Andy Schectman: Russia Responds With $440 Million Sanction On JP Morgan Assets | Arcadia Economics

➡ Arcadia Economics talks about how a Russian court has ordered the seizure of nearly $440 million from JP Morgan. This news is part of a larger discussion about the physical market for silver and gold, where prices have been fluctuating. Some believe that silver is undervalued and a good investment due to its increasing uses and decreasing availability. Meanwhile, gold is being bought up in large quantities whenever its price drops, particularly in China, which is becoming a major player in the gold trading market.

➡ The article discusses the ongoing economic and political tensions between the U.S., Russia, and other countries. It highlights how the U.S. has been threatening sanctions against Chinese banks involved in Russian war production transactions, leading to an acceleration in the de-dollarization movement. The article also mentions that several countries have withdrawn their gold reserves from the U.S., indicating a lack of trust. Lastly, it points out the hypocrisy of the U.S. in sanctioning other countries for actions it itself is guilty of, which is causing global frustration and pushing countries to
seek alternatives to the dollar.

Russian court orders seizure of nearly 440 million in JP Morgan funds. Well, hello there, my friends. Chris Marcus here with you for Arcady Economics. And once again, it is that time of the week for our physical market silver report, where we dig into things that are happening on the retail level and in terms of the actual order flow and premiums. Although also we had quite an interesting news story that I’ve been excited to talk with you about, Andy, because this one, I believe is right up your wheelhouse.

And I think we’ll be somewhat near and dear to every precious metals investor’s heart. Some ways not the best news as we will dig into, although interesting, who was bearing the brunt of that. So lots of sanctions going around, which we will dig into and more, although, before we get started, how are you doing today, sir? I’m doing good, brother. I appreciate it. Hope you are as well.

I have a fairly good idea what you want to talk about. And, I mean, after all, when you say lots of sanctions going around, that that’s pretty much Janet Yellen’s motto is go around the world and throw out mandates. And, well, if you don’t follow in line, sanction, sanction, sanction, of course. And yeah, it’s. Sometimes you wonder, just is this too stupid to be stupid? So, yeah, let’s dig in, brother.

Good to be here. Well, as, as we will discuss sometimes those sanctions aren’t received too well and apparently counter sanctions can be issued. But before we do that, let’s take a real quick look at the pricing. We’re recording Monday afternoon about 06:00 p. m. . Eastern. So Monday’s session done, although here we see silver sitting at 27. 44, which we’ve seen it stabilize a bit after that big drop that started off last week.

Similar picture in gold where, you know, again, we had the rally for the better part of two months, then a little bit of a sell off last week and now stabilized at the 23 $50 level. Curious if you have any thoughts on how things have settled in a bit. And before we dig into the sanctions and perhaps anything you could pass along from the conversations you’ve had with your customers as they’re looking at this change in the market and where things stand right now.

Yeah, I mean, I think that it’s one of these deals where it’s a big battle being fought. Half of the world is accumulating. The other half of the world doesn’t want to let the price get out of hand. And because of what it really says, I think that the price of silver at 27, 40 or 50 or whatever it is, makes it as undervalued as any asset on the planet, period.

And I really do mean that. I think that it’s as good of a place to look at in terms of an investment that offers unique upside potential, very, very minimal downside in an asset that is expanding tremendously in its uses and its applications, while at the same time diminishing in terms of its geologic footprint and in terms of above ground stockpiles. And you add into it the rumor that because gold for immediate delivery in China is becoming harder to get, that they have moved and prodded, they being the government and telling their people who have an affinity for buying gold on a habitual basis, to look to silver.

The investment demand for silver in places like China and India, who continues to blow off the doors, their numbers are up like 280% month over month. They bought almost a half a billion ounces in the last two and a half years. Its as undervalued of an asset as you will ever find. But when we also talk about gold, I want to bring something up kind of interesting that is lost in the pullback, in the smashdown.

And when the market was smashed in gold last week, or the Thursday before that, a couple billion dollars worth of metal dumped onto the market like that in a matter of just handful of minutes or less. Well, that’s not the way trades are done. You don’t maximize anything by dumping it into the thinnest part of the day. When New York is closing and as it’s transitioning to Asia, you’re guaranteed the worst settlement, but you are guaranteed the greatest effect.

It’s a drive by shooting, but when you look at the amount of Comex approved gold bars in Hong Kong that are being delivered to brinks Hong Kong. Brinks has a deal with the Comex, and it’s through the OTC market, where over the counter, where the buyer and the seller can agree, negotiate where to take delivery of the product. And so what we’ve seen a tremendous amount of in one day.

In one day last week, 475 gold kilo bars. Excuse me. Pardon me. That’s what was received into the depository. 7560 kilo bars were shipped out to brinks, Hong Kong. That’s $571 million worth of gold, or 243,000 plus ounces. But the interesting thing about it is that the majority of all the physical movement through the Hong Kong vault is caused by EFP transactions, exchange for physical transactions. And basically what happens is that they knock down the paper price, they buy the real thing, and stand for delivery in Hong Kong.

These bars are then picked up and moved directly to the Shanghai Gold exchange. So what we are seeing again is the awareness of the Chinese and the big players across the globe, that when the price gets knocked down, they’ll stand for delivery. They will immediately stand for delivery. They will buy contracts and stand for delivery and have them move in kilo bars to brinks, Hong Kong, which is then picked up by a truck and delivered right to the Shanghai Gold exchange.

The same thing is true with silver. And these exchange for physicals are much more difficult to see with transparency. So the bottom line to me is that all of these movements, these knockdowns, the suppression, the continuing suppression in the gold market, or the volatility is being met with, thank you very much, will stand for delivery. And thats what were seeing, whether it be tremendous silver deliveries in India or massive gold deliveries in China, or the rumor that now China is going to be accumulating copious amounts of silver.

Theyre doing it in ways, in every way. Whether it be exchanged for physical, whether it be share redemptions out of the ETF’s, whether it be direct deliveries out of Comex or the LBMA, theyre buying everything they can that is not nailed down. This is a much bigger game. And when you look at the combined average daily volume now between the Shanghai Gold exchange, which is largely cash and carry, and the Shanghai futures exchange, effectively, you now have Shanghai as the second largest gold trading market on the planet.

They have taken over the Comex in terms of trading volume. And I do believe there will come a time when these bullshit drive by shootings that we see that there isn’t a trader on the planet that would do things that way that wasn’t trying to create a tremendous amount of effect. If they were trying to maximize the transaction, that would have been bled out over hours or days or even longer.

Not dumping a few billion dollars over the course of two minutes to drive down the price at the end of the trading day, that is the dumbest thing you could ever do. That trader would be shot and then fired, probably in that order, unless they were doing it for a reason. And that is being met not only with will stand for delivery, thank you very much. But also in terms of legitimacy and trading volume in Shanghai, we can see that it effectively has taken over in terms of volume.

The Comex now, does that last? Does that become greater? Maybe it does. In an environment where right now Shanghai is pricing silver $3 an ounce higher than the Comex is, maybe the world understands and I’ve read that to you, the finance ministers of Russia talking about the new BrIcs currency, saying that for the moment, the prices are determined in the west, even though we produce and consume these commodities, the west prices.

But that will change. The new system will change that. Or the head of the Shanghai gold exchange says, when we finally have the right to speak in the international gold market, the true price of gold will be revealed. And that stands for silver, too. But so these ups and downs, they don’t mean anything. And the technical analysis, sure, there are still traders and algorithms that follow that, but the bigger issue is that the countries that are accumulating it, they’re using it to their advantage, and they are emptying the shelves.

And so when you see a pullback, either you can chase the pullback and add to your position, or you can think that maybe the trend is over and it’s going to head lower, because we’ve all been conditioned into believing that. It just feels to me that this time, that’s not the case. This time, each pullback is met with demand and met with a rising price or a stabilizing price.

In years past, when they would hit it, they would hit it hard and it would fall, not just a little bit, but a lot and for a long period of time, and they would then step on it again. So you didnt have any aspirations of it coming back up until they decided to let it rise up and let the speculators back in and get a little hope. But it just seems a little bit different this time.

And I know thats a dangerous thing to say, but that is how it feels to me, Chris, and I think the rest of the world, these countries in particular, that are using this oppression against us, well, they’ll continue to do that until there’s no one left to deliver at the make believe prices of the west. Well, I hear you, and certainly it’s been stunning watching some of that.

And one thing that you mentioned in there a couple of times that I will point out, just in case people haven’t seen this, we did last week get the March India silver imports, which you can see we’re still a rather elevated number, about 800 tons, big drop off, as might have been expected from that record setting number in February. But as you can see, still well above what we saw in 2023.

So strong start to the year in terms of India. And of course, in there, you also mentioned a few other things that are happening politically, which is what I really wanted to dig into today. I think by now, people have seen that the US has been threatening to sanction chinese banks, basically, if they’ve been involved in any war production transactions in Russia, now they’re at risk of being sanctioned.

Obviously, you and I and many other people in gold and silver have talked about the impact that we’ve seen ever since Russia first had its assets frozen, then back in March of 2022 was kicked out of swift. And we’ve seen the de dollarization movement accelerate since then. Also likely not a coincidence that really around that time is when we began seeing those big inflows of central banks purchasing gold, which have gone on to set records, set a record in 2022.

Was very close to that in 2023. And then as this was happening. So this is April 8, about three weeks ago. Saw this one last week. Russia has vowed a mere response to the confiscation of its reserves, which could cost western countries 288 billion in assets. Which I’m not sure what people’s exact reactions were when seeing this. Certainly maybe just thinking they’re saying that. Although the news came out that more than just saying that, because last week here we have russian court orders seizure of nearly 440 million in JP Morgan funds.

I’m sure the irony that JP Morgan would be the target on this one, not lost on precious metals investors. But that aside, I mean, this is a bit of a dangerous precedent where a lot of talk about the US taking the frozen assets here is the House of Representatives passed a bill that could unlock that. And you see Russia, go figure, they’re not going to be happy and now actually responding back with sanctions.

So I think this is a next step in a chain that you’ve talked about plenty over the past couple of years. But love to hear your thoughts now that we’ve seen this next step unfold. Yeah, I mean, how stupid can you be? You know, it’s okay for us to give 200 billion to the Ukraine without any congressional oversight, mind you, but if they decide to give money to their ally, the charter member of BRICS, any aid that would ever benefit the russian war machine, the war machine like ours isn’t, then not only will their companies be sanctioned and their banks, but Beijing itself, you know, you can’t do this.

You can’t go around the world when they view us as being hypocritical first and foremost, and as the world reserve currency, you’re supposed to remain neutral. And now you’re beginning to see it spread even further. Quietly. I think it was Representative Mooney that asked the Fed, tell us all the countries that have been pulling gold out of the New York Fed, and for whatever reason, even under the Freedom of Information act, they haven’t provided it.

I did just read an article where Nigeria, South Africa, Ghana, Senegal, Cameroon, Algeria, Egypt and Saudi Arabia have all withdrawn their gold reserves from the United States. And when you talk Saudi Arabia, well, that should resonate with people. What do you think this means? They understand that, after all, gold has no counterparty risk. What are we leaving it in New York for when this is the country that has proven that if you do not line up their way, if you do not align ideologically, well, not only will you get your funds sanctioned, but in the case of Russia, now confiscated and used to give to the foe of the country they are fighting, the country that we are aiding, the country that we are providing billions of dollars in military aid to, and providing all sorts of technical assistance and weaponry.

But that’s okay, but you can’t do it. Well, that’s pissed off a good portion of the world. There is no question about it. You’re now beginning to see Pakistan, who has formally applied to BRICS. Now they’re being threatened with sanctions if they decide to follow through and build the pipeline with Iran between the two countries for oil. And all of these things that are happening, the world is growing very tired of it.

And this is the rallying cry, if you will, that is bringing everybody together, no question about it. And it isn’t ending. And the worst part about it is the way that it comes across as being completely hypocritical, that many of the things that we are doing arguably are no worse than any of the things that we’re sanctioning other countries for. Maybe they are actually worse, and that’s debatable.

But the point of it is it shouldn’t be for us to decide. We should not be the judge and the jury and the hangman. I think we’ll very quickly accelerate the ultimate endgame of de dollarization as these countries realize that, you know what? Not only are they broke and insolvent, and in five and a half years, all of their discretional income will have to be borrowed, which. Or discretional spending, which includes military.

They’re a country that’s completely and totally broken and is going around borrowing money they don’t have to lend to other countries that they think is okay to lend to. But telling everyone else who they can and can’t lend to. I mean, even Janet Yellen said for China to export their way out of their financial problems is just unacceptable to the global economy with a weak yen. I mean, all of these things that we want to go around our leadership and impose are going to have consequences.

And the question is, are they intended or unintended? That that’s debatable. Is this too stupid to be stupid? Is it planned? Or do we just have incompetence? But the worst possible thing you can do from a country that the world views as being hypocritical is to sanction in a holier than thou manner. Yeah. It’s just, you can’t make it up. Yeah. And another thing that came out that I thought was rather interesting.

Obviously, this is happening with Biden in the White House, although we see on Bloomberg, Trump advisors discuss penalties for nations that move away from the dollar. So whether Trump is the president or Biden is the president, certainly indicating that we’re not on the verge of some de escalation. Baird mentions discussions include penalties for allies or adversaries who seek active ways to engage in bilateral trade in currencies other than the dollar, with options including exports controls, currency manipulation, charges and tariffs.

And I’m sitting there reading this and thinking, gee, is that going to change the trend we’ve seen or accelerate it? And in a world where we see geopolitical dension already, I don’t know, is this the highest we’ve seen it in, in our lifetimes, at least since the late eighties, nineties and beyond? Just seems to me that a lot of the reasons why countries are turning to gold now, it’s like more pressure being applied to continue to give them that incentive.

100%. I mean, it is 100%. And then you look at it and you say to yourself, this is a country where if we were to spend $100 every second of every single day, it would take almost 2000 years to equal the 6. 2 trillion the government has spent in just the last twelve months. And that’s all been borrowed. We’re accumulating a trillion dollars of debt every hundred days or less.

That’s like $100,000 a second. And, you know, you got a corrupt political system in charge, you have manipulation of the news, and, you know, if our statistics don’t look good, like unemployment or inflation, just change them. We’ll just adjust the metrics. We’re a country that in many respects has lost its bearing, and this is not lost on the rest of the world. We’ve talked at length about all the other things that is happening here in this country.

It’s not lost on the rest of the world. And so, yeah, I think by sanctioning, you are only incentivizing you are creating a rallying cry. You are telling all of these countries, this is your chance to find safety in numbers. And you would think that they would understand that. Which is why I feel that this is almost too stupid to be stupid, that it just seems like it’s.

It’s happening, it’s real. And as my buddy Chris Iron says, you know, they’re here. Here they are trying to tax unrealized gains right on. People who are making big, big bucks, like over 100 million. Well, these are the people that create all the jobs. These are the people that can pick up and say, screw off. I left Minnesota because it lost its mind. Right? That was a big deal for me.

Come to Florida. These are the people that will pick up shop and leave the United States. And before they do that, they will sell everything they have in Nvidia and in bitcoin and in all of these assets that have unrealized gains to float. An idea of taxing unrealized gains is about as un american as you could ever get. It’s as uncapitalist as you could ever get. And it will destroy the markets.

And more than anything, it will make these people leave. And then when these people leave and pull with it all of the business that they were creating, the industry that they were creating, who’s going to fill that vacuum? And it’s just like the commercial real estate that we see. Listen to some of these numbers on commercial real estate real quick. I know that’s not what you asked me, but it’s all part of a bigger.

All part of a bigger picture. Let me just show you these numbers there. They’re absolutely scary as hell. There were 625 commercial real estate foreclosures in March, up 117% from the year before. I’m just going to give you three of them to give you an idea. And this is the same thing when you talk about the sanctions and the ramifications of people leaving the system. It’s the same thing that’s happening in the cities.

The former one at and t center, which 44 stories, the third largest building in St. Louis, sold for 205 million in 2006. Just sold for $3. 6 million. It sold for $205 million in 2006. Holiday Inn Express in Washington, DC. Debt owed to the lender. The lender was the only bidder for the foreclosure. The lender, um, it bid 18. 5 million for it and won it. It was originally sold for 83.

5 million just a few years ago. And the last one, Blackstone sells NYC office building at a $420 million haircut, $185 million. They bought it for, they Blackstone paid 600 or sold it for, paid 605 million plus millions in renovations in 2014. It’s all the same thing. You push things too far. And the consequences in this case, what happens to the cities and the lenders when all the commercial real estate goes belly up? But what happens when you chase everyone out because of your sanctions? They move away from the dollar.

Big problems. You chase out the people because of unrealized capital gains and raising capital gains tax to 44. 5%. You’re going to blow things up and chase people away. The consequences of our politicians, whether it be by weaponizing the dollar or destroying the dollar or just allowing our inner cities to be destroyed, they’re all the same problem in a different shirt. And that is the consequences. Our people will leave.

And that’s what’s going to happen with the big money. That’s what’s going to happen with the people that have been accepting dollars for all of these years. They’re not going to anymore. And that’s why you see them all dumping treasuries and buying gold because it has no counterparty risk. And that’s what’s putting the floor under the price of gold. As the public in this country has been selling into the rally and selling their ETF’s going down at a 45 degree angle.

Even though Bill Holter thinks a lot of that is share redemptions. That’s why the money’s leaving the ETF’s. I think a lot of it is that there’s just not enough belief by the public that that gold and silver are the place to be. Instead, Nvidia and bitcoin are much sexier. You trigger a law like this where unrealized gains are taxed, it’s game over. Just like it is when you start to weaponize the dollar across the globe by.

By a country that is viewed as being incredibly hypocritical and rightfully so, they’re gonna leave and there are consequences to pay. So whether it’s in the inner cities or the dollar around the globe, the same thing is true. You mess with things the way that we are, and there will be consequences for sure. Well, then I guess JP Morgan getting one of those consequences, and we shall see what’s next.

But again, certainly a continuation of a lot of the things that we’ve seen building. It’s not shocking. Yet at the same time, when you do see the blowback from that little, little stunning in its own right. So anyway, Andy, before we wrap up anything on special this week for people who do want to keep their money out of the dollar system and avoid that counterparty risk in case who knows who’s next to be sanctioned.

So what do you have for us this week? That’s true, man. I mean, it’s funny. And you’re good at injecting a little humor into the equation. I should get better at that. This shit’s so crazy you gotta laugh at it. I guess. But you’re right. We have 1oz 2023 silver krugerrands in original mint boxes for $3. 10 over spot and 1oz gold krugerrands. Excuse me, kangaroos. And $59 over spot for the 1oz gold kangaroo.

So still good values. The only thing that I really see starting to rise are the silver eagles. And I think that’s a good precursor. Or maybe the US mint is just not good at keeping up with demand. Or maybe like Jack Sermon told Bix weirdness three part interview that he was told only to produce as many last year as would keep the public from freaking out. And I couldn’t believe he said it, but he did.

I don’t know what it is, but here again, the silver eagle is starting to rise. Premiums now around the nation are between six and $8 over spot. Thats roughly two to three times what they were my whole career with the exception of the last few years. So if thats a leading indicator, we would expect to see metals start to rise. But at 310 over spot on the krugerrands, thats as good of a price as ive seen in the better part of four years on the krugerrands.

Alrighty. And you can find out for everyone watching at home. If you’re interested, you can get more information in by emailing arcadiailesfranklin. com and Andy will wrap up for this week. But good to see you again as always. And I don’t, I don’t know the right way to phrase it. Again, the thing with JPMorgan, not something that necessarily to be happy about, but I. I do think it’s a culmination of all the things you’ve been saying, certainly that we’ve been talking about here.

And either way, what goes around comes around, man. That’s karma. That’s what it is. And whether it’s an unintended consequence or an intended consequence, well that’s debatable. But what goes around comes around in life, you know, and that’s why you do the right thing and you don’t worry about stuff like that. But you go around imposing rules and the rest of the world says, no, no, no, that’s not how it’s supposed to be.

There’s going to be problems and this is no different. Well, we will keep an eye on it and see what happens next and we’ll wrap up for now. But thanks as always for being here and we’ll talk to you again next week. See you next week, my man. Thanks for having me. Well, thank you, Andy, as always for today’s report. Hopefully you enjoyed that one at home. Found it helpful in terms of getting an idea of some of the things that are going on.

Before we wrap up, I did want to thank first majestic Silver, who brought us today’s show and had a key development in the past couple of weeks as they’ve identified a new water source at La and Kata. The lack of water there had slowed down the processing rates at the plant, led to a higher all in sustaining cost, although they have identified a water source and are expecting throughput rates to return to targeted levels of 3000 tons per day by the third quarter of 2024.

So that was a big thing on their list to get taken care of this year and they’ve made some progress there and just wanted to pass that along. Hope you’re having a great day out there and I’ll look forward to seeing you again tomorrow. .

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