Silver Is On A Tear Today

Have you heard? The guy who runs Pawn Stars is now stating that silver is going to be in short supply. This is the 6th year of a supply shortage. He’s looking at no supply from China, heavy industry usage and a lack of raw production.

 

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Yes, I could be wrong about what I wrote previously. It's just a guess. I think silver at $500 or even $1,000 per ounce is not out of the realm of possibility in the next few years, but to my mind it's not the most probable outcome. The most probable outcome is a massive correction based on historical patterns. To be clear, I don't think anyone knows the future. As I said previously, humans are horribly bad at predicting the markets - some get lucky and get some media shine now and then.

 

I think you raise some good points, Jol....but I think it's the HOT MONEY that would try and tie the price of silver to future Fed rate cuts from a guy who might lean towards rate cuts (dovish) while at the same time ripping the Fed for their balance sheet bloat (super-hawkish).

If the Fed cuts 25 or 50 bp....but trims the balance sheet 3 trillion dollars....is that bullish for monetary liquidity and the markets ? I would say NO based on my 4 decades of Fed Watching.

Wouldn't surprise me if some of the fools who thought BitCoin was going to $1 MM by 2028 decided to hop onto silver.

 

I'm still trying to wrap my head around repos (the new monetary tinkering strategy) using ChatGPT. Getting the gist of QE some years ago was also tricky. So pardon my neophyte thinking. My take is that there is an effort to juice the markets before the Midterms, so I am rather doubtful, despite the rhetoric, that the Fed will be hawkish. I suspect the Fed will be hawkish in one way and dovish in another in a manner that (effectively cancels the hawkishness and...) signals to the market that the printing is coming. Maybe I am wrong about this, and perhaps new gimmicks will be tried that circumvent Fed balance sheet growth. I have heard through the grapevine that Warsh is hawkish, but I just don't see why he'd be chosen if the goal is to get the markets to pump unless there's another important detail here.

 

Repos are NOT new...they've been around for decades. They are simply a tool to conduct monetary policy through the NY Fed's SOMA (System Open Market Account) by influencing the level and activity of bank reserves. Ditto reverse repos.

If you are an investor in Mortgage REITs (MREITs) like AGNC, NLY, etc....that's what you are using to finance your balance sheet.

I doubt Powell was going to help Trump though I don't think he'd try and hurt him, either. A Fed chairman is singularly fixated on doing the right thing. We had a bunch of Fed Chairman in between William McChesney Martin and Paul Volcker who sucked, for lack of a better word.

It takes a majoriy of the FOMC to determine monetary policy, not just 1 or 2 people in synch with an administration:

https://www.federalreserve.gov/monetarypolicy/fomc.htm

Warsh is "dovish" on cuts, "hawkish" on the balance sheet. He'll do what he thinks is right -- whether it IS right or turns out to BE right....we'll find out.

 

Or.......



This is what's stored, not what's deliverable.

 

I have never followed the markets. I do know the market trends for rare coins, classic cars. Price increases had, have been due to these criteria.

Rarity
High Quality
High demand vs low supply
Eye appeal

Thus, a 67 vette that sold for 6K fully loaded in 1967, today will hammer for 300-800K 9.3M for L-88 model

Likewise, one of my coins that sold in Berlin 1936 auction for 25RM ($5)US recently sold for 6.3 SF $8K US.

Coins & cars are the hottest investments.

 

We are seeing a trend of tangible collectibles, especially at the higher end, growing substantially in value. Let's not forget the Pokemon card that recently sold for $16.5 million. I know the super-rare vintage comic books of the past have sold for millions, and the most coveted baseball cards have sold for a lot. The issue here is this doesn't always filter to the mid and bottom tiers, as there have been complaints in these parts of coin premiums dropping as a result of the gold price spike. Lots of collectible cards are still in a bear market.

 

Overseas trading opens tonight.

 

It's only 11:28 here in Arizona, so tonight is still Saturday for a half hour.

 

I saw that....I'm shocked by that price as I wouldn't think there are bidders who value something that I believe just came out in the last 30 years to vintage cars, arts, or coins. I remember the sports card bubble of the 1990's and it wasn't until Covid that SOME Of them finally achieved new ATHs.

You had sports cards and NFTs in a classic bubble....in fact, PCGS and another company I believe got bought out by PE firms. Maybe the volume of grading stuff is holding up, if not the prices. Otherwise, they both could be like Hummels going nowhere fast.

Excellent points.

 

Asian markets open at 6 PM EST.

 

That's an interesting silver inventory chart...but I'm not seeing anything actionable. The amount of silver could be a leading or lagging indicator.

 

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