Whats driving the prices in these metals?

[Cigarlover]

It's not inflation or industrial demand. Martin Armstrong is correct. Inflation doesn't drive up the metals prices. As I write this gold is up 1050 for the year or about 38% since Jan 1. Inflation is definitely not running at 38%. For gold there is virtually 0 industrial demand.

For silver an argument could be made that industrial demand has been a factor but silver is up over 40% for the year. Industrial demand is not up 40% for the year, not even close.

Many of us have been in the metals for a couple of decades or more. By far the most bullish cycle we have ever seen. We aren't seeing limit up days as we did in the past with Ag which was caused by a short squeeze. No short squeeze involved here, this is just a strong move that only rarely pauses along the way and doesn't even pull back much to shake out the weak hands.

In the 1970's prices may have been attempting to keep up with money printing but that's not the case today. If it were than AU would be at 140,000 and AG would be at 8750. Thats a similar GSR ratio as we had in 1980 but the Hunt's cornering the silver market is what drove prices that high in silver supposedly. Regardless neither of those metals are approaching those numbers so we can assume they are not trying to keep up with the money printing.

So what is driving this market? I'd love to say the public is waking up and it's speculation but a the dealers those post videos will tell you, the public is selling way more than they are buying.
It can only be banks and hedge funds but why? This is way more than preserving wealth, this is building wealth at this point. Preservation of purchasing power is basically a hedge against inflation and as I said, this has gone way beyond inflation protection. In 1964 an ounce of silver bought 3 gallons of gas. Today it buys almost 16 depending on where you live.

The reason for the post is to get ideas on why this is all happening. Since this is now an investment and not just protection from inflation or wealth preservation, I'd like to know the end game so I can plan an exit strategy. Also since the is now just an investment, a more prudent investment may just be the mining shares. We are already seeing some shares move 5-10% in a day versus 1% in the metals themselves. Only makes sense.

 

[KnowWhy]

I have no answers, but the same questions. Thank you for asking.

An observation is the USD dropping and metals climbing as it drops. Although, last fall(?) dollar was rising and metals were too. If day-to-day fluctuations were correlated with USD index, they were not as much recently, but at the moment, USD is pretty low and metals are pretty high.

 

[pmbug]

My $0.02 FWIW:

Gold - China has been working on a plan to internationalize the Yuan with gold via the SGE. They have accelerated the development of extrajudicial warehouses in Honk Kong (now open) and Saudi Arabia (not open yet). That's announced so far. They might open more warehouses in other locales too. China is buying gold like crazy in the SHFE/SGE system to stock these warehouses. China has also loosened gold import restrictions and pushed their insurance industries to invest in gold.

On top of this, back in Dec/Jan, the bullion banks started raiding London for gold (to stock the COMEX) presumably over fears/uncertainty of tariff policy. That caused the LBMA and BoE to technically default on delivery (T+60) obligations telling the world that London's shelves are bare. The world woke up to the reality that physical gold is scarcer than the paper markets would lead one to believe.

Silver - The paper markets for silver have not, for years, reflected the true production/demand dynamic because there was a stock of excess supply to draw upon. That stock appears to be gone now. There are indications that the LBMA vault stock liquid free float may be exhausted and the COMEX vault stock may not be liquid either. SLV may be signaling the true state of free float scarcity. Without the physical stock to draw upon, the paper markets won't be able to short like they used to.

 

[Voodoo]

Prices are ALL WRONG. They've been wrong for probably longer than most of us have lived. Take them with more and more of a grain of salt.

 

[Joe King]

Prices are ALL WRONG. They've been wrong for probably longer than most of us have lived. Take them with more and more of a grain of salt.

And now they are correcting and making up for lost time.

 

[nickndfl]

Bug is right. Gold is replacing US Treasuries and the $USD internationally. Countries along the silk road will trade in their local currencies and then be able to convert any surplus into physical gold.

The Chins might find a way to screw.it up with tungsten or impediments to delivery?

I know central banks will keep buying no matter the price because they have excess dollars they need to unload.

 

[Cigarlover]

Been hearing the same thing about China. Building vaults all along the Silk Road so gold can be stored in multiple places. China wants to go in and build up countries economies and allow them to use gold as collateral for loans. All of these countries become trading partners along the Silk Road and win win for all of the players.

Once the is fully implemented it would make sense that gold has a stable value. Up or down 40% in a year would not make it an attractive asset to hold. Of course when. it goes up we all want it but it also goes down. Then again at the end of the day an ounce of gold is an ounce of gold. I guess I could see a world where currencies are no longer measured against each other. Each country currency is valued by how much they print versus the amount of gold they own. Gold is the stable asset. For a country like the US that prints 2 trillion a year just to cover deficits the price of gold could be 10k versus a country with no debt. Of course it's much more complicated a formula if done that way. How much gold does each country own and how much currency has been printed. The picture should be much clearer as we approach 2032. I would think more details should be coming out soon as many of these countries have already been meeting.

 

[Bottom Feeder]

If I was a country watching Trump twist and swirl, impose draconian requirements on world trade, kicking the FED's ass to lower rates, and sending the US dollar skittering towards the edge of irrelevance I would be buying something that I could use to exchange for the new global reserve currency when the dollar finally dies.

JMSO,
Bottom Feeder

 

[nickndfl]

At the figurative end of the Silk Road the price of gold will be fixed just like it used to be $20.67 per ounce for 30 years.

I have it on good authority it will not be $20 at that time.

 

[Joe King]

At the figurative end of the Silk Road the price of gold will be fixed just like it used to be $20.67 per ounce for 30 years.

I have it on good authority it will not be $20 at that time.

What if there were a new US currency that was exchanged 50,000 FRNs to 1 of of the new Dollars? Gold could be $20.67 then.

 

[nickndfl]

What if there were a new US currency that was exchanged 50,000 FRNs to 1 of of the new Dollars? Gold could be $20.67 then.

C'mon man!

 

[SilverStacker]

If I was a country watching Trump twist and swirl, impose draconian requirements on world trade, kicking the FED's ass to lower rates, and sending the US dollar skittering towards the edge of irrelevance I would be buying something that I could use to exchange for the new global reserve currency when the dollar finally dies.

JMSO,
Bottom Feeder

Trump wants the dollar devalued to give exports, most of all Industrial exports, a kick in the ass and stimulate domestic production. He just doesn't want it devalued for long. The Chinese have done this with the Yuan with great success. On day one a cheaper dollar has been one of his main goals because the trade system and currency systems are rigged games and former administrations were to stupid or to cowardly to do anything about it.

In short a weaker dollar makes American made products cheaper to buy for foreign markets. At the heart of America's persistent trade deficit is a persistently over valued dollar that not only makes the products more expensive to export but also makes the workers salaries harder to swallow , which makes foreign investment far less interested in starting up companies here. Meanwhile while American made goods are way over priced over sea's foreign companys are dumping their products on us on the cheap. Most of all China, but many others too. China's yuan is so undervalued against the $USD, about 28%, that even with Trumps 25% tariffs the Chinese still have a clear trade advantage.

Trump inherited a irrelevant dollar. A dollar you can't compete with other currencys and goods in the world market. Even if we make a great product nobody in the world is going to buy it because it costs to much due to an over valued dollar. Many, if not most, currencies are clearly misaligned against the dollar and correcting this is one of Trumps goals in fixing this mess FrankenBiden left him.

To make tariffs truly effective, the United States has to hold its currency stable against the nations on which they are imposed.

Our calculations suggest that the US dollar is some 20% to 25% overvalued, before considering any tariffs.

In other words, instead of $1.08 to the euro, the correct rate might be around $1.30 to the euro. Instead of 7.25 Chinese yuan to the dollar, the correct rate might be 5.8 yuan to the dollar.

At those rates, US goods become much more competitive — and foreign-produced goods less so. Think about it: An automobile made here becomes 25% more competitive on global markets, while a toy or a smartphone made in China becomes 25% less competitive in the US market

The combination of a competitively priced dollar on world markets and tariffs against nations that run large trade surpluses with us will deliver a huge boost to US manufacturers, workers and farmers as they compete in world markets.

 

[Joe King]

Even if we make a great product nobody in the world is going to buy it because it costs to much due to an over valued dollar.

Not only that, but most all other nations put tariffs on our exports.

For example, both Canada and Mexico charge a 25% tariff on US mfg'ed cars.

Germany "only" charges 10%, but also adds a 25% VAT on the car, shipping costs, AND the original 10% tariff. (yes, they tax their own tariff)


Yet everyone cries foul when WE have a tariff on their shit coming into our nation.


We should tariff everything every other nation tariffs of ours. It's only fair. Anyone thinking otherwise obviously wants other nations to do better than ours.

 

[Cigarlover]

I get that Trump wants manufacturing back in the US. It should have never left and there were plenty of warnings when congress allowed manufacturing to be shipped to China. They sold us out then and screwed the American middle class.
The problem is that Trump isn't president for the next 30 years. It's actually only 1 of the problems with his plan. So in 3 1/2 years our politicians are free to sell us out again. As a corporation I would be very skeptical to move operations back to the US. I addition to that the US is one of the most expensive places to live so workers are going to be much more expensive than anywhere else. Thats assuming we even needs workers in the plants. I imagine most places will just have robots building everything and a few humans to make sure everything is running as planned. Initially I can see lots of humans being needed to build the plants though.

A lower dollar may be good for industry but is it good for Americans? From what I can see, life for the middle class and poor in the US is getting harder. The cost of everything is up and wages have not even kept pace with inflation. Americans are barely making it if they are middle class and many are living off of CC and helocs. Unfortunately Trump has just neglected these facts.

In order to be competitive on the world markets this country needs some serious deflation.

 

[Joe King]

So in 3 1/2 years our politicians are free to sell us out again

That's why they workin' so hard to divide his supporters. They want his base split to help them back into power next election.

 

[Cigarlover]

That's why they workin' so hard to divide his supporters. They want his base split to help them back into power next election.

It would appear he is dividing us more than anything. If he gets his wish and the next fed chairman cuts rates down to 1% again we are going to have serious inflation issues once again. We already have them now and people are barely making it. Homelessness is at an all time high. People living in vans and cars and getting a gym membership to shower before work.

If Trump wants to get rid of the debt he should put Melania on only fans and use the proceeds to go directly to paying down the debt. He needs to do that soon though, she isn't getting any younger.

 

[nickndfl]

We would get inflation in $USD terms if rates were 1% now, but in terms of gold which is where the world is going it would be deflationary.

 

[SilverStacker]

The problem is that Trump isn't president for the next 30 years. It's actually only 1 of the problems with his plan. So in 3 1/2 years our politicians are free to sell us out again.

Yes, your right. What were going to have to do is hold the feet of future administrations to the fire and make them adhere to Trumps policys. A good start would be a Trump 2.0 and 3.0. JD Vance and Rubio finding common ground on a super ticket that guarantees 8+ more years and hopefully puts a stake into the lefts idiotic policys and twisted morality. And at some time we have to begin real action on this deficit, painful as it may be it simply has to be done.

The policys of the Biden/Harris crew have done serious damage to the Republic . If in fact they even knew what they were doing they didn't know a damn thing about economics. Inflation under them was killing us. In the 4 years of their twisted administration everything cost us 20% more yet even still they wanted to raise tax's. "Raising tax's" is their answer to everything and already American's are drowning in debt. Credit card debt was among the worst and probably THE worst kind of debt one can accrue. They promised forgiveness of college tuition debt in a failed attempt to get college kids to vote them into another 4 years, which they mostly didn't. But nothings for free and these tuition loans would be paid for by plumbers and construction workers and barbers...ect

By every metric Working Man Joe's policys were a disaster, him and his auto pen. If in fact he even knew what was going on and not wondering around in the woods somewhere, and meanwhile, Kamala Harris was maybe a space above a moron.

Four years wasted.

 

[Joe King]

Four years wasted.

Yes, but the normies in society needed that 4 years to be able to see close-up what the left was all about.

There has been many eyes opened over the past 4 years.