➡ Rafi Farber, from The Endgame Investor, predicts a financial crisis that will affect all prices, including gold and silver. He notes that the money supply is growing at a rate of 3.33%, a high rate not seen since 2021, which may not be enough to sustain capital gains in stocks. He also mentions that reverse repos are down to about $200 billion and could zero out in the next two to three weeks. Lastly, he suggests that there might be a palladium short squeeze and that the platinum to silver ratio is at an all-time low, excluding 1980.
➡ The article discusses the current state of the silver, gold, and palladium markets. It notes that silver premiums are low but not negative, suggesting a potential financial crisis could cause them to spike. The article also mentions a possible short squeeze in the palladium market, with producers buying at low prices and speculators shorting. Lastly, it suggests that now might be a good time to buy platinum as it’s relatively cheap compared to silver.

The only question is, when does the final crunch finally start? It’s going to be soon. Don’t know exactly when, but it’s not far away. Well, hello there, my friends. Rafi here from The Endgame Investor with this week’s silver report for my own channel, which goes by my name, Rafi Farber. I should have needed something more original, but you know, I was just not thinking when I made the name. Don’t want to change it now. Change! You got change! 85, 95, one dollar! But anyway, we’re gonna have some big fun today. Silver is around 35.

Gold’s at $27.50. It looks like the endgame is very close. The real money metals are spiraling out of control. Hopefully they will be out of control very soon. We’ve got one final financial crisis ahead of us, which will crunch all prices, including gold and silver. Less so gold, more so silver. And after that, we should be on the path in a beeline to the endgame. That has been my thesis at The Endgame Investor since the 2020 financial crisis caused by, let us not speak of it ever. Now let us never speak of it again.

But the big news today, this week, is that reverse repos are down to about $200 billion. And I’ll show you the patterns that suggest that this could zero out in the next two to three weeks. I’ll show you why. Rate cuts have not slowed the pace of Federal Reserve losses. The money supply is actually climbing on a quarterly annualized basis by 3.33%. And this is a pretty high rate, a rate that we haven’t seen since 2021. But if you take into account the money supply since then, it has not changed on net since 2021, about three years now.

And so this growth rate is not really enough to sustain any capital gains in stocks from here, especially with stocks at or near all-time highs. Gold has hit finally the first weekly golden cross versus the S&P since 2001, excluding the 2020 crisis caused by, let’s not speak of it, premiums, physical premiums for silver are low, but they are not below zero as they were in 2010 and 2011. Premiums below zero suggest that there is a little bit of a bubble in silver. We are not seeing that now. This is more fundamental.

It has not hit the physical markets yet, but I believe it will, especially when the next crisis is finally triggered in the repo markets. And is there a palladium short squeeze? It certainly seems that there is, and I’ll show you the charts. And if you still want some platinum and you’ve got a lot of silver, the platinum to silver ratio is now below 30 and all-time low, excluding only 1980. And with that, let’s continue with this week’s silver report on my own channel. For our first slide today, this is a new one for me.

I haven’t made this. I haven’t configured this before, but I just configured it now. It is the repos to reserves plus reverse repos ratio. So repos to parentheses reserves plus reverse repos ratio. I want to see how much overnight loans are being made relative to the total supply of dollars available, which includes not just bankers, but add reverse repos to that. So here on September 18, 2019, that was their apocalypse, 83.13%. Usually I just show this ratio as a repos to reserves, repos to bankers ratio. Now I’m adding reverse repos into it to show the total liquidity.

I think this is a little bit more accurate as to where we are on the timing for this next crisis. So we have here September 18, 2019, 83.13%. And we are now at 64% as of October 23, 2024. Once we hit 83%, we’re going to have a repo crisis. Somewhere around there, not exactly. It could be a little high, a little bit lower than that. Something around there. How much longer do we have? Hard to tell, but it’s not years. It’s weeks to months. We’ll see how far we get in the next few weeks as reverse repos finally drop out.

But here is why I think that reverse repos are finally going to go to zero by November. It’s this chart. What I want to show you here is, look, we’re at October 25th right now. So 202.798 billion dollars in reverse repos left. And what you have here is you can see typically from mid month until the end of the month, we’ve been having a rise in reverse repos in September. It was pretty strong September 16th at 239 billion to the end of the month, September 30th at 465 billion. So that was about a doubling, almost a doubling of the reverse repos in the second half of September.

We had the same thing over here, starting from around August 15th, mid month until the end of the month, August 30th, we also saw a rise in reverse repos. We had the same thing over here from mid June to the end of June, a big rise and then a plummet. We had one month where we did not have a rise in reverse repos in the second half of the month. And that was in July. So you see here, we had 413 over here and then we had still 413. So it was pretty, it was very stable from, it was 100% stable from July 15th to July 30th, 413 billion.

And then we had the plummet, right, to a low of 300 or 286 billion by August 7th. So that is 413 billion to 286 billion. That’s about 130 billion or something like that, 127 billion. If I’m not mistaken, I’m doing the math in my head. So now we have this situation like we had in July where we do not have a spiking reverse repos into the second half of the month. So what I’m saying is that we could be in a situation where we’re about 130 billion dollars below where we are now, which is 200 billion.

That leaves about 70 billion left because in July it dropped 127,30 billion from where it was around the mid month. It could be 100 billion, 70 billion, something like that. It’s going to be very low. And then we should zero out. And once we do that, bank reserves are going to start to fall very fast and we’re going to have a repo crisis, just like we had in September 2019. And we are going to go back to the slides. This I wanted to show you that the rate cut, 50 basis point rate cut has not slowed federal reserve losses.

You would expect that they might, because if they cut rates, then treasuries will rise in value. They haven’t been rising in value. That’s been pretty strange. This might think this is the first time that a 50 basis point cut has not risen, has not raised the value of long-term treasuries. They’ve actually fallen as long-term rates continue to rise. And since that is what the Fed holds, their losses continue. You can see their weekly losses are about between one and two billion dollars a week. And it’s been pretty consistent throughout the year since around February, 2024.

It’s been that much losses per week and it continues. The money supply is climbing at a 3.3 percent annual rate. I just calculated this a few hours ago, where at 3.3 percent, you can see this is the highest rate of monetary inflation, meaning expansion in the money supply since around June, 2022. And you might think that this is a signal of, let’s say, more inflationary stock prices, asset prices, but I don’t think it will be, because if you take it into context, you can see here that the money supply is the absolute, not the rate of growth.

This is the absolute money supply. It’s still the same as it was in October 2021. October 21, we had 21 trillion, 21.15 trillion dollars in the banking system. Today are the last reading, not today, but this is the last available reading. We have 21.15 trillion dollars, almost the same. So we have not had any expansion on that of the money supply for three years. So it’s going to take more than a 3.3 percent annual growth rate to inflate asset prices from here. I don’t think they have anywhere else to go but down.

That is until the next printing round, but that’s another story. We have the first weekly golden cross in the gold S&P ratio since 2001, excluding the 2020 crisis over here, which brought gold S&P up wildly because gold went down not very much and stocks crashed. So that I think is artificial because of what was done to the economy. I’m not going to count that. So the last time you had a golden cross of the blue line above the red line, we had a 10 year bull market up to the 2011 highs. And this is different now because you can see here that gold and stocks have been pretty much in pace since around 2018, but gold has not outperformed stocks since then.

But if it does, and people realize that their portfolios are losing relative to gold, they’re going to pile into gold and into silver and it’s going to supercharge the rally that we’ve already been in. We’re not quite there in the silver to S&P 500 ratio, but we’re getting close. You can see here 0.0052 versus 0.0058 where we are now. You can see here I zoomed in on the gold to S&P 500 ratio. You can see that they are exactly the same 0.4411 50 week moving average 0.4411 200 week moving average. And yes, this is magic.

Everything in finance is magic. And no, I don’t mean that literally. Premiums are low in silver, but they’re not below zero. I marked the zero line. We could be worried possibly that premiums are so low, but they’re around what they were before silver squeeze started in 2021. But you can see here that they were below zero in 2010 and 2011, a lot of that time. So if the physical price is below the spot price in silver, the futures price, that means we’re in a little bit of a silver bubble, but we’re not seeing that here.

Premiums remain low, but they’re at 5.5%. It just means that the spot market is ahead of the physical market. And the physical market will catch up, I believe, on a financial crisis, which will happen in the repo markets. You’ll see that premiums will spike just like they did here in 2020. And I think that will go a lot higher than they did back then. Is there a palladium short squeeze? It looks like there might be one because if we look here, we see the palladium price going from about $800, a little bit higher, $825, I think the low is over there in August.

And you can see that open interest has been falling as the price has been rising. This is the definition of a short squeeze as open interest gets lower, meaning contracts are being closed out, shorts are being covered, and the price is going higher. How serious is the short squeeze? I don’t know. I guess we’ll see. It doesn’t look so serious yet, but you can see the long-term context of where we are in open interest is still pretty elevated relative to where it was from 2020 to 2023. So there is quite a bit of way to go here, print open interest to continue to fall.

And if we look at the COTs, we can see that they are still very abnormal with the blues on top of the reds, meaning the commercials are along, the commercial palladium producers, the ones that make palladium, are actually long the spot price. Why would they be long the spot price? Why would they be long the futures? Because they think the price is still low, so they can stock up on physical palladium at lower prices than they would be able to produce it, and that’s why they are long. And the speculators are actually short.

Why are they short? Because that’s what the trend has been since 2021 or so, and they’re trend followers. Where the speculators could be squeezed out of the market and forced to buy back, that might be what we are experiencing now in palladium, so just watch it. What do you want platinum? You got silver? Now would be a good time. This ratio keeps going lower and lower. Platinum keeps going lower and lower relative to silver. You can see here the inverted ratio just because it’s graphically easier to see. It’s about 30 to 1 now, if this is flipped.

Right now it’s at 0.033, so it takes about 30 ounces of silver to buy 1 ounce of platinum. It has never been this cheap relative to silver, except in late 1979 and early 1980, this is the only exception. So I don’t think you’re going to get platinum much cheaper than this. If you have a little bit more silver than you want and you want some platinum, now would be a good time. And so in conclusion, my friends, we are weeks to months away from something in the repo markets going wrong. The reverse repos are draining out, and once they do, bankers will fall quickly, and we will enter some kind of banking crisis, which will be followed by the final printing round, which will lead us into a sprint to the endgame.

That is my thesis, and I’m sticking to it. The only question is, when does the final crunch finally start? It’s going to be soon. Don’t know exactly when, but it’s not far away. This is Rafi of the Endgame Investor. Please sign up to subscribe to the Endgame Investor. Link at the description below and become my patron on Patreon for as little as $3 a month, where you can learn about Austrian economics in the Bible. And yes, it is there. It is subtle, but Austrian school business cycle theory is subtly mentioned in the Bible, hinted at, and find out where by signing up to the Patreon below.

This is Rafi of the Endgame Investor, with this week’s silver report for my own channel, and I’ll see you guys next week. [tr:trw].

See more of Rafi Farber on their Public Channel and the MPN Rafi Farber channel.