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How Silver Can Conquer $50+ in 2022

Two realistic price movement scenarios can see silver finally ascend through the magnetic $50 level in 2022. A case can be made that either – or perhaps…

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Two realistic price movement scenarios can see silver finally ascend through the magnetic $50 level in 2022. A case can be made that either – or perhaps both – have a strong likelihood of taking place.

First Scenario:

In December, silver moves up from a strong multiple-year base, with an impulse leg-driven First Quarter, punching through strong resistance and spiking into the low ‘$40’s before retreating to its breakout just above $30.

It builds a broad $15 sideways HSR (horizontal support-resistance) price box between $43 and $28.

Volume strengthens on up days, and lessens on down days, creating a descending technical triangle.

In April, silver breaks out of its four-month coil and drives into new multiple year highs between $44 and $55 per ounce, creating spikes above $50, but without managing three closes (above a given price, in this case the historic $50) David Morgan looks for to validate a bullish (or bearish) impulse leg breakout.

In mid-June, physical silver gives up the ghost and retreats into a seasonal July-August double bottom.

Many long-term silver bulls lose hope as the “triple top” (1980, 2011, and 2022) they see causes them to conclude that silver prices will “never” rise and stay above $50 during their lifetimes.

Metals and miners wash out into the fall of 2022, as the last weak hands are “worn out or scared out,” even as silver consolidates for a fourth – and this time successful assault on $50.

Second Scenario:

In the second scenario, silver, having retreated toward its $30 breakout early in the year, yet unable to leave $50 behind, churns in a frustrating triangular fashion.

Meanwhile, new, subtle, but sustained physical buying comes in late in a session on any breakdown in price.

Large money siphons off increasingly scarce physical inventory like what happened in late October 2021, when a metals’ dealer colleague shared with me that he had just taken “a test order” from a new customer… for five million dollars!

The silver price is coiling; the spring is tightening… Those who read this column have heard the litany of supportive factors, but there are two more that may slip beneath people’s radar.

A Technical Indictor:

In several decades of following “the restless metal”, one powerful “technical tell” – what I call “the fourth time indicator” – stands out. It’s when a price challenges either upside resistance or downside support for the fourth time.

A classic example of this took place as what would become a 5-year cyclical bear market built out from the 2011 upside failure and touched $26 silver for the fourth time.

I remember getting a pit in my stomach, thinking, “It’s probably gonna’ go through… and keep dropping!” Which is exactly what it did.

A Physical Indicator:

The metals’ dealers I speak with tell me that virtually no significant quantities of gold and silver are coming back into the market.

Additionally, a tell I watch for is the availability – or lack thereof – of fractional ounce gold coins like the Canadian gold Maple (leaf) or the Australian gold Lunar.

Upon inquiring recently about 1/10th oz Canadian Maples, I was told, “Do not expect anything before late January 2022 at the earliest.” (Some American fractionals are available, but internationally less desired by dealers than their more easily resold cousins.

Silver has acted like this before. Jeff Clark’s talk at last fall’s Silver Symposium envisioning how the next silver bull run might unfold, was titled “From Boring to BOOM.”

Clark noted how silver actually declined for two years into 1976, during a time – as now – when inflation and unemployment were high, and there was an ongoing energy crisis. He had a dozen quotes “from the experts” read aloud, several from the venerable New York Times

Said one in the event by a less-than-a prescient observer: “Gold is headed below $100. Who wants to put money in gold and silver now?” Another: “Any argument against putting money into gold goes double for silver. Silver is fools’ gold!”

Clark described the current environment succinctly and eloquently. “We have a falling silver price, surrounded by catalysts.”

You may be a long-suffering holder whose dreams of a metal moon shot have been dashed too many times to count. (And yet silver in 2000 traded for less than $4.00 the ounce; rocketed to near $50 in 2011; and even today with a $3-$5/ounce bullion premium and $9-$12 for the American Silver Eagle versus the traditional $3, you’re still looking at a “30 handle.”)

What do you think will happen when one of those “catalysts” or some other unexpected factor collides with a jaded “nothing’s gonna’ change'” investment cohort, an unsuspecting public, and an asleep at the wheel manufacturing sector?

In conferences and essay columns like this one for Money Metals, I’ve said it before: Everyone knows the price of silver – look it up on an exchange or call your dealer. But No one on the face of the earth has even a rough idea of the value of silver.

My bet says that as we track the metal’s path to $50 in 2022, followed by an epic three-digit stellar shot in 2023-4, we’re all going to find out! If such is the case, which side of this bet will you be on?

The Mt. St. Helens Side-Eruption.

When Silver makes its move, “the side of the mountain is going to blow out.” In March 1980, Mt. St. Helens in WA State blew its…side. Everyone including the geologist monitoring its activity – and who himself died during the explosion – expected that when and if it did activate, it would follow the classic vertical eruptive form. But no.

The NE side of the volcanic cone disintegrated as a 300-mph hell-fire storm of ash, rock, plant matter (and a bird’s beak I found in a relative’s back yard in Moses Lake 200 miles from the site!) spread out across several states.

This may serve as a fitting analogy for what’s to come when silver explodes, making its exponential, beyond-the-comprehension run, shocking even “the experts.” Should this take place, will you be standing there empty-handed as a spectator, watching? Or holding physical silver, some gold, and perhaps platinum in hand to ensure your other assets?

      




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Economics

Goldman Slams Omicron Panic: “This Mutation Is Unlikely To Be More Malicious; No Reason For Portfolio Changes”

Goldman Slams Omicron Panic: "This Mutation Is Unlikely To Be More Malicious; No Reason For Portfolio Changes"

One look at the ridiculous…

Goldman Slams Omicron Panic: “This Mutation Is Unlikely To Be More Malicious; No Reason For Portfolio Changes”

One look at the ridiculous plunge across asset markets on Friday, which sent oil into one of its biggest tailspins in history (which as Goldman calculated would only make sense if the Omicron lockdowns are twice as bad as anything observed so far), and one would think that the Omicron variant – which as Edward Snowden so aptly put it “sounds like the name of an 80s movie’s evil Robot King” (of course, the WHO had no choice but to skip the Xi variant, located right before Omicron in the Greek alphabet for obvious propaganda reasons) – is several times more aggressive and far more deadly than the Delta or any other Covid variant to date. Neither is the case, and in fact, as even Tom Peacock, one of the original Imperial College narrative-setters admitted, “it may turn out to be an odd cluster that is not very transmissable.”

Alas, that would not help politicians who kill a lot of birds with just one brand new and “horrifying” variant, including getting a carte blanche for trillions in new vote-buying stimmies, enforcing even more ruthless and authoritarian government restrictions a dream come true for all liberal fans of big government, and most importantly forcing another round of mail-in ballot elections one year from today. 

And yet, perhaps the pandemic apocalypse is not just around the corner. On one hand, Angelique Coetzee, the chairwoman of the South African Medical Association said today that the new Omicron variant of the Coronavirus results in MILD disease, WITHOUT prominent symptoms.” On the other, none other than the most important bank on Wall Street – Goldman “Vampire Squid” Sachs – which sets the narrative that all other banks dutifully follow, has decided that it’s not worth starting a panic crash over this mutation and in a note published late on Friday writes that “this mutation is unlikely to be more malicious and that the existing vaccines will most likely continue to be effective in preventing hospitalizations and deaths” and as a result, while Goldman “would monitor the situation in Gauteng closely over the next month, we do not think that the new variant is sufficient reason to make major portfolio changes.

Translation: brace for a face-ripping rally come Monday when carbon-based traders finally take over from the idiot algos.

Below are more details from Goldman’s London trader Borislav Vladimirov who penned his “Initial thoughts on risks from the B.1.1.529 variant and market implications.”

Main points

  • While we do not have sufficient information to forecast a global B.1.1.529 wave, a high rate of transmission almost inevitably leads to a variant’s dominance.
  • Nevertheless, the South Africa NICD (link to their Q&A here) note that this mutation is unlikely to be more malicious and that the existing vaccines will most likely continue to be effective in preventing hospitalizations and deaths. The current PCR and antigen tests are expected to continue to identify the mutation.
  • As such, while we would monitor the situation in Gauteng closely over the next month, we do not think that the new variant is sufficient reason to make major portfolio changes.
  • Having said that, given the time of the year and liquidity as well as policy risks in December, investors could consider short term hedges for growth sensitive risky assets.

We would start from what we know:

  • The variant has a large number of mutations
  • It has the P681 H spike protein mutation associated with the higher transmissibility of Delta
  • Currently no unusual symptoms have been reported following infection with the B.1.1.529 variant and as with other variants some individuals are asymptomatic.
  • It is easy to identify and hence monitor – The B.1.1.529 lineage has a deletion (△69-70) within the S gene that allowed for rapid identification of this variant in South Africa and will enable continued monitoring of this lineage irrespective of available sequence data.
  • Most likely current PCR and Antigen test will continue to identify it well.

Potentially high transmissibility has triggered market concern:

  • It is gaining pace rapidly sequencing  90% of new cases just 2 weeks since emergence. For comparison the Delta needed 3 months to reach that intensity. This is the most concerning data point that has attracted market attention.

  • One caveat is that the fast acceleration data could be skewed by location. The virus is spreading in Gauteng which is the largest and most densely populated province of SA. (15.2mio people with population density that is 17.3x higher than the country average)
  • The level of restrictions in SA at the moment (measured by the government stringency index) is low (relative to Israel or Austria for example, see chart below). This can be helping faster spread that isn’t necessarily driven exclusively by the virus characteristics

  • Cases of B.1.1.529 have been identified in Botswana, Israel and Hong Kong. If the variant is highly transmissible, it is most likely that it will eventually spread despite travel restrictions.

What we still do not know…

  • We have no information on the variant’s impact on hospitalizations and mortality. A careful monitoring of the Gauteng data over the next two weeks is essential.
  • There are reports that two of the cases were fully vaccinated. This is a very small sample to make any conclusions and we do not know for how long the patients were vaccinated. What we know from Delta is that antibody levels wear off between 6 and 9 months after the second vaccine and that while the vaccines are less effective in preventing infection, they are still highly effective in preventing hospitalization and death. For the time being there is no reason to believe that this variant will be different in that respect.
  • Will the Pfizer pill be effective against the new mutation?
  • Is the European wave driven by the new variant?
  • While the new variant could be present in Europe, the rapid rise in cases is driven by the Delta variant (see information below)
  • The European data comes with about a month delay from sequencing time so we should know more by the third week of December (unless the process accelerates due to the attention on the new variant)
  • Efforts to limit the current Delta wave in a number of European countries could help preventing the spread of B.1.1.529, if already present.

Is the above a reason to be concerned?

  • A very broad press focus in the past 24h has received high market attention.
  • It will take weeks before we get additional official information and scientific evidence about the potential risks.
  • This comes at a time when investors have been surprised by some of the lockdown measures announced in Europe
  • And also when real growth is likely to fall meaningfully on higher inflation (even though nominal growth is likely to stay well above average)
  • At this time of the year positions in risky assets, especially after strong YTD gains, could be vulnerable to short term corrections (ie 2018 template)
  • Travel restrictions will delay the process of logistics network normalization which would imply that the supply capacity constraints easing anticipated for H2-2022 might take longer to materialize.
  • Meanwhile, monetary policy has recently shifted gears to signal faster removal of accommodation which could add to a short-term risk aversion into the December FOMC.  

Conclusion: while we do not have sufficient information to forecast a global B.1.1.529 wave, a high rate of transmission almost inevitably leads to a variant dominance. Nevertheless, we can have reasonable degree of confidence that this mutation is unlikely to be more malicious and that the existing vaccines will most likely continue to be effective in preventing hospitalizations and deaths. As such, while we would monitor the situation in Gauteng closely over the next month, we do not think that the new variant is sufficient reason to make major portfolio changes. 

Tyler Durden
Sat, 11/27/2021 – 16:59





Author: Tyler Durden

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Precious Metals

Peter Schiff: The ‘Devil You Know’ Is Still A Devil

Peter Schiff: The ‘Devil You Know’ Is Still A Devil

Via SchiffGold.com,

On Monday, President Joe Biden reappointed Jerome Powell to head…

Peter Schiff: The ‘Devil You Know’ Is Still A Devil

Via SchiffGold.com,

On Monday, President Joe Biden reappointed Jerome Powell to head up the Federal Reserve and nominated Lael Brainard to serve as the vice-chair. In his podcast, Peter Schiff talked about Biden’s decision, the markets’ reaction and what the Fed will (or will not) do moving forward. Ultimately, Peter said the devil you know is still a devil.

Peter predicted Biden would stick with Powell. He said there was no political upside for him to do otherwise.

If something happened, something goes wrong, which something is going to go wrong most likely — so, it’s going got hit the fan — and if it hit the fan with Brainard at the helm, well, Biden would own it. People could say, ‘Oh, the reason the economy went off a cliff, the reason that inflation is running out of control, it’s all because you put Brainard in as Fed chairman.’ Whereas, if everything falls apart under Powell’s watch, well, Biden can simply say, ‘It’s not my fault. Powell was Trump’s guy. I just left him in power because he was already there and there was bipartisan support.’

If things go well under Powell, Biden can take credit, saying, “Hey, I renominated him.”

Peter said the crazy thing about the announcement, which was entirely predictable, was the market reaction. In the two days after the announcement, gold sold off by over $60 dollars and fell back below $1,800 an ounce. Silver took an even bigger hit, down about $1.25. Meanwhile, there was a big rally in the dollar index and bond yields went up. Peter said it makes no sense.

All of a sudden, Powell, the guy who’s been there the entire time, almost four years, the architect of this reckless monetary policy, zero percent interest rates, huge quantitative easing, inflation is transitory, there’s nothing to worry about — the same guy who brought us to this inflation party — we’re going out with the same guy again and everybody now is celebrating that somehow this massive dove has become a hawk. All of a sudden, everybody is excited that Powell is going to fight inflation in his second term.

What makes people think Powell is suddenly going to become an inflation warrior? He hasn’t fought it at all up to this point.

He spent his first term lighting inflation fires. Why anybody believes he’s going to put out those fires in his second term is beyond me.”

The reaction in the gold market was particularly puzzling. Just a couple of days ago, people were buying gold because they were worried about inflation. The yellow metal pushed above $1,850 after October CPI came in much hotter than expected.

One of the main reasons to be worried about inflation was because Powell was chairing the Federal Reserve. And Powell had made clear that the Fed is doing nothing about inflation. They think it’s transitory anyway. … If you were worried about inflation and you were buying gold a couple of days ago, why are you suddenly no longer worried about inflation and dumping your gold?”

Sure, Brainard would have likely directed a slightly looser monetary policy than Powell. But she’s not that much more dovish than Powell.

Powell’s not a hawk. And so, simply because we didn’t replace one dove with an even bigger dove doesn’t mean the dove that’s still there is going to turn into a hawk and suddenly start fighting inflation. He’s not.”

If anything, the makeup of the FOMC will be even more dovish now than it was before with Brainard serving as vice-chair.

If you were worried about inflation and the current FOMC, you should be even more worried, or slightly more worried as a result of this change than you are right now. Yet the market is acting as if everything has changed and we’re going to have this tough on inflation Fed.”

After the announcement, Biden, Powell and Brainard spoke to the press. All three talked about fighting inflation. Peter said he thinks the articulation of that commitment got everybody thinking that the central bank is now serious about the inflation problem. None of this makes sense

Politically, they have to say they’re against inflation because inflation is all over the news. It’s what everybody is complaining about. So, even if they have no intention of doing anything about it, they have to at least create the pretense that that’s what they’re going to do. So, you wouldn’t expect anything less. But even if, as a result of this tough talk on inflation, they actually do taper a little bit quicker and raise rates a little bit sooner, who cares? Because even a quicker pace is meaningless in the face of what’s going on.”

Even using the government numbers, inflation is running at around 7%. It would likely be double that using real numbers.

In order to rein in this inflation in the 1970s, or by 1980, rates had to go to 20%. All we’re talking about is a couple of rate hikes. We won’t even raise rates up to 1%. So, why should this make any difference to an inflation rate this high? If you could fight inflation with 1% interest rates, well, why didn’t we do that in the 1970s? It’s because you can’t — especially when inflation is already as bad as it is right now. And by the way, it will be even worse by the middle of 2022 when they finally get around to supposedly raising interest rates — if they actually do it.”

Meanwhile, during the taper, the Fed will still be doing quantitative easing. That, by definition, is creating even more inflation.

You can’t put out a fire by pouring less gasoline on it. Because any gasoline you pour on the fire is going to make it bigger. That’s all the Fed is claiming it’s going to do.”

To truly fight inflation, the Fed actually needs to tighten. It needs to shrink its balance sheet and shrink the money supply. It’s not talking about doing that.

On top of that, Biden needs the Fed to keep inflating and monetizing the deficits in order to pay for all of his massive spending plans.

If the Fed tapers to zero, there’s no way the private sector would finance all these deficits without the help of the Fed. I don’t know why no one has put two and two together — that what the Fed is promising is impossible.”

Tyler Durden
Sat, 11/27/2021 – 15:45












Author: Tyler Durden

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Economics

Global Fertilizer Shortage Threatens to Send Food Prices Even Higher

A global shortage of nitrogen fertilizer has pushed prices upwards to record-highs, threatening to raise already-elevated food prices even higher.
The…

A global shortage of nitrogen fertilizer has pushed prices upwards to record-highs, threatening to raise already-elevated food prices even higher.

According to Argus Media, nitrogen fertilizer prices have soared to the highest in nearly a decade, with prices already up 80% since the beginning of the year. Farmers apply the chemical ahead of the planting season to boost yields for a variety of crops, including corn, canola, and wheat; however, with the sharp upward trajectory in prices, some crop producers have decided to delay their nitrogen fertilizer purchases, which could result in a cascade of rush-buying come spring,

In that event, demand for the commodity would suddenly skyrocket, leaving some without the fertilizer altogether due to shortages. According the Guardian, which cited US Agricultural Retailers Association CEO Daren Coppock, there is currently still enough fertilizer supplies for an application before winter, but with prices accelerating fast, “there’s going to be a lot of people who wait and see.” And, in that event, “if everybody’s scrambling in the spring to get enough, somebody’s corn isn’t going to get covered,” which could ultimately lead to even higher bread and meat prices next year.

Global food prices hit the highest level in 10 years in October, marking an increase of more than 30% compared to the same period one year ago, according to data compiled by the United Nations Food and Agriculture Organization (FAO). If strong crop yields fail to materialize in 2022, food inflation will accelerate even further, which could lead to widespread famine across some parts of the world.


Information for this briefing was found via the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

The post Global Fertilizer Shortage Threatens to Send Food Prices Even Higher appeared first on the deep dive.


Author: Hermina Paull

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