Metals, a Hedge or Investment Depending on Your Views... or a Sucker's Bet?

[Jacob Petersheim]

I have to wonder how much of this is really more prepper-hobby imagination than reality though.

 

[Jacob Petersheim]

A lot of "inside baseball" here, but London bankers pulled a stunt overnight:

This is just the latest crack in the global financial system run by the London-NY Axis, a major tentacle of what some call the Modern British Empire that Trump is actually battling.

 

[Jacob Petersheim]

I've been watching a number of YouTubers who either represent or work for coin shops, online metals dealers, and just individual enthusiasts.

I've been struck by how hard silver gets "pumped." Since it is (even now) very cheap compared to gold, a lot of people are pushed into it even though it is very clear they can't afford to be in this market.

Imagine buying silver when you have no cash savings, struggle paying bills, or are even in debt?

It seems to be a consumption fad, very much like idjits buying Star Wars Dolls, Lego-based Model Sets, Nikes in a color for each day of the month, etc. when they're 40 years old! But I suppose people can be magpies, craving shiny objects to fondle.

 

[Don Alaska]

I understand there is at least one big player in silver who is trying to crash the market, probably China. I don't know what there motive is, but they are buying a lot of "paper" silver and the story is that they plan to demand payment all at the same time, sending prices of "metal" silver ( which they own literally tons of) through the roof to try to cover the paper. I am not smart enough to know how this all would work, but I know that those who own the paper silver (mostly banks and investment firms) would be devastated if this were done.

 

[Jacob Petersheim]

The paper Futures and physical Spot prices have been doing a dance for a while now. Normally Futures leads as speculative, but things are now tight and have even gone into "backwardation" for short intervals when paper issuers have struggled to deliver when demands for physical delivery were made.

Everyone knows that it's a shell game, just as it is when banks "spend" your account deposits multiple times making loans.

I have heard the rumors too @Don Alaska but I don't really think it is China. Instead this is probably a struggle between the old system based in London and an upstart wanna-be system separate from but more aligned with BRICS.

For all the talk about nominal prices, those trying to sell are encountering a different reality. If you can get anyone to buy your junk 90% coins or Sterling products at all you are lucky to get 80% on silver melt price now. Refiners just don't need the stuff to meet demand, and that may say a lot right there. If there was a hungry global market they wouldn't be paying so little for scrap for the melting pot.

 

[Jacob Petersheim]

With silver above %58 now, dealers are saying their wholesalers are capping wholesale buyback at $50. It sounds like they expect a huge drop and can't afford the risk of getting burned.

If a dealer is experiencing slow sales, only items with a quick turnaround like primo Eagles are fetching people anything close to spot. Anything likely to have to be unloaded back to a wholesaler or refiner just isn't cashing out at the higher values. Some shops report that they've reached a point some days now where they just stop buying silver at all by Noon.

Not too surprising. In some ways it's like trying to get a good price for your roadside tomato stand at the height of the season when everybody else has tons to sell as well.

 

[Don Alaska]

The paper Futures and physical Spot prices have been doing a dance for a while now. Normally Futures leads as speculative, but things are now tight and have even gone into "backwardation" for short intervals when paper issuers have struggled to deliver when demands for physical delivery were made.

Everyone knows that it's a shell game, just as it is when banks "spend" your account deposits multiple times making loans.

I have heard the rumors too @Don Alaska but I don't really think it is China. Instead this is probably a struggle between the old system based in London and an upstart wanna-be system separate from but more aligned with BRICS.

For all the talk about nominal prices, those trying to sell are encountering a different reality. If you can get anyone to buy your junk 90% coins or Sterling products at all you are lucky to get 80% on silver melt price now. Refiners just don't need the stuff to meet demand, and that may say a lot right there. If there was a hungry global market they wouldn't be paying so little for scrap for the melting pot.

I don't think there is any surplus of silver metal on the market. We are using more than is being mined and smelted, so I don't see how there could be any surplus. The surplus is in paper, and there is not enough metal to cover the paper, as we saw in the latest debacle in London. They borrowed from New York and nearly cleaned them out too. They even touched Shanghai which is interesting. The only reason I said China is that the buyer is reportedly form Asia, and I figured China was the most likely to have currency on hand. There is many times the amount of paper out there as there is silver, so everything will be fine as long as large holders don't cash in at the same time. The London case could just be a trail balloon to see what would happen if things went on a larger scale. People keep talking a "shorting silver" but, like I said, I don't know how that works with silver paper. Metal is metal, and whoever holds it has it, although the value can certainly swing a lot, as it did when the Hunt brothers messed with it.

 

[Jacob Petersheim]

One reason the US left the bi-metallic monetary standard was the rise of industrial uses for silver. Chief among these was the chemical industry, and a great portion of that was photography.

That's all gone now. Yes silver still has industrial uses, and even some newer ones in a sense. But these are small compared to photography's consumption. X-ray imaging alone used to consume huge amounts. PV solar panels use silver (today) but in thin-film very tiny amounts. Newer panels use much narrower thin-film "stripes" and newer technologies with greater efficiency make use of graphene with a little embedded silver.

There is a net deficit in silver mining vs. consumption today, but not enough to make it worth ramping up mining very much until just recently.

There has been a lot of loose bogus chatter about large amounts of silver in modern missiles. This doesn't seem to have any foundation at all, and it is hard to picture where very much silver would find a use in one.

The clearest signal is that refiners are turning many kinds of silver away. They have all they can recycle and refine on hand already to meet capacity for months.

This really doesn't look like the 1979-1980 Hunt Brothers' scenario of cornering the physical market and supply to me.

 

[Jacob Petersheim]

Hammered down a little since this morning, but gold has had a good run since I first brought it up here:

 

[Jacob Petersheim]

One of the things about silver is that even at current pricing it isn't very dense in value.

It takes almost 3 whole monster boxes (500 coins) of silver Eagles to equal the value of a single tube (20 coins) of gold Eagles. That's almost 120 pounds!

Where do you store that much silver securely? Makes quite a hump if you bury it, and silver tarnishes, especially with moderate humidity - decreasing its value non-trivially.

The gold would be about 3 packs of Juicy Fruit gum with a rubber band around them. And gold doesn't tarnish or rot. That's about $84K of value at today's price.

Heck, you could break that up into 2-pack plastic baggies taped up inside a dresser, toilet tank, under tables, closets, some in the freezer, or just bury it in the back yard. Sheesh, make some wooden bookends with a hollow compartment for the whole tube. Stick it on the shelf inside a tin of rice. Inside a bag of Epsom Salts in the bathroom. Lots of possibilities.

 

[Don Alaska]

One of the things about silver is that even at current pricing it isn't very dense in value.

It takes almost 3 whole monster boxes (500 coins) of silver Eagles to equal the value of a single tube (20 coins) of gold Eagles. That's almost 120 pounds!

Where do you store that much silver securely? Makes quite a hump if you bury it, and silver tarnishes, especially with moderate humidity - decreasing its value non-trivially.

The gold would be about 3 packs of Juicy Fruit gum with a rubber band around them. And gold doesn't tarnish or rot. That's about $84K of value at today's price.

Heck, you could break that up into 2-pack plastic baggies taped up inside a dresser, toilet tank, under tables, closets, some in the freezer, or just bury it in the back yard. Sheesh, make some wooden bookends with a hollow compartment for the whole tube. Stick it on the shelf inside a tin of rice. Inside a bag of Epsom Salts in the bathroom. Lots of possibilities.

Well, yeah, it isn't very value dense, but then neither is real estate, but it is still valuable. Plus, I suspect it is generally easier to redeem silver at the local coin shop rather than walking in with $84, 000 worth of gold and asking for something else. I have heard of people buying houses with both gold and silver, and in that case gold is the better choice, but buying groceries, or guns, or gas, silver is better.

 

[Jacob Petersheim]

Well, yeah, it isn't very value dense, but then neither is real estate, but it is still valuable. Plus, I suspect it is generally easier to redeem silver at the local coin shop rather than walking in with $84, 000 worth of gold and asking for something else. I have heard of people buying houses with both gold and silver, and in that case gold is the better choice, but buying groceries, or guns, or gas, silver is better.

True enough.

But even given a scenario where barter is going on... yet civilization is intact... wouldn't it be more practical to keep your "savings" in gold? Instead of hitting the ATM for cash, trade in an ounce or half ounce of gold for a tube or two of silver Eagles and a tube of 1/10 ounce silver coinage (Britannias and Maples come in 1/10 ounce silver) or pre-65 dimes.

I don't really expect a barter scenario to ever become common, but even so the same logistics of holding all your savings in silver would seem to apply.

 

[Don Alaska]

The BRICS countries have finally announced the release of their new currency. It apparently is backed by 60% gold and 40% a basket of currencies. Interactions and payments among the BRICS countries and other nations wishing to participate. This is targeting the Dollar as a reserve currency and the SWIFT system of international exchange. It is expected to cause the price of gold to skyrocket and the U.S. dollar value is expected to plummet. We'll see....

 

[Jacob Petersheim]

The BRICS countries have finally announced the release of their new currency. It apparently is backed by 60% gold and 40% a basket of currencies. Interactions and payments among the BRICS countries and other nations wishing to participate. This is targeting the Dollar as a reserve currency and the SWIFT system of international exchange. It is expected to cause the price of gold to skyrocket and the U.S. dollar value is expected to plummet. We'll see....

Yeah, Biden's stunt to attack Russia through SWIFT was a ridiculous error. But I'm not sure he was actually in control of that or even conscious of any of it. Instead it sounds like the action of his EU-UK puppet masters.

I try not to post many of these videos, but the goofy guy offers a nice story about silver and gold at the shop he works for.

He also talks about the old man "Timmy" they "babysit" most days so his impatient granddaughter can get away from him (and vice versa). They probably changed his quality of life at 101 years old.

 

[Don Alaska]

I saw one notice that the London Exchange is now leasing silver from China to cover the demands for metal. Things are interesting. I guess silver did not make Trump's list of controlled exports, while gold did.

 

[Jacob Petersheim]

I saw one notice that the London Exchange is now leasing silver from China to cover the demands for metal. Things are interesting. I guess silver did not make Trump's list of controlled exports, while gold did.

That doesn't really fit very well with other things we know.

The LBMA got caught with its pants down last Summer, not having enough physical metal on hand to meet demand from India. India took it there because they already owned a lot of LBMA paper and asked for physical delivery.

London banks control it all. The LBMA, the big "U.S." banks, Wall Street, and the Chicago Mercantile Exchange. COMEX is basically the commodities arms of London Banking. When the LBMA came up short, they pulled from COMEX. COMEX was also short on physical, and put out massive rush orders to U.S. refineries to process their inputs into 1000 ounce COMEX bars and ship them by air to London.

Our refineries have been so busy with gold and the LBMA-bound silver that retail coin shops got into trouble because they couldn't sell excess stock to them. Sterling, 90% junk silver coins, and jewelry scrap have been refused for months.

Even after delivery to India, the LBMA is now swimming in silver and within a month should have enough physical to cover all existing issued paper contracts. Almost all of it has come from U.S. sources because Mexican refineries are a mess these days, run into the ground by drug cartels.

China gets much of its supply in crude form (doré) from South America right now. Then they refine it themselves. If they are leasing silver to the LBMA it is probably short-term coverage until they have topped off their own reserves of silver from sources in the U.S.


Silver is primarily an industrial commodity and minting as coins and small bars is very tiny. There is much overstatement right now about the amounts of silver used in PV solar panels, EVs, etc. The amount in a cellphone is measure in milligrams. Basically industrial consumption disappeared as photography moved from chemical to digital in nature. The stories about military uses are mostly just stories as well.

 

[Don Alaska]

That doesn't really fit very well with other things we know.

The LBMA got caught with its pants down last Summer, not having enough physical metal on hand to meet demand from India. India took it there because they already owned a lot of LBMA paper and asked for physical delivery.

London banks control it all. The LBMA, the big "U.S." banks, Wall Street, and the Chicago Mercantile Exchange. COMEX is basically the commodities arms of London Banking. When the LBMA came up short, they pulled from COMEX. COMEX was also short on physical, and put out massive rush orders to U.S. refineries to process their inputs into 1000 ounce COMEX bars and ship them by air to London.

Our refineries have been so busy with gold and the LBMA-bound silver that retail coin shops got into trouble because they couldn't sell excess stock to them. Sterling, 90% junk silver coins, and jewelry scrap have been refused for months.

Even after delivery to India, the LBMA is now swimming in silver and within a month should have enough physical to cover all existing issued paper contracts. Almost all of it has come from U.S. sources because Mexican refineries are a mess these days, run into the ground by drug cartels.

China gets much of its supply in crude form (doré) from South America right now. Then they refine it themselves. If they are leasing silver to the LBMA it is probably short-term coverage until they have topped off their own reserves of silver from sources in the U.S.


Silver is primarily an industrial commodity and minting as coins and small bars is very tiny. There is much overstatement right now about the amounts of silver used in PV solar panels, EVs, etc. The amount in a cellphone is measure in milligrams. Basically industrial consumption disappeared as photography moved from chemical to digital in nature. The stories about military uses are mostly just stories as well.

Believe what you want, but things I see don't indicate that London is flush, especially with silver. They seem to be trying to stay afloat.

London silver squeeze: the immediate ignition point​

The latest surge traces back to the October historic tightening in London, still the main centre for trading physical silver. Over recent months, London vaults have seen heavy and persistent drawdowns as metal was shipped to satisfy strong US and Indian demand. The result has been a collapse in “free-float” inventory — unencumbered metal not tied up in leasing programmes, ETFs or industrial contracts.

As availability dwindled, silver lease rates spiked sharply, forcing those short physical to scramble for cover. With little metal available for prompt delivery, the squeeze dynamic intensified. This is the type of market where price becomes secondary; the priority becomes securing any available ounces. Friday’s vertical price action simply reflected the moment when those physical constraints forced their way into the financial market.

 

[Jacob Petersheim]

I think that is about a month out of date. For example, air shipments of silver have stopped. That emergency has passed.

I suppose we'll just have to see, but I expect the price of silver to plunge again soon and stay down for quite some time, as in years.

 

[Don Alaska]

I think that is about a month out of date. For example, air shipments of silver have stopped. That emergency has passed.

I suppose we'll just have to see, but I expect the price of silver to plunge again soon and stay down for quite some time, as in years.

That was posted this weekend. As you said, we'll wait.

 

[Jacob Petersheim]

I was surprised to find out how scummy the Royal Canadian Mint is.

They are not allowed by charter to produce coinage that isn't sold in Canada, but they use the loophole of putting a few on the market there and listing small mintages on their web site.

The "scam coins" are private mintages of "premium" coins for U.S. based "Gold IRA" custodians. These guys use celebrities and such to advertise converting IRAs to their gold-holding IRAs. If you pressure them hard and resist their high-pressure sales tactics most of them will invest your funds into solid investments like U.S. Mint Eagles, but they upsell you hard into these RCM private "premium" coins that often have enormous markups on them. AS much as 175% in at least one documented case!

All perfectly legal under current lax regulations. Sadly, your IRA immediately loses a huge whack of value, and that's before they start assessing custodial fees, Even if you take delivery of the coins down the road they are very hard to sell on the retail market as unknowns. They fetch far back of spot, and go right into the scrap pot for melting if you can get a coin dealer to buy them.

Many of these companies have been sued and put out of business, but the principals walk away scot free and soon pop another one up. Even the endorsing celebs (Glen Beck, Tucker Carlson, Jordan Peterson, and many many more on the left as well) play dumb about it all and take the fat checks.