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Money Daily has been providing business and financial market news, views, and coverage on a nearly continuous basis since 2006. Complete archives are available at moneydaily.blogspot.com.
Money Daily has been providing business and financial market news, views, and coverage on a nearly continuous basis since 2006. Complete archives are available at moneydaily.blogspot.com.
Big Fail: US Non-Farm Payroll Adds 49,000 Jobs in January; December Revised To -227,000
Friday, February 5, 2021, 9:52 am ET
The US economy is in really (fill in blank with appropriate reality) shape.
According to the stock market, things could not be better. The S&P 500 and NASDAQ each closed at new all-time highs, while the Dow Industrials and the NYSE Composite are each within one percent of breaking out to record heights, surpassing those made just a couple of weeks ago.
Meanwhile, back in the alternate universe some people call the "real world," the Labor Department released the jobs data from February, which had non-farm payrolls up just 49,000 versus +105,000 expected and a revised -227,000 for December, from the reported -140,000 in the original report. Somehow, it seems the irrational exuberance in the stock market has slipped over to the "real world" side as the unemployment rate fell to 6.3% versus 6.7% expected and 6.7% in December.
While this blog and most of the world was focused on the antics of the Reddit crew from r/wallstreetbets, the price of GameStop (GME) stock and the divergence in the price of physical silver from the COMEX and LBMA spot price, there were other developments elsewhere in the world of finance.
We've heard that Google and Amazon and most of the Big Tech giants posted knockout fourth quarter 2020 results. There's also been significant, perhaps troubling developments in the bond market.
The 10-year note is quoted this morning with a yield of 1.17%. The 30-year note closed Thursday at 1.93%. That's a 12-month high yield for the 30, (1.97%, 2/20/20) and an 11-month high for the 10-year (1.18%, 3/18/20).
All of that leads into what looks to be a boffo opening for the stock market, with futures modestly higher. There's a big football game this weekend also, featuring the main participants being some old guy (Tom Brady) against a flashy kid (Patrick Mahomes). Maybe that's what's keeping the world spinning.
Being Friday, the staff left early (8:00 am ET?), so check back here Sunday morning for the WEEKEND WRAP and the SOSMPB (Single Ounce Silver Market Price Benchmark), which looks to be higher than the initial reading last Sunday of $37.60.
See you then...
At the Close, Thursday, February 4, 2021:
Thursday, February 4, 2021, 9:00 am ET
Silver is mispriced.
It doesn't matter whether you are buying or selling in the futures market on the COMEX, through an online retailer or on eBay. The price you are buying or selling for is wrong. And it is wrong because of decades of intervention and suppression by the financial industry, international banks, central banks, bullion banks, their agents, and sympathizers in the media.
The recent foray into the silver complex by the Reddit group r/wallstreetbets accomplished one great thing. Forget about exposing the short sellers in the COMEX, the incestuous nature of the LBMA daily price fix, the inflows to ETFs like SLV and PSLV, the wild gyrations in the futures market. None of these matter in comparison to the successful decoupling of the two prices for silver, spot and market.
Since the so-called "Reddit Raiders" call to action, supply of physical silver in the form of finished products - coins, bars, jewelry - has vanished from the shelves of internet retailers and local coin shops. Most are now either out of stock or down to bare bones in denominations of 1, 2, 5, and 10 troy ounce items withe shipping delays ranging from eight days to a month or more, reminiscent of prevailing conditions in March, April and May of last year as the pandemic spread worldwide.
The difference is that in 2020, the price for physical silver items at retail plummeted. In 2021, they skyrocketed. The dealers apparently have awakened to the cruel, corrupt scam being played at the wholesale end by the COMEX players and members of the LBMA. In 2020, they played along. In 2021, they decided to revolt. what began as a plot to disrupt the COMEX market and do damage to big money participants - as wallstreetbanks group did in the stock market with GME - resulted in a demand imperative for precious metals retailers.
It seemed to be their only choice.
Silver on the COMEX rose close to $30 an ounce on Monday. By Tuesday's New York close, the price was $26.48. Wednesday's close was $26.65. Meanwhile, if any could be found, silver eagles, maple leafs and other one ounce coins and bars were selling for $37, $40, $45, and higher with delivery delays of up to 30 days. One reliable place to find silver items for immediate delivery is on eBay, where independent sellers are quick to ship, demonstrating the marvel of efficient modern markets. Current supply is slim. Competition in auctions is fierce.
The prices have decoupled. Spot or Futures price: $26.65. Market or Retail price: $37.60 (as of the Sunday Money Daily SOS Market Price BENCHMARK) to $45 or higher.
Neither price is correct and they will remain uncorrected until position limits are imposed and enforced on futures contracts and are settled in physical metal rather than paper currency, which is the routine practice on the exchanges. It's known as "force majeure" (unforeseeable circumstances that prevent someone from fulfilling a contract) and is employed not in extraordinary circumstances as intended, but as standard practice.
Until there are honest markets populated by honest players rather than the criminal cartel currently - and for many years prior to this - in control, price discovery will be difficult, if not impossible. The price of silver will be whatever one is willing to pay at whatever price sellers are willing to sell. With the spot and market prices interoperable, criss-crossing each other at various nexus points, expect to experience wild price volatility, which can be localized or widespread, dependent on conditions, participants, volume, availability, market forces and other variables.
It's the Wild West all over again. Enjoy the show.
Silver futures were flat on Wednesday, along with stocks.
Etherium, the second-largest cryptocurrency by market cap, posted a new high at $1,699. Bitcoin continues to trend higher, topping out at $38,769 overnight, chasing the all-time high of $41,986.37 from January 8 of this year.
Stock futures are modestly higher with less than an hour to the opening bell. The Labor Departed reported 779,000 initial unemployment claims for the prior week, less than the 830,000 expected by mainstream media's paid shills.
As an added off-topic-on-target bonus, here's the Robin Hood of Wall Street, Gregory Mannarino, with the Mouth that Roared, Alex Jones, discussing the global financial system, exposing the establishment's assault on the people of the world and offering some solutions.
At the Close, Thursday, February 4, 2021:
Wednesday, February 3, 2021, 9:15 am ET
For the past week or so, and especially over the last two days, there's been significant activity and interest in the silver market, spurred on in large part by the crowd over at the Reddit forum r/wallstreetbets, which famously, for better or worse, parlayed their experience with heavily-shorted stocks (GME, AMC, the most glaring examples) into a foray upon the price of silver in the spot, futures, ETF, and physical markets.
The primary idea was to rattle the short sellers in the futures markets by buying up shares of ETFs like SLV and PSLV, buying physical silver from online dealers, local coin shops, and exchanges like eBay to spike demand and elicit a response in the spot price - set by the LBMA - and in futures trading.
With the dust settling, we can ascertain that there is a winner, actually two, as both sides can claim victory. The redditers managed to drain inventory from dealers and bump up the price for finished goods, while the LBMA and futures pit traders managed, after some initial shock treatment, to keep a lid on the price of their 5,000-ounce contracts. Rising from about $25.50 per troy ounce to as high an ask price of $30.50 or thereabout, futures participants smashed it back down into a range between $26.20 to $27.80, with the market makers initially increasing the bid-ask spread to a highly unusual $1.00, now back down to a 0.50 spread.
It will remain to be seen which side will eventually claim victory if it's assumed the LBMA and establishment players in futures want to keep the price of silver low and the reddit public wants it higher. That will work out over time, but for now, the dealers and the public don't have to rely on spot and futures prices when buying small amounts (1, 10, 100 ounce bars and coins), because a market price is available and actually has been in place for years. It's called eBay, where silver and gold coins, bars, bullion, jewelry, and other objects have been selling for years in a very robust marketplace.
Money Daily has been tracking prices since April 2020 consistently with the same methodology and the results are now providing a solid market pricing mechanism. Forget about "spot" and "premium." Think rather, spot price and market price, which are two distinct, separate pegs which may or may not correlate.
The LBMA sets the spot price, or "fix" as they call it, which is then further refined via†futures trading on a continuous basis, with the exception of the weekly period beginning each Friday at 5:00 pm ET and ending Sunday at 6:00 pm ET. Their standard unit is a contract for future delivery of 5,000 troy ounces of silver, which is normally settled in cash, which actually eliminates physical silver from the equation and sheds doubt on the veracity of the process. In essence, they are trading paper (silver contract) for paper (FRNs, euros, yen, etc.)
The market price is determined via a weekly survey of completed sales on eBay of†1 oz. silver and gold coins and bars, performed every Sunday morning between 7:00 am and 9:00 am ET, numismatics excluded, shipping - often free - included, to derive a price for delivered silver product paid in paper currency.
Thus, the two pricing mechanisms are distinct and either or both can be ignored or followed at the buyer or seller's peril. There is obviously a price differential, being that the spot price is first set by the fix and then traded upon in the bulk amount of 5,000 ounces, whereas the market price is determined using finished goods (bars, coins), using a blended, transparent average (the sum of average and median prices for coins and bars for silver and gold separately, divided by four), universally settled in an exchange of US$ (FRN) for specific goods. The price, or "peg" is set only once per week. The market determines adherence, rejection, or any divergence from that price until the next survey.
There's no need to update pricing by the minute, as is the case in the futures trading. The market price is self-determinant.
For the present time, this weekly survey is sufficient to gauge the price of finished gold and silver (we're experimenting with silver first and will get around to gold as time and developments in the market persist), until a better system is devised, possibly incorporating prices from participating dealers and/or coin shops.
With a reasonably-calculated market price, there's little need for the spot price in the general operation of the open market, unless one is trading in larger amounts, though it makes perfect sense that items weighing 10 ounces, 100 ounces, and beyond would warrant a discount to the single ounce market price, while fractional amounts (1/2, 1/4, 1/10 ounce) would be priced accordingly higher on a per ounce basis.
The premia or discount is entirely a function of market participants. Some dealers may offer discounts to repeat buyers or pay a bit more from steady customers. Each market participant will have his or her own methodology, likes, dislikes, plans, and schemes, all of which makes for a vibrant, open market with a transparent benchmark.
Going forward, every Sunday morning around 9:00 am ET, Money Daily will release its Single Ounce Silver Market Benchmark, using the proven methodology and timing. Bear in mind that any price discovery carries a significant caveat emptor. Preliminary results from prior surveys can be found HERE.
The initial, current Single Ounce Silver Market Price Benchmark is now available.
Money Daily and Downtown Magazine (dtmagazine.com) bear no responsibility for sales or purchases based upon its posted prices and has no relationship with eBay other than as a casual seller. As developments proceed, the methodology and process may change.
One final thought: Through all the ups and downs, the real winners may have been the silver miners, some of which experienced significant gains in the price of their stock on the NYSE and NASDAQ, and they're always amenable to higher prices for their product, be it spot or market.
Let the games continue!
At the close, Tuesday, February 2, 2021:
Tuesday, February 2, 2021, 9:15 am ET
It's 4:00 am. Most people are still asleep at that hour, and while they slumber, thieves are stealing their gold and silver.
Well, they're not exactly stealing physical gold and silver, and they're not exactly thieves, either. What's happening is that on global futures exchanges, the value of gold and silver is being diminished by a consortium, or a cartel of bankers, traders, assayers and bullion dealers whose objective is to get the best price on gold and silver for themselves and the worst price for you.
As the r/wallstreetbets crowd trundled into the precious metals space last week and with more effort on Monday, they managed to crack open a Pandora's box of trickery and deviousness that still remains largely outside the public's view. Like Las Vegas, what happens on futures markets largely stays in futures markets, because, as comedian George Carlin suggested years ago, "it's a big club, and you ain't in it."
The redditers, fresh off the smashing success in routing short sellers in GameStop (GME) and other names like AMC Entertainment (AMC) and American Airlines (AAL), issued a challenge to the silver futures market controllers, rallying their troops to buy up shares of silver EFTs, SLV and PSLV, buy shares of miners like First Majestic (AG), Endeavour Silver (EXK), Hecla Mining (HL) Fortuna Silver Mines (FSM) and to purchase and hold physical silver.
At the start, wallstreetbets appeared to be winning. The futures market in Asia opened with a bang, sending silver up about eight percent, from $27 to $29. As day dawned in the US, the bid was wavering between $29.00 and $29.50, before the traders in the futures pits executed one of their classic smackdowns, sending the price reeling below $28 by mid-morning. By the close of trading in New York, silver stood at $28.55, an apparent, but eventually, phyric victory for the redditers.
However, since the reddit horde is mainly US-based, their influence waned in the overnight Asian market, as the controllers send the price of silver crashing as low as $26.30 the ounce. As markets prepare to open again in the US, the silver price hovers again around $27.00. It's apparent that the redditers have bitten off more than they can chew, for now.
It's understandable. They're up against a consortium of central banks, bullion banks, commercial dealers, commercial banks, institutional traders, and establishment operatives who've been at this game for decades. These people are not about to be upended by some upstart social network of millennial punks.
However, the battle has been engaged and it's doubtful that the reddit crowd is going away any time soon. What's more likely is for their roster of players and supporters to expand now that they've demonstrated the power of an organized crowd with a unified purpose.
Perhaps the attempt to smash the silver market was premature and a little bit of chest-thumping bravado. What appears certain now is that weaker hands will sell their silver at a loss to the "diamond-handed" reddit crowd that will remain engaged to some degree. At the very least, what wallstreetbets did for silver was empty the shelves of bullion dealers around the world. Shortages of metal and shipping delays are now common among online dealers like Provident, Scottsdale, Apmex, JM Billion and others. Coin shops in various locales report being sold out of common silver items like Eagles, Maples, and one to ten ounce bars. Many dealers are expressing concern over sourcing future supplies. Some suspended buying on their sites altogether while most list the bulk of their inventory as "out of stock."
A passing glance at the roster of members in the London Bullion Market Association (LBMA) evidences just how tilted the playing field in the precious metals space is towards those who produce and procure gold and silver at the fountainhead as opposed to those who buy them at retail, and this is what wallstreetbets, gold bugs, and silver stackers are up against.
The LBMA, which conducts auctions, "fixes" prices, holds symposiums, and helps to regulate the global trade in gold, silver, platinum, and palladium, are in the business of price control to their benefit and also to serve their ultimate masters, the central banks of the world, particularly the US Federal Reserve, ECB, Bank of England (BOE), Bank of Canada (BOC), Bank of Japan (BOJ), People's Bank of China (PBOC), and the Swiss National Bank (SNB).
The LBMA and the COMEX futures markets seek to ensure that precious metals, especially gold and silver, which are real money, don't become too competitive with the fiat currency of the central banks, which is why gold and silver have been suppressed for many decades and why, as long as the LBMA issues dialy "benchmarks" or "fixes" and futures prices are used as valuation standards, true price discovery in precious metals will never be achieved.
According to LBMA's chief executive, Ruth Crowell, "The LBMA is the world's authority for precious metals. We're the standard-setting organisation that defines how precious metals are refined, as well as traded around the world. It's our job to ensure the quality and the integrity of the metal itself, as well as the market participants."
In other words, the LBMA's job is to control the flow of precious metals, largely to the benefits of their members, of which the general public is not one of them. They are the successors of the London Gold Pool, which collapsed in 1961.
From Wikipedia's entry on the London Gold Pool (emphasis ours):
The London Gold Pool was the pooling of gold reserves by a group of eight central banks in the United States and seven European countries that agreed on 1 November 1961 to cooperate in maintaining the Bretton Woods System of fixed-rate convertible currencies and defending a gold price of US$35 per troy ounce by interventions in the London gold market.
Even Wikipedia is using words like cooperate, interventions, price controls, and even "suppress" in regards to the activity of the defunct London Gold Pool, so can you say, COLLUSION, CONSPIRACY, CARTEL?
After 1980, the gold price was suppressed well enough to get it below $300, but there was a bit of a void, insufficiently filled by the Bank of England. A new, official benchmark organ was needed. Thus, in 1987, the LBMA was formed by the Bank of England (big surprise!). From the LBMA website:
LBMA was established in 1987 by the Bank of England, which at this time was the bullion market's regulator. LBMA took over the roles previously carried out by two separate organisations, the London Gold Market and Silver Market, whose origins date back to the mid-nineteenth century.
This is what the redditers ran into as they attempted to force the price of silver higher and damage the short-sellers. While they succeeded to some small degree on Monday, overnight Tuesday, the suppression commenced full throttle, sending silver down as low as $26.30 an ounce.
It's worth noting that the price of entry into the silver futures market is a single contract representing 5,000 ounces of metal, or, on a cash basis, about $135,000 if silver is $27 an ounce. The reddit people don't have that kind of money (some may), but the bullion banks, who hold the bulk of short interest, have billions. While this imbalance is daunting, it's going to take more than a few days for the commoners to even put a dent into the institutional money. Any attempt to break this market is going to last months, if not years.
Other methods should be employed, the most evident to be the establishment of another standard, representing the price of gold and silver on the open, public market, like on eBay or through a network of online dealers and local coin shops. Such a standard or benchmark need not be updated in real time. While the price of 1, 10, and 100-ounce silver and gold coins and bars may vary by location, it should be a little more stable, as are the London "fixes", if only to afford some degree of comfort to retail buyers and dealers alike.
A standard valuation metric needs to be established for the common investor, as opposed to the mega-banks and central banks which deal in tonnage rather than ounces. Money Daily has been tracking prices on eBay as a kind of counter-balance to the LBMA and futures markets. The prices tracked every Sunday morning here are taken as a survey of most recent sales and are indicative of prices paid, including "premiums" and shipping, which is often free. when adding the premium over the LBMA's spot price, one can readily see that the prices actual people and dealers are paying and receiving are well-separated from the institutional spot prices. It's actually even more complicated, accounting for the 10% or higher fees taken out by eBay, but that's the game, and plenty are playing.
Circling back to the charges of collusion and conspiracy surrounding the LBMA and futures trading, history suggests that the interests of central banks and their agents are not well aligned with those of the working class or even the investor class.
If the price of an ounce of gold increased from $35 to $850 from 1971 to 1980, what should the price of gold (and silver) really be today. Let's give the gold and silver riggers some credit and "benchmark" the prices of gold and silver to where they were at the end of the Great Financial Crisis of 2007-2009.
Gold advanced from $800 at the start of 2009 to $1400 by the end of 2010. For convenience sake, let's take the middle of that range $1100, as our starting point. Silver took a similar path. On January 8, 2009, silver was $11.12 per troy ounce. On December 28, 2010, silver was pricing at $30.30. The midpoint of those extremes is $20.71. That's our reference point.
So, now we're talking about 11 years of price suppression, longer than the nine years (1971-1980) from Nixon's closing of the gold window to the peak price of $850, a period in which the price of gold increased by more than 24 times.
Applying that 24X increase to prices from 2009-2011, gold should be priced at $26,400 and silver should be $497.04. Adjustments can - and should - be made to have silver recalibrated to aratio of 16:1, 12:1 or even 8:1 to the price of gold, which would render the following silver prices:
Gold/Silver Ratio: Silver Price @ $26,400 gold
Suggesting a GSR (Gold-Silver Ratio) of 16:1 or 12:1 dates back to Byzantine times and even recently. Those are established norms which have been tossed aside by the suppression of the central banks and LBMA. The 8:1 ratio is suggested by the authority of First Majestic CEO, Keith Neumeyer, and others, who attest that to be the current ratio of gold to silver being pulled out of the ground. For every new ounce of gold, eight ounces of silver are found.
It should be clear to everybody that gold - and even more so, silver - is massively undervalued and that the intention of the central banks and their agents of suppression in the LBMA and futures markets is to keep silver priced extremely low because it is money, it is plentiful, divisible, easily recognizable, and has been used as a store of value for thousands of years, just as has gold.
This story is far from over. In fact, this chapter has only just begun.
At the Close, Monday, February 1, 2021:
Sunday, January 31, 2021, 11:20 am ET
Stocks suffered through their worst week since October, 2020, with the Dow losing more than 1000 points and all of the major averages dropping by 3.25% or more. The tech-laden NASDAQ and small caps on the NYSE Composite led the way lower. The NAZ fell 3.49%; the NYSE lopped off 3.71%.
Macro losses on the exchanges took a back seat to the internecine skirmishes between billionaire hedge fund managers and the rag-tag recruits from reddit.com group n/wallstreetbets as the mostly-millennial stock traders from the reddit group took the short-sellers to task over shares of GameStop, the beleaguered game retailer targeted by the hedge funds.
Essentially, what the wallstreetbets crowd did was target the most-shorted stocks by buying up shares of down-beaten GameStop (GME), and others, such as Nokia (NOK), Blackberry (BB), Bed Bath & Beyond (BBYB), AMC Entertainment Holdings (AMC), and Koss Corp. (KOSS), sending shares soaring, squeezing the hedge fund shorts, costing them billions of dollars.
Hedge funds, which have extensive short positions in many equities, hoped to capitalize on the misfortunes of companies but failed to take into account retail market forces and the power of social media as the reddit group n/wallstreetbets devised a strategy of buying the losing stocks and holding, forcing the hedgies to cover their downside bets.
In effect, the hedge funds borrowed shares (at fees ranging from 30% to 50% of the share price) of the beaten-down stocks and sold them into the market at prices under the asking price, Their plan was to buy those shares back on the open market as the stock collapsed, return the borrowed shares, pocketing the difference. They also short stocks through put options, bets that a stock will trade lower over time with specific time limits (strike dates).
The reddit crowd, glibly calling themselves "retards" or just "tards," seized upon the opportunity to make massive profits and punish the billionaires at the same time just by buying shares of the targeted stocks. As members of the seven million strong group n/wallstreetbets executed their strategy, shares began to rise, fueled by increased volume from the retards, then accelerating as the hedge funds began to panic and cover their shorts at increasing losses.
Through Friday, the hedge funds have accumulated losses approaching $20 billion on Gamestop alone. For their part, the retail crowd is holding onto their gains, causing the shorts even more pain in the options market. The opposing forces created such a firestorm of volatility that both the puts and calls on some issues were both gaining at the same time, a logical impossibility, exposing the options market to failure.
Launching attacks on multiple fronts in different stocks, the reddit retail crew was not just beating the hedge funds, they were slaughtering them. If this was a football game, the score would be something along the lines of retards 144, hedge funds 0, and it's only the first quarter.
On Thursday, the redditeers got into the commodities game, sending silver futures up nearly 10% in a matter of minutes, taking gold, platinum, oil and many mining stocks, like First Majestic (AG) along for the ride. Using their buy and hold strategy and extending it to the most manipulated market on the planet - silver futures - the reddit gang began openly discussing taking down the COMEX futures market, short sellers and bullion banks, which are particularly at risk in silver, being heavily on the short side to suppress the price of what's known as "the money of gentlemen."
So far, plans include buying up shares of EFTs such as the iShares Silver Trust (SLV) and the Sprott Physical Silver Trust (PSIL), individual miner stocks and lately, purchasing physical silver from local coin shops, online retailers and eBay sellers. The latest move would more than likely be the most successful over time, as excessive physical demand would certainly cause supply shortages, prompting price gains. Longer term, if millions of people begin buying up small amounts of silver coins, bars, and jewelry, the demand spike would naturally result in a supply squeeze and either expose the COMEX as a fraud for failing to deliver physical metal on contract executions or boosting the futures price as spot prices sprint forward. Continued pressure from millions of silver buyers could break the futures market and the bullion banks and cause further chaos.
An article outlining the effects of what r/wallstreetbets is doing appeared on Thursday with a dire warning: Goldman Warns If the Short Squeeze Continues, The Entire Market Could Crash.
Analysts at Goldman Sachs are rightfully scared of the implications of what amounts to a peasant revolt in financial markets, traditionally the province of the rich and not-so-famous. With stocks bubbling out of control and the underclass betting on losers while the hedge funds are trying to savage them, the resulting carnage would cause liquidations earmarked for margin calls, fees, short-covering, and loss mitigation in the billionaire class. With money having to come from somewhere, the billions invested profitably in the Apples, Googles, and Facebooks of the world would depart, setting up a vicious liquidity trap complete with cascading losses throughout the markets.
So, in case you're thinking these millennial kids (mostly aged 20-45) are a passing fancy, you just failed economics 101, 201 and 401. This is a complete and fully-engaged revolt against money and those who control it and it's unlikely to end well for the people who've been manipulating every market on the planet for the past 35 years. It should not go without mention that Robinhood, the trading platform preferred by the redditeers, had to tap into its credit line through Goldman Sachs and JP Morgan and has placed order limits of five shares down to one share of selected stocks, primarily the ones most targeted by the "retards." Many of the stocks on the restricted holdings list can be referenced here, though as yet unconfirmed, Robinhood has since trimmed the list and boosted the number of shares one can purchase and hold. Seems the online brokerage, Robinhood, has had scheduled meeting with the Sheriff of Nottingham, aka, the SEC.
Elsewhere, the mainstream (if we can call them that) cryptocurrencies became passť even as the world's richest person (today, anyhow), Elon Musk, admitted to buying some Bitcoin with a tweet saying, "It was inevitable." The news shook Bitcoin about 15% higher, but then fomented some selling. Bitcoin jumped to $38,570 on Friday morning, but has since slumped back into its near-term range between $30,000 and $35,000. Etherium caught a sympathetic bid on Friday, though it remains largely in a high range between $1200 and $1500.
Treasuries remained moribund with the short end of the yield curve flat at the zero bound from 1-month (0.07%) bills to 3-year notes (0.19%). Yield on the 10-year note gained one basis point, from 1.10% to 1.11%, while the 30-year gained two, rising from 1.85% to 1.87%. Interest rates in fixed income have remained so low for so long (generally since 2000) that the speculative bubbles in stocks, art, and real estate are approaching breaking points with the Fed powerless to do anything to settle markets.
Since January 6, the unofficial start of the Joe Biden administration, the 10-year has held in a tight range between 1.04 and 1.15%, while the 30-year has maintained even more intransigence, holding between 1.79 and 1.88%.
The Federal Reserve is stuck. Rising rates would murder stocks and they simply cannot lower them any more than what they are unless going into negative territory is seriously considered. Essentially, negative interest rates, a capstone for many European nations has been lauded as a failed experiment though there remains a record amount of more than $17 trillion with negative yields and those have typically terms of seven years or longer. Overall, 75% of the global bond market pays a yield of less than 1%, while only 10% pays a yield of more than 3%. Effectively, global real (inflation-adjusted) yields are almost all negative, upwards of 93% not keeping pace with inflation.
Already a failure on multiple fronts (the economy, education, race relations, civil rights, social justice, Covid, foreign affairs, trade policy, government corruption, and accountability) the Biden administration and Democrat party control of both chambers of congress is likely to oversee a global bond rout with their inflationist policies of spend and pretend, pushing yields higher by boosting the federal deficit and making it more expensive to service, the end result a ballooning federal debt which is rapidly approaching $28 trillion. At $27.86 trillion presently, $30 trillion is likely to be exceeded within months. By the end of the government's fiscal year (September 30), the federal debt could easily be upwards of $32 trillion, the run-rate of profligate spending and dollar dilution approaching half a trillion dollars a month.
These rank amateurs and posers, many from the destructive Obama administrations of 2008-2016, espouse ideas that press hard against beneficial public policy. Their insistence on greening, climate change, and identity politics stoke hatred and anger on both sides of the aisle, while their economic plans rival those of second-graders (with apologies to second-graders everywhere). Within months, Biden and his horde of deviant Democrats are likely to cause a massive stock market collapse, raging unemployment, and general strife. If Biden isn't impeached within the next six to eight months, the US - and with it the global - economy will become completely unglued.
Oil maintained above $50/barrel for WTI crude, checking out Friday at $52.20, just below the prior week's close ($52.27), though close to the recent high of $53.57. Since October 30, 2020, the price of oil has risen 45.9% form a low of $35.79. Any number of crosswinds are contributing to the price makeup. With holiday travel on the wane, prices at the pump would normally be falling, but colder weather and the re-opening of businesses in many states shuttered by the pandemic are mitigating that factor.
As the main street economy returns to some semblance of normalcy, expect gasoline prices to spike by Spring. The national average is currently at $2.43 a gallon, roughly the same as the pre-pandemic price from this date in 2020. With the Fed's printers working overtime counterfeiting fresh currency and the federal government hell-bent on doling out another $1400 to just about anyone making less than $75,000 a year (about 85% of the population), price inflation in food and energy are about as certain as water turning to ice below 32 degrees.
No state is selling unleaded regular for less than $2.00 a gallon, with Mississippi and Louisiana on the low end at $2.09 and $2.10, respectively, Hawaii ($3.26) and California ($3.41) the only states with average prices above $3.00. Nationwide, drivers could be looking at gas above $3.00 a gallon in pretty short order, especially if states continue lifting COVID-related restrictions. Consumers may be screaming for relief by Memorial Day.
WTI crude's last peak was October of 2018, when it topped off at $76.18 a barrel. While unlikely to hit that number anytime soon, a range of $60-68 a barrel is a very real short term possibility. While that number isn't exactly appealing to end-users, it would likely rally US frackers and shale unaffected by Joe Biden's executive order banning new leases on federal land. The main beneficiaries of Biden's boneheaded approach to energy are Russia and OPEC, as the United States will have to import more oil at higher prices.
Americans have to face up to the reality that the person sitting (or mostly sleeping) in the White House is illegitimate, as the Democrats conspired to steal the election from Donald Trump. Simply put, Biden should be thrown out of office, tried for his crimes and jailed as soon as possible. Just days into his term he's already tried - through executive orders - to reverse much of the good done by Trump. He's an ass, a thief, a liar, a crook, a seller of influence, and his policies are mostly opposed to the public good. Most people don't like him, don't accept him as their president, and will remain angry about the stolen 2020 election until he is removed.
Fittingly, in the face of last week's ramping of beaten down stocks and the fast foray into the silver space, silver far outpaced gold, rising swiftly as its more pricey counterpart suffered a slight decline.
Gold ended the week at $1847.76, down from the prior Friday's price of $1855.90 per ounce while silver, courtesy of the reddit crowd from r/wallstreetbets, caught a long-overdue bid Thursday and Friday, slingshotting from a low of $25.26 on Wednesday to close out the week at $27.71, a sharp, 9.7% move, a five-month high, with more upside straight ahead.
As the assault on silver shorts commenced over the weekend, premiums rose notably at delaers and online markets. Local coin shops and online merchants reported record volumes, many selling out of popular products, imposing shipping delays and quantity restrictions as demand soared.
Here are the most recent prices for popular gold and silver items sold on eBay (numismatics excluded, shipping - often free - included):
Item: Low / High / Average / Median
Weekly survey results from April 2020 to present can be found here.
At the Close, Friday, January 29, 2021:
For the Week:
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