CoT report which showed big increase in shorts by the swap dealers or banks, reduction in longs. You see the opposite of that in the managed money. Big reduction of shorts. Well, hello there, my friends. Chris Marquis here with you for Arcadia Economics. And it is time for a regular Tuesday conversation with Andy Sheckman of Miles Franklin. And I am particularly interested to dig into this one because we’ve seen quite a rally that as we record here on Monday afternoon and gold up $2.

40 that makes eight straight trading days in a row of gains in the gold market. Silver up as well, not quite as much, but at 24 70 as we are recording this and all of which made it a bit interesting to see the latest CoT report that came out on Friday. As we wonder is the rally. I see many people are calling for the to the moon rally coming up now.

CoT report might suggest otherwise and certainly even if we’re in the midst of a bigger rally, pullbacks to be expected along the way, although fortunately to dig into all those things and give us a look at what’s happening on the retail level is Andy Sheckman of Miles Franklin. So Andy, great to have you here again today, as always. How are you today, my friend? I’m good, Chris. Thanks for having me, buddy.

Crazy times, that’s for sure. Yeah. Well, as we begin here, as I mentioned, gold at 21 eightyat on late Monday afternoon, silver at 24 63. I’ll start. Any general thoughts in particular about the rally? One of the things that stood out to me is that a little bit different than some of the past ones, there hasn’t been really a specific catalyst. It wasn’t like the Fed said, all right, we’re going to start lowering interest rates or indicating that they’re getting closer.

In fact, from the school of thought that the market moves more so when it’s becoming indicated that a rate cut or rate hike is going to happen rather than the actual cut or hike playing out, we still have people talking about the possibility of a rate hike. So it’s in that sense been a bit different where not as much of a specific catalyst, but curious to hear any of your thoughts on know, I think a lot of what’s going on, Chris.

I think, look, this system that we have is one that is based upon trust. And I think there is a strong probability that a lot of what’s happening to the bond market, to the debt market is a function of lack of trust. And I think the most important thing to keep in mind is that you need somebody to buy the bonds in order to continue to finance the debt.

And this is all what centered around interest rates. Right. And the question really is, who can we count on right now to buy our debt? And the countries that predominantly have been buying our debt, I believe have shifted into buying tangible assets, not just gold and silver, but copper, zinc, lead, you name it. Anything that you would need to build an infrastructure. I believe that’s what they are doing.

And when you look at the performance of gold over the last 25 years, it has outpaced that of the bond market tremendously. It’s outpaced the s and P. We’ve talked about this before. But what it does look, America’s ability to pay its debt, I think, is becoming a concern for the nations around the globe. And right now, those foreign nations own almost $8 trillion worth of our treasuries.

And I think they’re getting nervous and maybe they don’t trust us anymore. So when you say that this movement is different, well, it’s different to me in two ways. The biggest is that, at least in terms of gold, it’s blown through all resistance. There’s nothing above it. It’s never been this high. Where does it stop? And should it actually have been much higher to begin with? I don’t know.

And I do think it will drag silver with it. It will pull it with it. Typically, as people have talked about forever, gold goes first, silver goes further in terms of a percentage gain. But in my heart of hearts, I believe what we are seeing is a lack of trust that is manifesting itself in higher commodity prices, in particular gold right now, because I think these central banks around the world view gold as a safer bet, one that doesn’t have sanction and confiscation risk, doesn’t have default risk.

It doesn’t have any of these risks associated with the government who has proven that they have no problem in cutting people off or cutting countries off from the system if they don’t align ideologically with the way that we do. So I think that’s why it feels different this time. This is central bank buying to me and big central bank buying that you can only manipulate a market by pushing it in the direction that it is going.

And to try to hold this back, I think is as dumb as a mud wall. And you’ll end up seeing companies that will try and could very well likely end up in the dust heap, history’s dust heap, of those that tried and failed. So not a smart time to be shorting this market in this environment, in this world, I guess, is all I’m trying to say yes, and as you pointed out, we did have more central bank gold buying.

It was an addition of 39 tons in January, came out just in the past couple of days as well. And Andy, that makes sense, what you’re saying about the overall conditions and demand, although let us balance that against what we see here on the cot report, which showed big increase in shorts by the swap dealers or banks. Reduction in longs. You see the opposite of that in the managed money.

Big reduction of shorts, increase in longs. Almost 18,000 contracts would suggest that we might see something similar to what we’ve seen for the past couple of years, where as the price goes up, the banks increase shorts and then does often come back down. Similar pattern. If we take a look over at gold, where you can see banks increase 37 and a half thousand shorts, you do 1700 longs, and again the opposite in the managed money fund side.

So what does that tell you? And what would you be watching out for based on that? Here’s what it tells me. There was an interview done in Sputnik, I believe, with Sergey Glasniav, and I just want to read something to you, and I think this what people need to take from what we’re saying right there, you need to take a step back. Right? Because we’ve pissed off the world in a huge way.

We’ve pissed off a lot of these countries that are coalescing together. And the article was talking about a new international currency, right. And what he said were two things. But the second point I’m going to get to in a moment, I think really answers your question. The first is the idea of a currency, he said, and there’ll be two baskets. One basket is of national currencies of all countries involved in the process, like the SDR, special drawing rights, but with more clear and understandable criteria.

The second basket are commodities, if you have two baskets. And we create the new currency as an index of commodities and national currencies. And we have a mechanism for reserves according to the mathematical model, that will be very stable. Stable and convenient. Okay, so they want a new system, right? Everyone’s been talking about the new settlement currency that hopefully that they bring up to a vote or come back to the drawing.

They went to the drawing board. They’re going to come back and present at the October meeting. We’ve been consistent in talking about that. But the second part that he brought up in this interview, I have been saying it now for at least a year, and I think it’s bound to happen. Look, the LME the London Metals Exchange was purchased by the Chinese. And that’s primarily a platform of base metals.

Copper, zinc, lead, that kind of stuff. I think they do some precious metals, but mostly base metals. This is not just precious metals. They are siphoning and sucking everything that they can that isn’t nailed down. They are substituting dollar holdings for assets, for commodities. And just as a parable, you look at the wealthy people in this country, they own assets. And I think that’s what the Chinese and the BRICS nations are doing.

But the second part is the most important thing. And he says the brics have. The second part is price. Let’s just say that the second part is price. He says, for the moment, price is determined by western speculation. We produce these commodities, we consume them, but we do not have our own price mechanism which will balance supply and demand. During the COVID panic, the price fell for oil to nearly zero.

Actually it was negative 40 a barrel. It’s impossible to make any strategic planning for economic development if you do not control the prices of basic commodities. Price formation with this new currency should get rid of western exchanges of commodities. This game that we are playing to suppress the commodities, to make our system, our bond market and our currency system seem stronger than it is. Not only is allowing these countries, as weird just said, to accumulate and pick dry the shelves of all of the commodities, from base metals to precious metals, to soft commodities like corn and soybeans and all of this stuff and wheat that they’re stockpiling.

In fact, they just brought up the idea of a new bricks grain exchange for the exact same reason that they produce more grain on a per capita than the rest of the world. And why are they beholden to the Comex market that sets the price? What you are going to see, in my opinion, is the foolishness by the west, who continues to suppress the price of metals for their own greed and stupidity.

Maybe they’re being told to do it to support the bond market, to support the dollar, to support this stupid illusion that the dollar or the emperor is actually clothed when we know he’s not. But I think what is going to happen is they will use that against us, as I’ve been very consistent in saying. They’re using this suppression against us by bleeding dry the exchanges. But they are preparing, and the russian finance minister totally knows it.

They all know it. And that is that the western price setting mechanism, the western comex prices, are a bunch of crap. And they’re going to use it against us until no one is foolish enough, I e. The brain dead money managers to do this, to take the other side. And when there is no one offering metal or commodities at the western price any longer, you will see a shift, whether it be to Moscow, whether it be to the Shanghai gold exchange, or to Dubai, and it’s coming.

So this back and forth folly of rinse, wash and repeat, where the brain dead money managers continue to fall for the same sucker game where the commercials suck them into speculation, then smack the price down as the price rises, will end poorly until it does. Frustrating as hell. But when you got the russian finance minister openly saying, we see what they’re doing and we’re going to change that, it’s going to happen.

And I don’t know if it’s this rally or the next, but each time that they continue to suppress the price in what is a immoral fashion and one that is messing with Mother Nature, it’s only going to exacerbate the final outcome, Chris. And I mean that, brother. I truly do. Right now, we’re playing right into their hand. Let’s suppress the price. And so they can gobble up every ounce across the globe on any exchange that’s dumb enough to sell it.

And when that day ends, when no one’s going to sell it for that make believe price just like that, you’re going to see another system, another exchange, another country take over for what the Comex was exposed to being, and that is fraudulent. And I think, yeah, maybe we will see another rinse, wash and repeat, where this rally, which seems so strong and substantive, is actually smoke and know one that was fostered by the commercial bank.

So I guess we’ll have to see. But if I were a commercial bank or a board member, I’d say, what the hell are you guys doing? You are playing with really dangerous fire. And maybe they should go back and listen to your interview with Bart Chilton talking about the fate of bear Stearns when they did the same stupid thing. So anyways, I digress. I don’t know what tomorrow or next week will bring, but I can tell you we’re getting much, much closer to the Comax and the western price setting system.

I think being exchanged for one that is more realistic to the countries who appreciate, understand, produce and consume the commodities that we’re valuing, that they’re accumulating. Well, I hear you, and I’m smiling over here because gold’s up $130 in the last week or so, and sky is not falling. Even if we have a bit of a sell off again, I guess you can cherry pick the dates. Obviously we look back from the year 2000 when price was about $250.

So it continues going higher, even with sell offs in between there. I would caution people that certainly that is a possibility. I don’t know if we’re going to 3000 tomorrow might not be realistic to expect. But one other thing that I would like to highlight that has been quite interesting along with this rally, is that here we see the weekly transparent holdings CETFs and the Comex continue to see the metal come out of there even as the price rises.

In fact, there was also a note from the World Gold Council on I believe this was Wednesday or Thursday of last week, but outflows from physically back gold ETFs continued for the 9th consecutive month. Which is interesting to see the price going up while the metal is coming out of there. And perhaps, Jess, if you have any comments on that one before we come to a close, I mean, if you look at it at face value again, that supports my thesis, it’s the central banks buying.

They’re not buying ETFs in the United States. They’re buying the real thing and taking physical possession of it. But the question that I have, and maybe you can add some clarity on this, do those outflows simply mean people selling? Or is it the same thing that I’ve been saying has been happening for a few years now? Are the sophisticated traders, I. E. The commercial banks, backdooring the metal out of there through share redemption? That I don’t know.

And there’s never really a lot of clarity on these outflows. Does the outflow mean that it was delivered by a company redeeming shares, or a basket, as it’s called? Or is it just people selling and buying crypto? I don’t know. But I will tell you that when you see massive outflows out of these massive gold and silver trusts and the price continue to rise, it’s very bullish. When you see gold rising in the face of positive real interest rates, it’s very bullish.

And I just think that just maybe that this strength that we see in gold is a lot more powerful than the cartel’s ability to suppress it. And the dangers associated with messing with something that has a global demand. It’s one thing when no one is accumulating it, it’s easy to suppress the price with levered futures contracts. But when you knock down the price, especially if it’s naked and you have half of the world standing for delivery saying thank you very much, it’s very dangerous.

So it’s just another very bullish factor. But maybe, do, you know, add some color. Could a lot of that or could some of that be people taking or companies or institutions or commercial banks taking possession? I’m not sure. Do you know? Well, I guess I couldn’t say entirely for sure, but certainly that would seem to be a part of it. In fact, the bottom of the article here mentions the two rounds.

Recent rounds of sustained outflows had little negative impact, was supported by resilient consumer demand and blistering central bank purchases. We’ve seen the same thing on the silver side, and I’ve wondered if some of the silver coming out of there is meeting demands in other places where again, we have silver institutes saying there’s a deficit. I know there’s. On a separate side note here, there’s been debate over whether that’s a deficit or a surplus, with some, not counting investor bullion demand in those projections.

So if you take that out, then yes, you could have a surplus. But given that people are still buying that and that silver has to come from somewhere. Yeah, on both sides, I would imagine that some of the gold and silver is being used to fill that. And interesting how over the past year and a quarter now, we’ve seen actually Comex registered silver is back up to about 50 millionoz.

So has been going back up. I would not by any means say that we’re close to running out of metal tomorrow, and certainly we’ll just keep an eye on the inventory levels. But yes, that would make sense of where some of that gold is going. And when you talk about heck, you know, the largest silver producer in the world, I think it’s Mexico. They have. According to the South Africa ambassador to Russia, whoever the heck this guy is, he just confirmed that Mexico is amongst the 35 countries that have formally applied to BRICS or have expressed interest to join the BrICS alliance, I guess I should say reported in the Eurasia network.

So you got to dig when you’re trying to find information on the BRICS and you have to start reading websites that are from all around the world, take it at face value. I can’t confirm nor deny, but there are rumors that Mexico wants to join BRICS as well. And so when you talk about the countries that are aligning with the BRICS, they’re all resource rich. And whether it be gold or oil or silver or rare earths or have strategic shipping lines and trade routes, they’re making a very formidable force.

And I think that you could argue that the countries that are expressing interest in joining BRICS I believe would be the ones that would be very well served in accumulating commodities. Because if indeed the russian finance minister is correct, and they will be issuing a common settlement currency that will be pegged not only by the national currencies, the local currencies of each member, but also by a basket of commodities that each would have to pledge, well, they better start buying those commodities, and I would assume that that is primarily the tier one asset of gold.

So to me, it’s just shoddy reporting by the west, not telling us exactly what’s happening, just giving us half truth. If I had a gun to my head, it would be that the central banks are the ones holding this market up, that the Comex is doing all they can to keep it from flying out the window. And I don’t know, I think 2024 is going to be some very interesting times.

And look, today’s March 11. It’s my dad’s birthday. Happy birthday, dad, if you’re watching this. And it’s also the end of the bank term funding program, and the clock starts to tick today. The majority of those loans were made a year ago this month. Now, there’s a lot of them that were made up until yesterday or up until today. So it’s not like the whole system is going to fall apart tomorrow.

But I caution people to start to pay attention to this, because in March and April, Miles Franklin added 14,000 clients in 45 days. When silicon and signature were bailed out illegally, I might add. Is that going to happen again? Bail in written into Dodd Frank law. We’ve talked about this ad nauseam. What happens when the people in this country wake up to bail in legislation that they have no idea exists.

And that’s when I think you see things start to really change in the retail. You know, what’s happening with the global price, to me, is a symptom or a function of the most well informed traders in the world, that being the central banks who know the playbook, they’re holding the price up by not buying bonds, in fact, selling those bonds and buying gold as a substitute to that system.

So I’m not very bearish whatsoever, no matter what the cot looks like. Yeah, they have the ability to knock it down, but by doing that, we just play right back into the hands of the countries that are accumulating it. And that’s why they’re not bitching. They’re not going to bitch when we’re making it easier for them to accumulate these items at subsidized prices. And once there’s none left to be given at those prices.

They will no longer use that price setting system. It will be, I believe, replaced with one from another country that wants to legitimize the real value of these assets that these countries have spent immeasurable time accumulating, stockpiling and producing, and value them appropriately and perhaps even tying it to a new system. So look at it for what it is. It’s an opportunity. Don’t be bummed out and pissed off.

Look at it the way they do that. Boy, these people are stupid as hell for doing this. Let’s just get some more. And I think that’s really, to me, honest to God, it explains a lot. So I guess we’ll see if I’m right or wrong, but only time will tell. Well, that sure is the case. And Andy, perhaps in wrapping up anything on special this week for people who are looking to add gold and silver.

Yes. So I believe if I’m not wrong on this, I just want to make sure looks like what we have right in terms of silver. We have pre 65 constitutional silver. 90% at 1. 99 over spot. If you can see that there’s our silver side of things. And for gold, we got the pre 33 $20 liberties at $65 over spot. Love those. Absolutely love those. And so here again, we’re going with some of the older stuff.

Both of those not eligible for an IRA, but both would be amongst my favorite ways to own gold and silver. Pre 65 silver gives you great utility and functionality. And the pre 33 gold, which to me, if I had my druthers, it’s all I would own. But for the last just few months, premiums have been out of sight for the better part of half a decade, seven, maybe even six, seven years where I haven’t recommended them to people.

So everything is a little bit weird right now with premiums. In fact, I’ll say it one more time, it will go down as one of the biggest mysteries of my career. Why premiums are where they are right now, as low as I’ve ever seen them in 30 plus years of business. At the same time, the coffers are being bled dry. And this is how good they are at suppressing rhetoric, suppressing logic, and suppressing price, which has an effect on people.

And I don’t blame people for capitulating along the way, because if you’re not spending the time to invest in the understanding of the way that this market has worked, like we talked about a few minutes ago, the rinse, wash and repeat, it can be overly frustrating if you see it for what it is, it can be the opportunity of a generation, and I do believe it will be ultimately one that has no counterparty risk either, once it’s in your own possession.

So, Chris, I love being here with you, brother. I look forward to picking up with you soon. I am going to be doing some traveling, but I’ll find a way to get with you. And again, thanks for having me. And it’s going to be an interesting year. I know we’ll have a lot of very cool things to talk about over the next several months, but can’t think of anyone I’d rather ride shotgun with than you.

And I mean that, brother. So thanks. Well, I appreciate that. Thanks for being here as always and safe travels, and we’ll look forward to catching up with you again next week. Look forward to it. Well, thank you, Andy, for today’s report. Hope you found that helpful at home and at least giving you an idea of some of the things to think about that could be coming in our near future.

Andy SchectmanAnd again, just because there are sell offs doesn’t mean that the long term case for gold and silver not still in place, but just sometArcadia Economicshing to be aware of and watch out for. And real quick, before we wrap up, would like to thank first Majestic Silver, who brought us today’s episode with Andy Sheckman. And first majestic had their quarterly and year end results out a couple of weeks ago.

And one of the things that they mentioned in there, which is really going to be a driver in the year going forward, is that the costs at their mines on the overall portfolio have been coming down. Now, you can see here that in the full year 2023, costs were higher. We see the cash cost per ounce at 1449 versus 1439 in 2022 and the all in sustaining cost at 2016 versus 1974 in 2022.

Although worth keeping in mind is that in terms of what they were running in the fourth quarter, those came down to 13, one for the silver equivalent cash cost and also down to 1850 in terms of all in sustaining in the fourth quarter. And obviously, as they have put the cost of shutting Jared canyon down behind them, hopefully that will continue to have an impact in the year going forward.

So you can find out more at first majestic. com. And with that said, going to wrap up for today, but thanks for being here and we will see you again sooner. .

See more of Arcadia Economics on their Public Channel and the MPN Arcadia Economics channel.