Andy Schectman: Silver Rallied Last Week After Banks Increased Shorts Again | Arcadia Economics
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We did see the same thing again on the Cot report. Here we look at the swap dealers added 7900 shorts sold 2000 longs. The land of Arcadia. Well, hello there, my friends. Chris Marcus here with you for Arcadia Economics, and once again joined by Andy Shekman as we take a look inside the, the physical silver market. Other issues affecting the silver market, certainly the gold rally. And also nice to be commenting on a silver rally as well, because seemed like silver was finally getting a little bit more involved in the nice direction of prices in the past week.
So we’ll dig into that little commentary on the Fed meeting coming up. By the time you’re watching this, it’ll be one day away. We’re recording Monday afternoon, but with all that said, Andy, it’s great to be back here with you, as always. How are you doing today, sir? I’m good, my brother. Good to be back with you too. Thanks for having me, Chris. Well, why don’t we dig right into silver, because obviously we’ve seen gold.
I mean, we’ve seen both of the metals rallying over the past couple of weeks, but silver really had its first bigger day back on Thursday when it was up almost a dollar now at 25 26 as of Monday afternoon. And again, as many people are familiar, we’ve had this $26 level that has been the top end of the range over the past couple of years. Of course, while this move has been happening, leaving the price closer to 26, we’ve also seen a build up of the bank short positions, which we will touch on as well.
But Andy, I’ll let you take it from there. Any thoughts on seeing silver finally catching up a little bit with gold? Yeah, I mean, it’s about time. And that’s usually the way it happens. Gold leads away. Silver then catches up on a percentage basis and typically outperforms it. But to me, one of the things that really needs to be talked about is that over 1200 tons of silver that have stood for delivery this year, you put that on top of the 76 millionoz that India took possession of in February, popping their numbers up to, I think, over 400 millionoz in the last two years, which coincides pretty darn close with the amount of silver that’s been bled off of Comex.
All of these things are starting to come together, but at the same time, we see the silver market in Shanghai really damn close to $28 an ounce. So what is the real price? Is it the make believe price on the LBMA and on the Comex? Or is it the ever slightly increasing arbitrage friendly price that we see in Shanghai of nearly $28 an ounce. So this is one of these deals where, again, you look at silver.
I do, anyway. And look at it from a fundamental position, Chris, at $26, just seems ridiculously cheap. When you look at it from an inflation adjusted position, when you look at it in terms of its supply, demand fundamentals, when you look at it in just about every single metric, an asset that is decreasing in nature, that is increasing in demand on many different levels, I think it’s hard to ignore it.
And then when you see, even on the LDMA, they’re down to 814,000,000oz. That’s the lowest it’s ever been, and of which 60% to 70% of it belongs to the ETFs or the bank of England. So the majority of everything that they have for delivery on the LBMA is either already owned or encumbered, or we’re down to the scraps. So this is becoming very interesting. And as China continues to crank up the arbitrage heat, this will be something that I want to talk about here in a moment or two as we get deeper into this conversation, what’s going on with the pricing and the demand.
But, yeah, I think, to me, I don’t care if the commercial banks are lining up on the short side right now, if that’s what you’re getting at. The bottom line to me is that to be short this market, especially naked short silver in an environment where you have massive bleed downs in inventory, where you have arbitrage going on across the globe, where you have countries like India standing for huge amounts of delivery, taking possession of it, it’s as dangerous and stupid as a mud wall.
So it’s just a matter of time before silver finally accentuates itself and finally gets to a price that would resemble something that is fair. And I think we’re still a long ways away from it. So, yeah, it’s nice to see it gain some strength. But even with that being said, I think we’re well below where it should be. Look, just take the price right now of gold at $2,160 and divide it by 42, which would be the average price of the last 150 years.
The price relationship, that’s 51 dollarsforty cents. That’s where it should be today, based upon the last 150 years worth of price ratio. But it’s coming out of the ground at seven to one. So take 21 50 and divide it by seven. You get $307. If you told me it was $300 tomorrow morning, I wouldn’t be surprised. And nor would I think that’s outrageous based upon its geologic relationship with gold.
So yeah, I mean $50 wouldn’t be too expensive nor would 300 or anything in between. So as we see it move up little by little by little. Yeah, it’s long overdue and I think there’s a lot of road left who expect silver to outperform and to appreciate as time goes on. As we get closer to the elections, get closer to the BricS meetings, I expect to see more of this continue.
Yeah, and interesting. I’ll pull this back up when we take a look at the gold chart. You see in there. Copper hits eleven month high, which obviously some similarities in trading to silver. And here we can see that eleven month high looking back one year. And again copper had a similar dynamic in the period during the great financial crisis and has followed the silver chart somewhat closely over the past couple of years.
And Andy, with everything that you said in there, one thing that I will toss in as a variable and get your comment on, we talked about it a bit last week, but certainly we did see the same thing again on the Cot report. Here we look at the swap dealers added 7900 shorts, sold 2000 longs. And you can see the managed money doing the opposite of that similar pattern in gold here, swap dealers adding shorts and subtracting longs.
Big increase in the managed money. So I get what you’re saying and also in terms of supply and demand and things like that. And we did see that big indian number. There’s reliant industries in India that is building a 20 gigawatt solar factory. And yet in terms of the day to day, that doesn’t always reflect immediately. So thoughts on what you see here with once again the increase in the banks shorting.
It’s annoying as hell and it’s old already and it’s the rinse, wash and repeat. And this is one of the reasons why what I’m about to mention related to the BRICS new currency, it will end very poorly. And I can all but guarantee that in a world of no guarantees to me it’s almost a no brainer when I read to you what I’m about to read to you.
But I think that this is not lost on the rest of the world. And look, there’s a reason why the Chinese bought the LME, the London Metals Exchange, which was primarily base metals like copper as you mentioned. And if you look at the fact that China just canceled a bunch of, I think they were soybean or corn contracts with US farmers, why they’re buying them from Brazil now and paying for it in yuan, which is immediately convertible into gold on the Shanghai gold exchange.
At the same time, the BRICs now have just developed, or are going to develop a BRICS grain exchange. And the BRICS grain exchange is a pushback to the fact that all of the global prices of these commodities are primarily settled on the Chicago mercantile or the commodity. You know, when you listen to what they’re saying, they say, the ministry insists that the BrICS countries are the largest grain producers and exports, but have no leverage to influence the price of agricultural commodities critical for their food security.
So what are they doing? They’re building the BRICS grain exchange. So this is similar to what I’m about to bring up to you with what’s going on with precious metals. But when you look at what they’re doing, look, they bought the LME. They’re going to warehouse metals that are listed on the LME in China. They’re the biggest producers of half of the industrial metals and the rare earth metals and all of the precious metals.
And they produce as much grain or more so than the west. These are the countries that are the ones producing and accumulating and appreciating the commodities for what they represent. And they have been subservient, really, to the western price mechanism and the whims of the ups and the downs and the shorting and the sucking and the speculating and then smashing it down again like we’re seeing right here with the increase in the swap dealers short position.
It’s annoying already. But if you take a step back and look at it for what it really is, I think there’s a hell of an opportunity here. And let me just jump ahead. I know this isn’t what you asked me because it fits like a hand in glove and it’s really very important. I know you had a big scoop today. Well, to me it’s one of the most important things that I could mention.
And a lot of it I’ve been talking about. Right. I’ve been saying for a long time that the Shanghai Gold exchange or the Moscow Metals Exchange or the exchange for metals in Dubai at some point would take over for the fraudulent LBMA and the fraudulent comex, where exactly these kinds of things can happen, where the price is controlled and or really representative of the futures price rather than the underlying commodity.
It’s the tail wagging, the, you know, there’s been this talk about a new currency and we talked about it for the last few years and a lot of people were bummed out when they didn’t come out with their currency in August in Johannesburg. And we’ve talked at length about how instead they’ve been trading in local currencies, just like Brazil, paying or accepting yuan for their corn. Brazil is, after all, the second largest exporter of corn in the world, or producer of it.
And so now they take yuan, and if they want to hold it, great. Or maybe they convert it into gold on the Shanghai gold Exchange and take possession of it, because gold is tier one and gold has been accumulated by the central banks at a faster pace than ever. All of these things are coming together. We see that. So there’s a website that, a news agency that I go to a lot, it’s called Tas TaSs, and it’s a russian news site.
And actually, I find that it’s on par in many cases with zero hedge. You get really good information that it’s confirmed by the western media, but usually several days later. In any case, they came out with an interview done by a man named Yuri Yushafkov, where he did admit everything that we’ve been talking about. He said that there’s going to be. They’re working on a new digital currency.
Right? And digital currency would be based off the technology of the project. Mbridge. And the M Bridge is a technology, I think it was designed by China, by Singapore and the United Arab Emirates. And it’s a way for these countries to trade their digital currencies across border without using the swift system. And they have done some trades recently using the mbridge, a couple of the. Maybe it’s called the Genesis trade.
A few of the first trades have been done over the last few weeks on the project Mbridge. So in any case, they came out and he came out and said that the idea of the currency will be based upon two baskets, and the first basket will be a mix of local currencies of the countries that are represented in the BrICS nations, and the second would be a basket of commodities.
Now, we’ve been saying that forever. Why? Because Glasiev, the russian finance minister, has been saying that for three years, or nearly, and it made great sense. In fact, I think we were talking about this long before he came out and said that it just became obvious when we saw the massive amount of central bank repatriation of gold and accumulation of it, its tier one revision, we knew that gold would have a footprint in something that was coming on the scene for a new system.
Well, Glasiev confirmed it a couple years ago, and here we have it again. He said, yes, a basket of local currencies and a basket of commodities. Now, here’s where it gets interesting, right? We have a digital currency using the project mbridge technology, sidestepping the swift system backed in local currencies of the BrICS nations and commodities. Everything we have said fits that. But here is where it gets interesting.
And I have said this. I’ve been begging people to understand that what is happening with the arbitrage on the Shanghai exchange, what is happening with the development of the Moscow exchange, what is happening around the globe, is that they are aware of what we’re doing. They are aware that we have been suppressing the markets for a long time to support the illusion of the strength of the bond market, the strength of the western system.
And I have argued for a long time, they are using it against us. The jiu jitsu move. I’ve said it a million times, using our leverage against us. Now listen to what this man had to say. He said, the second part is price. 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 pandemic, the price of oil fell to nearly zero. No, he’s wrong there. It fell to negative $40 a barrel, which is ridiculous, right? That’s what happens when the futures exchange can set the price for the underlying commodity. He says it’s impossible to make any strategic planning for economic development if you do not control prices of basic commodities. Price formation with this new currency should get rid of western exchanges of commodities.
That’s exactly what they’re doing. They’re setting the infrastructure and building it methodically. Base building, backfilling methodically to when the stupid price of the west, like negative $40 per barrel of oil, or a price that can continue to be suppressed by the commercial banks who distort the real value, distort the supply, demand, fundamentals distort and make the real price an illusion to support the agenda of the west. When no one is willing to deliver at those make believe prices like that, they will flip the switch and say, you know what? Now we’re really going to turn up the arbitrage on the Shanghai exchange and the Moscow exchange and the Dubai exchange and all around the world.
And here’s what gold and silver are really priced at. And they know this, and they are using the western suppression against us to drain the shelves. Look at India importing over 400 millionoz of silver. I don’t know how much is in the total Comex holdings? 200 and some million. It’s almost double what is on Comex, of which probably it’s ten times what is in the registered category. Those are the bars available for sale.
These countries know what we’re doing. They are beating us at our own game. And we’re too stupid as a country and as a media with no journalistic integrity anywhere to sound the alarm. And we’re going to wake up one day to a fact that the Comex and the LBMA are exposed for what they are, a fractional manipulative scam. And that’s why you see this slow, methodical accumulation over and over and over and over again.
Buy the LME, get all the base metals, settle all of these contracts for grains. Oh, let’s make a new grain exchange. So everything that we are doing, setting the prices for the commodities around the globe, they know it and they’re using it to their advantage to accumulate as much as possible before the last idiot will give it away at these make believe prices. And when that happens, it all changes.
It all changes very quickly. So to hear it coming out of the Russians saying, yeah, we know what’s going on, and we’re going to change that at some point. In essence, to get rid of the western pricing mechanisms in soft commodities, in base metals, and in precious metals, they’ll have all three covered, all the commodities, hard, soft and precious. They will control the price, they will control the production, they will control the shipping lanes.
It’s all being done methodically, slowly, base building. And we’re going to wake up one morning, not your listeners, not the people who I talk to, but the american public will wake up to find out that the shelves are bare and you can’t get it. And the price that we quote is make believe anyway. So I think that was one of the most telling things that I have ever heard in the last four years related to the BRICs, that if you do not control the prices of these commodities, then it doesn’t work.
So this new system, price formation with this new currency should get rid of the western exchanges of commodities. Do you understand how big that is? I think it’s huge. And again, base metals, they own the lMe. They’re doing it with soft commodities. And that’s why they’re doing the grain exchange like corn, like wheat, like soybeans, and they’re doing it with precious metals too. And it will all end badly, and they know it and we don’t.
And that’s the scariest part of all Chris, and I think that’s something that everyone needs to hear. Well, I know what you mean, because you can see the different steps falling into place. Obviously for gold and silver investors, there’s that tendency to want to see that reflected in the gold and silver price. Yet I was actually reading interview from Zoltan Posar over the weekend, and he was mentioning how I thought it was a great reminder, pointing out how these things don’t often happen overnight.
But you see the steps that have gone on, whether it was the gold repatriation or seeing the way that gold is being treated now, seeing central bank gold buying, and to my knowledge, I don’t think we haven’t seen any central bank silver buying yet, although I was thinking about how if you go, what about India? Well, I don’t know that I would call that investment mean. I think there’s people obviously there buying it as an investment demand, although a lot of it seems to be the solar and also a lot of jewelry goes.
I’m talking about in the sense that we think of american investors that are buying silver because inflation or thinking the price is going to go up. I was just thinking about how five or ten years ago, maybe outside of certain countries in the east, the idea of seeing gold as a store of value or money was not something that most people in the world were considering. Yet add some pressure on and the different things the economies have gone through over that period of time, and now that’s changed.
And for the same reason that has changed for gold. Those are the reasons that apply to silver and how we started off in the US with gold and silver. So I would say gold a step ahead in terms of that process. Which does that guarantee that silver is treated that same way? No, but certainly leaves open the possibility. And the things that you’re saying with the bricks speak to that possibility, not just with the metals, but a lot of commodities.
And I would imagine it won’t be. Or maybe if there’s something announced at some point, then one night it’ll feel like an overnight switch. But I appreciate you sharing the tweak we’re on here. And for the last couple of years, as you’ve seen the developments and shared them and allow people to form their own opinion and how they see it playing out. But certainly these things are happening and exciting in one sense, a little scary in another sense, perhaps, but I guess we just look at what is happening and just as best as possible.
I’m sure you’ll be looking forward to the bricks meeting and only a couple of months away now. Well, there’s 200 meetings between now and the big bricks meeting. So there’ll be meetings every day and just about new developments every day. And you’re right, and you said something interesting. Some people would say that I’ve been saying this same thing for two and a half years, three years. I have almost four.
I get it. But look at the progression. Right? So it hasn’t been all at once. And that’s why I’m fond of that term, logarithmic decay. Little by little by little by little by little by little by little, and bang, all at once. It’s a game. Agenga. So this has been going on for a long time, 17 years to be exact. That the bricks have been what started as a term that was, I think, coined by a trader, Goldman Sachs or something, has now turned into something very legitimate.
The acceleration of this foundation, of this formation, in every scope, in terms of significance, GDP, human population, military might, commodity share, shipping lanes, everything. And it’s being done methodically until it’s all at once. You’re right, it will seem like all at once to most people, but to the rest of us who have been hanging on, it will be like, my gosh, that took a long time. And I don’t know what it is that breaks it, but I do think that it’s true.
You can only manipulate a market for a very long period of time extended by pushing it in the direction it’s going. And what is different now, Chris, than the years that I’ve been doing this, is that there is way more recognition, not as much by the mainstream. That’s still. We’re tertiary, if you will, kind of on the side of what people see in the mainstream, but certainly by the most well informed traders in the world, the central banks, the commercial banks, the family offices, the sovereign wealth funds, gold and silver is not lost on them.
And I think it will be lost on the majority of the public and a lost opportunity for the majority of the public, because if you see things being bled dry, the way that they are at the highest level of supply, that will have a trickle down effect. And it’s unfortunate that it’s kind of going out this way, that the mainstream, that the public, who really should have an allocation to metals, is not noticing it because of the price and rhetoric suppression that the in the know people across the globe, I believe, are using against us, using that leverage, using that suppression that we developed and we employ against us so that they can slowly and methodically, without raising too much attention, reposition themselves into the things that Zoltan Posar would say are relevant in this new system.
He said, it will be a system that will be all about commodities, and that’s what this is. So, yeah, I think we are heading into that world where debt instruments and opaque promises are secondary to commodities and transparency, like blockchain. So it is a new world. We are heading in that direction. And the suppression of the west, and really the hegemony of the West, I think, is cracking and it’s in its last stages.
Of mean, I could argue we’ve lost the hegemony already. We still have our supremacy, but how long does that last? At what point does this confidence, you know, when we have our brain dead treasury secretary gallivanting to Brazil in a public meeting saying we need to confiscate russian forex reserves in Brazil, a member of brics? I mean, how close are we to that moment? And I would argue it’s getting closer and closer and closer.
Well, I hear you, and certainly some of those developments do not paint the rosiest picture. Obviously, countries concerned after they saw the sanctions, now, if we do see the money formally confiscated, won’t leave the best impression, but we will see what happens next. And Andy, I have two notes in wrapping up here. First of which, is there anything on special that people should know about this week in terms of people who are not feeling quite as confident about some of these policies and the directions that things are headed in? Yes, we do have on special this week.
Let’s see, we have 1oz 2023 silver Krugerans at $3. 10 over the price of silver. Now, we do have some palladium and gold specials, but since this is a silver show, let’s just say we have the 2023 South African Kruger, and at $3. 0. 10 over the price of silver, we do still have the palladium bars at 119 over. And we have a 1oz backdate, 110 ounce canadian maple leaf coins at $35 over melt.
But I know we like to focus on silver here. So as far as silver is concerned, the 2023 Krugeran 310 over spot, really cool coins. And they are IRA eligible, unlike the gold Krugerand. So I do like them a lot. They’re one of the six primary mints. And again, with premiums being where they are, this is, I think, as good of a buy on Krugerands as we’ve seen in almost four years.
Well, appreciate that. And the second note, before we wrap up here, a little bit of a more somber note, as wanted to pass along, I think a lot of people saw this back on Friday. Unfortunately, we lost my dear friend, a dear friend to a lot of us, certainly in the gold and silver community as Jim Forsyth passed away. And very sad news and been thinking a lot and feeling grateful, did have a chance to meet him in person.
See when we been over by the CFTC back in 2021, got to know him over the past couple of years. He contacted me shortly after the silver squeeze in 2021 and obviously quite an accomplished man. He was in the Air Force, won a seat in the New Hampshire Senate, was involved with Ron Paul’s state chair campaign, and then obviously getting very. Of course I should mention citizens for sound money, where he really did a lot to educate and try and push advocacy of sound money.
So certainly a lot that he did in his time here and also just really good, kind man. And before I show one other thing here, if you had any thoughts or words about Jim that you’d like to pass along. Yeah, he certainly passed my condolences to his family and his friends. He was a very nice guy and I didn’t know him very well, but we did have some conversations and he actually sent me one of the silver slices.
He stamped it, put my name engraved in it with ape on it, and we’re all on the same side. We have had conversations, he and I, in the past, and I’m remiss that I didn’t get to know him a little bit better, but he was someone that I admired and actually had ascribed to work with in terms of offering his. He would take 1000 ounce bars and slice them into little thin sections and then stamp things on it.
And I wanted to rep it. In fact, I even had sent him an email just a few months ago and we were kind of going back and forth as he was having some health issues. My sincere condolences and he’s way too young to have left, but he was a good guy and I’ll simply just say I’m sorry to see him go. Yeah, it really was a sad day and I think a lot of people saw him.
Obviously he was on my show plenty of times and many other shows. And you did mention the silverback, precious metals, where at least I think in his last months and years, I think he was doing what he really wanted to be doing and things that made him happy. So going to miss you, Jim. And would add, there was a Gofundme for Jim. This was while he was still trying to recover.
This was set up, although Jim did have children, survived by his wife. And I’ll put the link to this in the description field below. If there’s people out there who knew Jim and would like to offer support, I’m sure that will be really appreciated in this particular time. And again, just sad news. So God bless you, Jim, and we thank you for being a good friend and good person on the planet.
And Andy, with that said, we’ll wrap up here. I hate that man. I hate that. It’s sad. It is. And it’s awful. I’m sorry. Yeah. And perhaps just a good reminder to appreciate what you can and the things that are going well in life and the family and friends that we have around you. And certainly I think that’s how a lot of people feel about Jim. So that said, we’re going to wrap up for today, but Andy, thanks as always and we’ll look forward to catching up with you next week.
Yeah, and it’ll be next week from London. So I do have an interesting meeting in London that I will want to talk about. Whether it be this next week or slightly after that I think you’ll find of interest. But in the meantime. Yeah. Again, my condolences to Jim’s family and all the best to everyone out there. Go hug your kids and call someone and tell them you appreciate them and you love them.
Like I always tell you, Chris, I love you like a brother and thanks for having me on and look forward to catching up again real soon. Well, love you too, Andy, and thanks for the show today and look forward to next week. Take care. .
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