforce the legal intellectual property rights of foreign firms, one of the U.S.’ main sticking points in its ongoing trade spat with Beijing. Jinping’s speech was viewed by most markets as evidence of a possible breakthrough in trade negotiations between China and the U.S., but Beijing was quick to downplay that idea when Commerce Ministry spokesman Gao Feng said at a press briefing that “China and the U.S. have not held any negotiations on their bilateral trade frictions” and that it would “be misleading to say Xi’s pledge this week was a concession to the United States.” Feng reiterated that “China will not hesitate to fight back if the United States escalates its trade spat with Beijing.”

10. Crude oil surged this week, as peak summer demand season grows closer and tensions escalated in the Middle East over the incident in Syria. Brent crude, which is the international benchmark, was above $73 a barrel for the first time since December of 2014. Prices surged the most surrounding President Trump’s tweet that the U.S. could launch missile strikes into Syria in response to the alleged chemical weapons attack in Douma over the previous weekend. Saudi Arabia’s announcement that it shot down ballistic missiles and drones launched from Yemen by Houthi rebels also acted as support for oil prices.

11. The euro started the week off relatively flat against the U.S. dollar, but surged higher late on Monday. The euro then began drifting higher through the middle of the week but on Wednesday, it reversed its upward trajectory. The decline had leveled off by late Thursday afternoon and the euro will still finish the week out to the upside against the U.S. dollar. The Japanese yen had a volatile start to the week, drifting lower against the U.S. dollar through late Monday, then spiking briefly higher before moving negative again early on Tuesday morning. The yen drifted back into positive territory by Wednesday but reversed its upward trajectory by Thursday morning and trended mostly lower through Friday. A late upward surge on Friday was not enough to move the yen back to positive for the week and it will close lower against the U.S. dollar.

Escalating geopolitical tensions over the alleged chemical weapons attack in Syria the previous weekend are likely to continue to trigger increased market in all markets. Russia maintains that the alleged attacks were “staged” and were carried out by “foreign actors” attempting to further aggravate tensions between Russia, the U.S. and other foreign powers. Russian Foreign Minister Sergei Lavrov, in a press conference on Friday, said “We have irrefutable evidence that this was yet another performance and that intelligence services of a country which is trying to be in the frontlines of the Russophobic campaign were involved in this performance.” Though Lavrov did not specifically mention which “country” he was referring to, given comments by other Russian officials during the week that the U.K. was responsible for staging and/or creating a panic around the incident, it is likely that he too was referring to the U.K.

France and the U.K. both also claim to have gained evidence from the area of the alleged attacks and both say that the incident was real and that Bassar al-Assad’s regime was responsible. U.K. Prime Minister Theresa May said Wednesday that “All the indications are that the Syrian regime was responsible and we will be working with our closest allies on how we can ensure that those who are responsible are held to account and how we can prevent and deter the humanitarian catastrophe that comes from the use of chemical weapons in the future.” The United Nations Security Council has scheduled an emergency meeting on Syria for Friday evening, at the request of Russia’s UN ambassador. Vassily Nebenzia, Russia’s Ambassador to the UN, raised concerns over “the dangerous escalation” of the situation in Syria, which ultimately resulted in the scheduling of the emergency meeting.

US President Donald Trump has already threatened that the US could carry out missile strikes against military targets in Syria in response to the incident, and it is likely that France and the U.K. are also considering their own responses.

On Wednesday, a European air traffic agency warned of a threat of missile strikes into Syria and urged airlines to exercise caution over the eastern Mediterranean throughout a 72-hour period. It appears any military-style response might be waiting on the outcome of Friday night’s Security Council session. President Trump has reportedly told his top economic advisers, including Larry Kudlow and Robert Lighthizer, to “take another look at whether or not a better deal could be negotiated” with regards to the Trans-Pacific Partnership (TPP). Trump acted to remove the U.S. from the original TPP agreement as one of his first acts after taking office. It is likely that the U.S. will be unable to enjoy any leverage in negotiating a “better deal” since the remaining 11 nations that made up the original TPP talks moved on to sign the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. The signed agreement has not yet been ratified by enough countries for it to take effect but regardless, the signatures of the other nations on the final agreement will put the U.S. at a disadvantage in further discussions.

Australia’s trade minister told the New York Times on Friday that “We’ve got a deal. I can’t see that all being thrown open to appease the United States.” The surprise move by President Trump to attempt to re-enter negotiations for the TPP may be an effort to appease some of the U.S. agricultural states that have been hit hard by the ongoing trade tariff battles between the U.S. and China. China moved swiftly to retaliate against proposed tariffs by President Trump by slapping its own tariffs on many U.S. sourced agricultural products.

Trade war fears seemed to subside a bit this week as China’s Xi Jinping appeared open to responding to some of the U.S.’ accusations over its trade practices. President Xi Jinping, in a speech at a business forum, pledged to open up China’s economy to make trade easier for foreign nations, and also pledged to uphold intellectual property rights for foreign firms, which has long been one of the U.S.’ main objections to China’s current trade practices. Despite the apparent softening of Jinping’s stance, Beijing was quick to point out that his remarks in no way mean that China will kowtow to the U.S.’ demands and that any further trade barriers such as additional tariffs introduced by the U.S. will be met with a swift, retaliatory response in kind.

As trade tensions continue to escalate and macroeconomic and geopolitical uncertainties also increase, savvy investors take additional steps to help ensure that their portfolios are well-diversified in the event of a drastic downturn in global equity markets. Such investors have continued to add physical precious metals as part of a well-diversified portfolio to help mitigate the growing geopolitical and global macroeconomic risks that could trigger a collapse in stocks. These investors continue to stick to their plans to add physical precious metals to their portfolios whenever temporary price dips present them with the opportunity to purchase more product at a discount.

Remember that precious metals should always be viewed as a long-term investment and that the key to profitability through the ownership of physical precious metals is to actually acquire and own the physical products and to hold them for the long term. Always remember that you should never overextend your ability to maintain ownership of your precious metals over the long term.

Trading Department
Precious Metals International, Ltd.

Friday to Friday Close (New York Closing Prices)

Apr 6th2018 Apr 13th2018 Net Change
Gold $1332.50 $1345.50 13.00 + 0.98%
Silver $16.41 $16.70 0.29 + 1.77%
Platinum $915.50 $931.00 15.50 + 1.69%
Palladium $903.50 $987.50 84.00 + 9.30%
Dow Jones 23932.76 24360.14 427.38 + 1.79%

Previous Year Comparisons

Apr. 13th2017 Apr 13th2018 Net Change
Gold $1286.90 $1345.50 58.60 + 4.55%
Silver $18.54 $16.70 (1.84) – 9.92%
Platinum $974.50 $931.00  (43.50) – 4.46%
Palladium $797.00 $987.50 190.50 + 23.90%
Dow Jones 20453.25 24360.14 3906.89 + 19.10%

Here are your Short Term Support and Resistance Levels for the upcoming week.

Gold Silver
Support 1320/1300/1280 16.65/16.42/16.30
Resistance 1360/1380/1400 16.80/17.00/17.20
Platinum Palladium
Support 910/890/875 960/930/900
Resistance 940/960/985 990/1010/1030
This is not a solicitation to purchase or sell.
© 2018, Precious Metals International, Ltd.

CPM Group Precious Metals Report – Q2

Please find below the CPM Group’s free Q2 precious metals report entitled ‘A Year For Accumulation’. This report focuses on the impact of rising interest rates, inflation and trade tariffs on the price of precious metals.

CPM Group Precious Metals Report – Q2

 

 

This report was originally posted in the Strategic Wealth Preservation Blog and copied here with permission of the author.

Gold Hedging From Hedge Funds & Traders Continues to Surge

By Jeff Clark,
Senior Precious Metals Analyst, GoldSilver.com
Gold Hedging From Hedge Funds & Traders Continues to Surge
Gold Hedging From Hedge Funds & Traders Continues to Surge. An article by Jeff Clark.

It’s a relatively quiet trend, but the most active of investors—hedge funds and traders—are aggressively putting gold hedges in place.

It shouldn’t really be a surprise, given the recent spike in volatility in the stock market. It hasn’t been reported much in the mainstream, but an increasing number of people who make their living from investing are betting on gold.

We’ve shown this data before, but the trend continues to build strength. Gold trading volumes on the COMEX surged to yet another new high last quarter.

Comex Quarterly Gold Volumes

Volume on world’s biggest futures market hit a record 23 million contracts in the first quarter.

This swell in activity is quite remarkable. Volume is up a whopping 130% since gold bottomed in December 2015… it is more than triple the levels of 2006… it’s 40% higher than when gold hit its record price of $1,921 in 2011… and 65% higher than when traders dumped their holdings in 2013.

To be clear, this data measures “trading” activity, so it includes both buys and sells. But the jump in volume over the past two years shows that that activity is bullish in nature, because prices are rising. Basically, investors have placed more buy orders than sell orders during this period, which pushes prices higher. If more sell orders were initiated, prices would be falling.

Some of this activity is strictly trading—speculators that are betting the price is headed higher. But some of this is definitely hedging behavior. In other words, hedge funds and other institutional funds that have initiated a position in gold, via the futures market, to hedge their stock positions or other investments.

But it’s the unrelenting surge in volume that has a very specific message for us:

Hedge funds and traders have never seen a greater need to own gold than right now.

We can draw this conclusion because of the runaway increase in the number of contracts. The Comex hasn’t seen a 10% or 20% increase—the volume is more than double and triple what it’s been in the past, even during periods of big price movements. This ongoing barrage of activity signals an ever-growing interest on the part of traders and institutions in taking a position in gold.

And it’s not just activity on the Comex. Holdings in GLD, the largest gold ETF, hit their highest level since October 2017. And speculative long positions by money managers hit their highest level in two years at the end of March.

This has all served to push the gold price higher for three consecutive quarters, something that hasn’t happened since 2011. These are all clearly bullish indicators.

You may be frustrated by the lackadaisical price movement in precious metals, but this data clearly shows that many professional investors in the mainstream community are building positions in gold right now because they either think the price is headed higher or they recognize gold’s value as a hedge against risk asset markets.

Hang on, my friends. A shift is coming, and when it does, we will be handsomely rewarded. Make sure you own the amount of gold and silver you want to have in your possession and under your control when the next crisis inevitably hits.

Jeff Clark
Senior Precious Metals Analyst

 

 

This article was originally posted in the Strategic Wealth Preservation Blog and copied here with permission of the author.

Preparing for War

By Jeff Thomas,
Feature Writer for Doug Casey’s International Man and Strategic Wealth Preservation

“The statesman who yields to war fever must realize that once the signal is given, he is no longer the master of policy, but the slave of unforeseeable and uncontrollable events.”Winston Churchill

Recently, the US Government announced the replacement of its National Security Advisor. The existing military man – a combat veteran Lieutenant General, was replaced by someone who was, amazing though it may seem, more hawkish.

John Bolton - Preparing for War
Preparing for War. An article by Jeff Thomas.

This came as shock to the world and Americans in particular, as the new advisor, John Bolton, is seen publicly as aggressive at best and a psychopath at worst.

The New York Times recently said, “There are few people more likely than Mr. Bolton is to lead the country into war.”

In other comments, they’ve said, “Mr. Bolton, in particular, believes the United States can do what it wants without regard to international law, treaties or the political commitments of previous administrations… He has argued for attacking North Korea… which could set off a horrific war costing tens of thousands of lives… he has called for bombing Iran… He has also maligned the United Nations and other multilateral conventions… Mr. Bolton has largely disdained diplomacy and arms control in favor of military solutions.”

Pretty scary stuff.

But then, the president’s cabinet is increasingly about scary stuff. From the beginning, it was loaded up primarily with generals, as well as central bankers. Since that time, the turnover of staff has leaned ever further in the direction of aggressive military men.

In learning of the latest appointment, an American associate complained to me, “Look who they’ve chosen to be in charge of National Security. Don’t they know that this guy is so hawkish that, no matter what the situation, he’ll push the US toward war?”

Well yes, that’s quite so. However, the question suggests that the US Government is presently weighing the possibility of a major war. I doubt very much if this is the case.

I’m very much afraid that the logic in the question is, in fact, backwards.

The US made the decision to go to war some time ago. What they’re now doing is lining up the people they’ll need to assure that the wartime advisors are aggressive enough to see it through. Any Cabinet member who actually considers both war and peace as equally viable considerations, must be removed and replaced with someone who’s committed to the decision that’s already been reached.

Another concern amongst Americans is that President Trump has reversed his campaign promise to “work with Putin and other world leaders,” that he’s now threatening warfare on multiple fronts. An increasing concern amongst Americans is that he must be made to see reason, or he’ll lead the US to war.

Again, I believe that the logic is the wrong way round. Mister Trump is irrelevant. The Deep State – that conglomerate of governmental agencies and corporations that rule the US, have long-since baked war into the cake. The current president will be expected by them to get into line.

This is evidenced by Mister Trump’s repeated claims in the morning that he intends to work with others, only to announce in the afternoon that he will do the exact opposite. Mister Trump has an exceptionally strong ego and does all he can to maintain his image of being in charge, but, time after time, he’s had to reverse his public statements, often within the same day. (This is not the behavior of a man who is truly in charge.)

Looking back half a century, President Eisenhower’s final task in office was reputedly to advise the incoming President Kennedy that the recently-formed CIA was rapidly becoming a monster and needed to be dismantled at all costs. Mister Kennedy agreed and attempted to do just that. His effort did not end well. Since that time, the Deep State has grown far stronger. It remains faceless by design, yet it rules, in toto, from behind the scenes. Its leaders rise from within and are not subject to election or public acceptance. They’re independent of both the party system and the constitutional balance of the three branches of government.

Mister Bolton was not chosen in spite of his belief that the US should be an active aggressor in every instance, he was chosen because of it.

The US is going to war.

Historically, when political leaders decide to go to war, they do three things. First, they build up their military might. They explain this to the people as being “necessary for defense.” They then create a war council – a group of advisors who are not only willing to go to war, but are eager to do so. (This assures, as much as possible, that they will stay the course, often obsessively, when the going gets tough. But this is also the reason why leaders often fight to the bitter end, even when all hope is gone, costing excessive and pointless loss of life, after the writing is already on the wall).

Finally, they create a justification for invasion. This is normally achieved either with a false-flag act of aggression, or a provoked attack by the intended opponent. It matters little which method is used, as the result is the same – a “justification” for invasion.

This was done by the US to justify the Spanish American War, both world wars, Viet Nam and each of the American invasions into the Middle East.

In the war that is to come, the US is doing all it can to provoke attacks from other countries in both the Middle East and Asia, whilst providing the media with propaganda, claiming that the US is only invading and planning to invade foreign countries for reasons of “defense.”

In essence, the way this works is much like the behaviour of the schoolyard bully. He doesn’t strike his intended victim. He pushes him, again and again until his victim can no longer tolerate the humiliation of being pushed and strikes back in some small way. This gives the bully the justification to claim that he’s been attacked and is justified in a full-force retaliation (which is immediate).

At present, the US is actively provoking a host of small countries and has already invaded quite a few of them in the last two decades.

The alarming factor in the US aggression is that these countries are all very far away from the US, yet right next door to Russia and China.

As the old saying goes, “The enemy of my enemy is my friend,” and, in this shoving match by the US, taking place in the backyards of Russia and China is almost certainly going to ally those two great powers, in opposition to the US.

In addition, many other countries in the world have become tired of the ceaseless aggression by the US and have already formed alliances with Russia and/or China. (We cannot yet know to what degree they will take part once a major war breaks out.)

Further, unknown to most Americans, many of its former allies are becoming increasingly disenchanted with US sanctions that threaten their trade with those other powers and, when they’re asked to join together in warfare against them, they’re very likely to refuse, or worse, to change sides.

The world, if not America, sees the US government as the aggressor and the war to come is not likely to end well for the US.

Jeff Thomas
International Man and Strategic Wealth Preservation
jeff.thomas1066@gmail.com

 

 

This article was originally posted in the Strategic Wealth Preservation Blog and copied here with permission of the author.

The Precious Metals Week in Review – April 6, 2018

The Precious Metals Week in Review - April 6, 2018
The Precious Metals Week in Review – April 6, 2018

1. The growing possibility of trade wars between the U.S. and China continued to dominate market movements this week. Stock markets continued to sell-off under the pressure of growing tensions between the U.S. and its trade partners.

2. The seasonally adjusted number of Americans filing initial claims for state unemployment surged by a massive 24,000 claims to a new level of 242,000 for the week ending March 31. The previous week’s level was revised higher by 3,000 claims. The four-week moving average of claims increased by 3,000 to a new level of 228,250 from the previous week’s revised average. The previous week’s 4-week average was revised higher by 750. Claims taking procedures in both the Virgin Islands and Puerto Rico have still not returned to their 2017 pre-hurricane norms.

3. The monthly Non-Farm Payrolls report was released on Friday and completely missed economists’ expectations. The U.S. economy added just 103,000 jobs in March compared to expectations of 193,000 by most economists. It was a huge decline in job additions compared to February’s 326,000. J.P. Morgan Funds chief global strategist David Kelly told CNBC that the report may be showing that the U.S. may be “out of easily employable workers”. Mr. Kelly said “In the housing market, sometimes realtors say sales were weak because there was no inventory. Well, there is not a lot of inventory of really great workers to hire who are still unemployed. That may be slowing down job growth.”

4. Larry Kudlow, the new director of the National Economic Council said on Friday that Tariff negotiations with China have “not really begun yet”, telling Bloomberg television that “China’s response to our complaints… has been unsatisfactory”. Kudlow categorized the U.S.’ actions thus far as a “moderate, tempered approach” and said that “This is not a trade war.”

5. The standoff between the U.S. and China escalated further this week. On Wednesday, China announced that it would be placing tariffs on 106 U.S. products, including agricultural products, automobiles and whiskey. On Thursday, President Trump threatened to place another $100 billion in tariffs on additional Chinese goods. China’s Ministry of Commerce responded by saying “We will immediately fight back with a major response. We have no other choice.” At a briefing in Beijing on Friday, a representative for the Ministry said “We feel America is very arrogant. They have taken a wrong action. The result is that they will hurt themselves. If they release the list of $100 billion tariffs, China is prepared and will not hesitate.” The representative said “We have prepared with a bottom-line mindset and have planned detailed action. We won’t start a war, but if someone does, we will definitely fight back.”

6. Guggenheim’s Chief Investment Officer, Scott Minerd, warned clients in a recent note that the market is on a “collision course with disaster” and said he feels the likelihood of a recession is increasing and that the stock market could plunge by up to 40 percent, triggering the chance of a collapse in the bond market as corporations default on their massive debt loads.

7. A member of the European Central Bank said that monetary policy will remain accommodative, even if a trade war does break out. Executive Board member Benoit Coeure told CNBC this week that the reason the central bank would remain accommodative was that “the economy, and in particular the inflation in the euro zone, is not yet where we want to see it. We’re very much data driven, we look at facts.”

8. Crude oil dropped this week as the threat of escalating trade tensions spilled into the oil market. China is one of the largest importers of U.S. crude oil and if they counter the latest threat of additional tariffs by placing tariffs on U.S. crude, it could send U.S. prices lower, taking down global crude prices with it.

9. The euro had a rocky week, moving lower against the U.S. dollar for most of the week in a series of sharp spikes and sudden drops. As the U.S.-China trade standoff escalated on Friday, the euro saw a sharp surge to the upside, but did not gain enough back to close the week out to the upside against the U.S. dollar. The Japanese yen popped higher early in the week, but soon began moving to the downside. The yen also popped higher on Friday as trade tensions escalated but it could not fully recover the losses and will also close out the week lower against the U.S. dollar.

The possibility of an all-out trade war escalated this week as the U.S. and China engaged in more tit-for-tat retaliatory tariffs. President Trump suggested another $100 billion in tariffs on additional Chinese goods this week and Beijing said Friday that if those tariffs are implemented that it will retaliate swiftly with another round of tariffs on U.S. made goods.

Treasury Secretary Steven Mnuchin went on CNBC on Friday to try to do some damage control, saying that he was “cautiously optimistic that we will be able to work this out.”  Secretary Mnuchin said “Our objective is still not to be in a trade war with them” but added “there is a potential of a trade war.” Mnuchin would not comment on the progress of any talks with China but said “Right now we have initiated a plan. The tariffs will take some period of time to go into effect. There will be public comment, while we’re in the period before the tariffs go on, we’ll continue to have discussions. The president wants reciprocal trade.”

The monthly U.S. Non-Farm payrolls report was released Friday and the numbers were nowhere close to economists’ expectations. The U.S. economy added just 103,000 jobs in March, and the weekly unemployment claims jumped by a surprising 24,000 claims. A true trade war breaking out between the U.S. and China could trigger corporations to scale back on both the goods they manufacture, and also scale back on the people that they employ to make those goods.

Consumer spending has dipped in the U.S. as well, which may also mean that consumers are tightening their wallets ahead of perceived economic turmoil. Global Stocks were extremely volatile throughout the week, setting new lows in the U.S. as the escalating tensions rippled throughout the world. Benoit Coeure, a policymaker at the European Central Bank, said that the ongoing exchanges between the U.S. and its various trade partners has already begun to have a negative impact on the global economy. Coeure said “We’ve obviously seen stock prices going down, some risk premia going up, so some tightening of financial conditions globally, starting with the U.S. But it all depends on how the situation will evolve and that’s certainly what we don’t want to see – a general tightening of financial conditions.”

As the stock sell-offs accelerate, savvy investors continue taking steps to make sure that their investment portfolios are diversified and have some protection against further downside risks in stocks. One such tool these investors use to keep their portfolios diversified is purchasing physical precious metals whenever temporary price dips allow them to acquire additional product at a discount. Historically, when stocks have faced a major correction, the surge in demand for precious metals has sent prices surging.

Remember that precious metals should always be viewed as a long-term investment and that the key to profitability through the ownership of physical precious metals is to actually acquire and own the physical products and to hold them for the long term. Always remember that you should never overextend your ability to maintain ownership of your precious metals over the long term.

Trading Department
Precious Metals International, Ltd.

Friday to Friday Close (New York Closing Prices)

Mar 29th2018 Apr 6th2018 Net Change
Gold $1323.00 $1332.50 9.50 + 0.72%
Silver $16.29 $16.41 0.12 + 0.74%
Platinum $928.00 $915.50 (12.50) – 1.35%
Palladium $948.50 $903.50 (45.00) – 4.74%
Dow Jones 24103.11 23932.76 (170.35) – 0.71%

Month End to Month End Close

Feb 28th2018 Mar 29th2018 Net Change
Gold $1318.00 $1323.00 5.00 + 0.38%
Silver $16.41 $16.29 (0.12) – 0.73%
Platinum $988.00 $928.00  (60.00) – 6.07%
Palladium $1037.50 $948.50 (89.00) – 8.58%
Dow Jones 25029.20 24103.11 (926.09) – 3.70%

Previous Year Comparisons

Apr. 7th2017 Apr 6th2018 Net Change
Gold $1255.20 $1332.50 77.30 + 6.16%
Silver $18.18 $16.41 (1.77) – 9.74%
Platinum $955.00 $915.50  (39.50) – 4.14%
Palladium $801.00 $903.50 102.50 + 12.80%
Dow Jones 20659.34 23932.76 3273.42 + 15.84%

Here are your Short Term Support and Resistance Levels for the upcoming week.

Gold Silver
Support 1320/1300/1280 16.30/16.15/16.00
Resistance 1360/1380/1400 16.42/16.65/16.80
Platinum Palladium
Support 910/890/875 900/890/870
Resistance 940/960/985 930/960/990
This is not a solicitation to purchase or sell.
© 2018, Precious Metals International, Ltd.

As Volatility Spikes, Here’s What Could Be Ahead for Gold and Silver

By Jeff Clark,
Senior Precious Metals Analyst, GoldSilver.com
As Volatility Spikes, Here’s What Could Be Ahead for Gold and Silver.
As Volatility Spikes, Here’s What Could Be Ahead for Gold and Silver. An article by Jeff Clark.

The shift from low to high volatility in the markets is on. And almost by default, that’ll include gold and silver, since they’re inversely correlated to stock markets most of the time.

We’ve already seen this at work. The S&P 500 fell 2.2% on April 2, and in response, gold rose 1.2% and silver 1.6%.

It’s more than just a daily phenomenon, though; any prolonged wave of uncertainty that hits the markets will push investors into gold. What’s happening on a small scale now will play out on a much bigger scale when sentiment shifts, especially in regard to our monetary system.

And when gold and silver volatility really ratchet up, it’ll be a lot of fun, as you’re about to see.

First, here’s a snapshot of the daily price movements in gold and silver since the year the last bull market peaked:

Gold and Silver daily volatility since 2011

A few things stick out. You’ll first notice that gold and silver have rarely had a daily move greater than 5% over this time period. Further, volatility has decreased. Prior to 2018, gold’s average daily movement was 0.5%, and silver’s 0.8%. For the first three months of this year, however, those averages were almost halved.

You also see confirmation of what most of us already know: Silver’s volatility is usually greater than gold’s. Here’s a couple of the more dramatic examples: On May 13, 2011, gold rose 1.1%, but silver soared 11.4%. And on April 15, 2013, gold fell 9.2%, while silver dropped 14.1%.

But silver is not always more volatile than gold. In the chart above, silver’s price movements were bigger 71.5% of the time—meaning gold’s were bigger 28.5% of the time. And the two metals don’t always go the same direction; gold rose 0.26% on December 2, 2008 (not shown), while silver declined 5.05%.

Exceptions aside, silver will continue to be more volatile than gold, especially on days when developments impact the markets unexpectedly.

So, if volatility really starts to ratchet up, what kind of levels might we see?

What High Volatility in Gold & Silver Look Like

The best example comes from what has been, so far, the greatest precious metals bull market in modern history.

The following chart shows the daily price movements of gold and silver from January 1971 through December 1980. Check it out.

Silver much more volatile than gold in 1970's mania

The chart is a tad crowded, but you can see that volatility spiked in 1974 and 1979/80. These were periods when investors piled into precious metals, the historical message being that another rush in the future would lead to similar volatility.

And yes, silver was more volatile than gold. The most fun example occurred on September 18, 1979, when gold rose 6.8%—but silver skyrocketed 36.5% higher. The price was $13.40 on September 17, and closed at $18.303 the next day.

Can you imagine your silver holdings rising by 36.5% in one day? If Mike is even half right about what’s coming, odds are high we’ll see one or more days like that again.

On average, silver moved 1.4 percentage points more than gold during the decade. What’s interesting, though, is that silver logged bigger one-day movements only 63.5% of the time. So gold moved more sharply than silver roughly one-third of the time.

Here’s another compelling fact. When the market entered the mania, silver’s volatility increased at a more rapid pace than gold’s. From 1979 through the end of 1980, silver outperformed gold by an average of 2.4 percentage points, almost double what it did before the mania set in.

There’s no doubt in our mind that this level of volatility—and silver’s dramatic outperformance over gold—will repeat in the next big run-up in precious metals.

Investment Implications

Based on the historical record, there are clear investment conclusions we can draw:

  1. Higher volatility is ahead. Current volatility readings are half of what they were a few years ago, and a third or a quarter of the levels during the mania. They won’t stay this subdued for long, and once precious metals get rocking, so will their volatility.
  2. Investors must be emotionally prepared to handle high volatility, regardless of the direction. The days the metals soar will be fun, but you can’t get let yourself get shaken out on the down days. Not until Mike says he’s starting to sell.
  3. Once prices start to run again, we’ll see some breathtaking performances from silver. It’s coming; markets are cyclical, and a change in sentiment is all it’ll take.

The future will indeed be very fun for those of us that have meaningful exposure to gold and silver.

Jeff Clark
Senior Precious Metals Analyst

 

 

This article was originally posted in the Strategic Wealth Preservation Blog and copied here with permission of the author.

The American Revolution in Two Acts

By Jeff Thomas,
Feature Writer for Doug Casey’s International Man and Strategic Wealth Preservation

The American colonies were made up of people who could not accept the downward progression in Europe and said, “I’m leaving.” That took great courage, as they were leaving their few known comforts for unknown difficulties.

The American Revolution In Two Acts
The American Revolution In Two Acts. An article by Jeff Thomas.

However, once they had made the move and overcome the difficulties of settlement, they understood that their courage had been rewarded. Such people never look back and say, “Maybe we shouldn’t have left.”

There can be little doubt that they taught their children and grandchildren the values of courage, determination, hard work and self-reliance. And, to their numbers were added more and more immigrants, each of whom was also courageous enough to abandon Europe for freedom and opportunity. They raised generations of people with a “pioneer spirit.”

Not surprisingly, then, that when the American colonists were squeezed by King George for increases in tax, it wasn’t difficult for them to refuse; to choose to go it alone, rather than allow the British king to steal the fruits of their labours.

Although the tax level at that time was a mere 2%, it was the principle that taxation is theft that angered them. Further, they had already proven to themselves that they had all the character qualities necessary to determine their own future.

And, so, in a sense, the American Revolution was Act II of the quest for freedom and, of the two challenges, it may have been the easier one to face.

However, the America of the late eighteenth century is not the America of today and the outcome will not be the same for Americans in the present era.

It’s important to remember that only a very small percentage of people actually left Europe to find freedom. The great majority remained behind, complaining about the ever-increasing loss of freedoms, but doing nothing about it. Although their governments took more and more from them, the great majority simply tolerated it, saying, “What can you do?” They became the eventual victims of that oppression, as has happened throughout history.

Those in America today are, in essence, a subjugated people, just as Europeans were prior to the American Revolution. They’re accustomed to the concept of the nanny state – one which taxes its people heavily and throws back a portion of what they’ve stolen in the form of “bread and circuses,” as in ancient Rome.

Americans today complain continually, either that too much is being taken from them or that the state isn’t providing them with sufficient largesse. Some even complain of both at the same time.

And yet, a very large percentage of Americans holds out “hope” that somehow, the process will reverse itself – that a new political candidate will appear – a “Freedom Fairy,” who will somehow stand in front of the runaway train, stop it and reverse it.

Historically, this never happens. What happens is that a small number decide to set sail and escape. Whether it’s the Roman commercial class, who walked away from their shops and travelled north to live amongst the barbarians, rather than accept Rome’s increasing domination, or the German Jews that locked up their shops and homes and boarded ships to the West, just prior to the lockdown of 1939, every burgeoning new “free” society has been created by the few who took courage and made an exit from a dying society.

In every case, those who exited, did so with fear in their hearts that they would fail. They left their larger possessions behind and travelled light, sewing coins and jewellery into their clothing, not knowing whether they would succeed.

However, when they arrived at the new frontier, they met other like-minded people, each of whom had also shown courage and determination. They then created a new society that was, predictably, based upon the principles described above.

Today, a similar exodus is occurring. It’s made of those who place their liberty and hope for a promising future above the comforts and freedoms that, one by one, are being taken from them by their governments.

Of course, the details are not the same. They no longer travel by ship, but by jet. No one sews valuables into their clothes, as they’d never get through the metal detectors. Instead, they convert their assets to cash and purchase precious metals, to be stored in a country where there is diminished risk of confiscation by governments.

As has happened throughout history, the exodus is being undertaken quietly. Those who emigrate do not wish to call attention to themselves, but then, neither do the governments of the countries they’re leaving, so it’s never seen on the news and the official numbers who leave are far below the number that actually departed.

But the details of the exit are unimportant. What is important is that, when people meet the challenge to exit to find freedom and self-determination, they then build an extremely strong and free society. And there are many locations in the world where this is presently taking place.

But what of those left behind? Surely, the present-day US is at a breaking point and may very well explode into civil disobedience and even revolution.

Yes, this is quite so. And, again, history shows us what happens in countries where the majority feel that they’re entitled to be looked after; that the rich must “pay a little more” to provide them with largesse. Good examples of this are the Russian Revolution and the French Revolution.

Both of these are marked by a predominance of belief that “someone has to pay so that I can benefit.” In both revolutions, the aristocracy were violently removed and the rebels scrambled to grab as much of the spoils as possible. Disorder became prolonged and the new leaders that rose up were, if anything, more oppressive than those they replaced.

Today, in visiting the US and talking with Americans, it’s palpable that most Americans now have a gut feeling that this will most certainly not end well. Most hope that there might be a peaceful transition of some sort. Some vainly hope that a “Freedom Fairy” will emerge.

But, Americans, more than most people in the world, incorrectly believe that freedom only exists in their country and that, when it dies there, it will die everywhere. This is far from true, but it does mean that those who were born in the former “land of the free” are more fearful and discouraged than those elsewhere. The great majority doubt that it’s possible for them, individually, to choose freedom, rather than to go down with the ship. They, in effect, are exactly the same as the great majority in Europe in the eighteenth century.

The American colonies were built upon the courage of a few who chose to leave the dominance and stagnation in Europe. The same is true today. The USA may be a sinking ship, but the concept of “America” is not. It’s a movable concept and it can exist anywhere where people have chosen future freedom over tentative comforts.

Jeff Thomas
International Man and Strategic Wealth Preservation
jeff.thomas1066@gmail.com

 

 

This article was originally posted in the Strategic Wealth Preservation Blog and copied here with permission of the author.