When combined with rate cuts, QE becomes a deadly deflationary cocktail. Banks have no incentive to make loans, and T-bonds become the asset of choice. The T-bond money is squandered by governments, and money velocity implodes. The bottom line is that bank and government wealth is inflated by QE, and the wealth of the average person is massively deflated. “QE to infinity” is better described as “deflation to infinity”.
According to the mostly recently released data, the disconnect in the silver market continues. Now, when I say a disconnect, I am referring to the interesting change in supply demand trends in the silver market. Currently, we are witnessing an abrupt change in normal silver market dynamics.
Take a look at the "paper price" of gold and silver and then go and try to buy the precious metal from your bullion dealer for that price. What will you see? You will quickly realize that the paper price and the physical price are drastically different.
Gold and silver markets enter the week with an opportunity to build on last Friday’s strong reversal. The metals had drifted lower through Thursday’s close, but they got a big boost Friday after the Labor Department released disappointing jobs numbers.
In July 2014, WTI crude prices peaked at $105/bbl. Three months later, they had fallen to $81/bbl, prompting me to publish “crashing oil prices portend unspeakable horrors” on October 15th. In it, I espoused that there is no way the global economy – already on death’s door – could survive the implosion of the world’s most important commodity. For that matter, commodities in general are by far the world’s largest business – with countless corporations, municipalities, and sovereign nations dependent on their sale for financial survival.
For a few frenzied minutes, while everyone was sleeping, the price of silver spiked 56 cents. Well, at least the West Coast of America was sleeping. It began at 8:30 in New York, where presumably most traders were not sleeping. And of course, it was afternoon here in London (where Monetary Metals just held a seminar). The catalyst was a news release: the non-farm payroll numbers.
If there’s one chart silver investors need to see, it’s the INDIA vs COMEX chart. This chart puts into perspective just how little Registered silver remains at the Comex warehouses. In addition, Comex Registered silver inventories continue to fall as two large transfers were reported over the past two days.
COT Silver Report - October 2, 2015
A recent Reuters report about surging silver coin sales all over the world (click here) has precious metal investors wondering if this is not an early sign of the sort of increased physical metal demand that would surely precede another big take-off in silver prices like in 2009 to 2011 when silver rocketed from $8.50 to $49.50 an ounce, still just short of its 1980 all-time high.
In an ironic twist of fate, the mining conglomerate Glencore is seeking to pay down its massive debt by selling future gold and silver output. While this is only part of its solution to pay down a third of its $30 billion in debt, it’s quite interesting that the company is selling forward production of two of the most despised monetary metals in the Mainstream Media.