Investors dumped paper gold and silver along with stocks, commodities, and most other asset classes in March. The price of silver dropped to $12.02/oz on March 18th and gold bottomed at $1,473/oz.
The bullion banks – notorious for their concentrated short positions – might have made a killing. But that isn’t what happened. Some of the most prominent players took massive losses instead.
The price of silver soared in May, jumping more than 19 percent on safe haven demand as well as increased expectations of a swift economic recovery, given its many industrial applications. Not only was this silver’s best month since 2011, but it also marked an impressive turnaround for the white metal that just recently plunged to a more-than 10-year low. From March 18 through June 1 of this year, silver soared more than 52 percent, erasing all of its losses due to the coronavirus pandemic. …
Of course, I am sending this article to JPMorgan, as well as to the key officials at the CFTC and CME Group, but I also intend to make this article public so as to openly go on the record. I am torn about accepting payment from private subscribers while turning around and making public what you paid for, but I do feel it is in everyone’s best interest to let all of this see the light of day. Besides, I rarely make public more than one of the 8 or 9 articles I publish each month.
One wants to be careful about seeing things as previously predicted, but not so careful so as to not recognize when things seem to be playing out exactly as expected. Recent news stories and events seem to be in accord with a number of my central themes, but I’ll present the case as I see it and let you decide.
The silver miners’ stocks have surged higher since mid-March’s COVID-19 stock panic, clocking in some big and fast gains. Nevertheless, this long-struggling sector remains vexing. By mid-May as their latest earnings season was wrapping up, the silver stocks were lagging the gold stocks’ powerful upleg. And the silver miners’ Q1’20 operational and financial results were disappointing compared to the gold miners’.
We are now entering the final part of the endgame of the latest fiat experiment and the actions of the Fed and other Central Banks virtually guarantee that most currencies, including and especially the dollar, will end up totally worthless, just like in the Weimar Republic in Germany in 1923.
Having focused intently on the running open losses of the 8 big shorts (ex-JPM) for the past year, the latest price surge would seem to put the 8 big shorts in particular serious jeopardy. Simply put, the open losses ($7.8 billion, as of Friday, May 15) have never been larger, while the prospects for the big shorts buying back all or most of their short position at anywhere near breakeven have never been lower.
Over the last 50 years there have virtually been no significant Silver rallies during a period when the US Dollar index has been rising.
If you are betting on a massive Silver rally while US dollar strength continues, then you have a very low probability of success. Similarly, if you bet on a massive Silver rally while the US dollar continues a long decline, then you have a great chance of success.
Silver is powering higher in a new bull market after getting clobbered in March’s stock panic. Investors have been flocking back to silver in the aftermath of that ultra-rare extreme-fear event. That brutal selloff also utterly wiped out speculators’ upside bets in silver futures, giving them massive room to buy back in. After being pummeled to record-low levels relative to gold, an epic silver mean reversion higher is underway.