Chinas Now Buying Silver Directly From South America | Arcadia Economics

What we came away from that conversation with was more than we had hoped, specifically confirmation of information that I had coming from the China side of the supply chain. There were claims made by these people in China that they were doing buying concentrate in Latin America. And that was confirmed. And on top of it, the prices that were being offered for the concentrate were off the scale, historically speaking. Welcome to the Morning Markets and Metals with Vince Lancey, where each morning Vince brings you the financial and precious metals news to get you ready for your day.

And now, here’s Vince. Good morning, everyone. I’m Vince Lancey. Happy Monday. Today we’re going to talk about China’s insatiable silver appetite and also a technical report on oil by Bank of America that says oil is probably going to be breaking out pretty violently between August and October. But first, let’s take a look at the markets. The dollar is up 18 at 104.50. Ten-year yields are 416 down three basis points. The S&P 500 is 54.83, up 23. The VIX is 16.65, up 27 basis points. Gold is 23.91 in the middle of the range, up 480.

Silver is 28.09, up 17, close to the high end of the range. Copper is 409 down almost two cents. WTI is 77.63, up 22. Natural gas is on the bid side of unchanged at $2 even. Bitcoin is 69.800, up 1,500. Ethereum is 3,384, up 100. Platinum, platinum are both up. Palladium, 907, up six and change. Platinum, 943, up 578. Gold, silver, hovering at 85. Grains are all down. Soy is down the most. That’s pretty big, actually. 18 cents down almost 2%. 1.75% at 1066. Borne is 389 down almost two cents. And wheat is 529 down three cents.

Soybean drop. Don’t swear by that. That could be seasonality. I’m not sure, but they do have a seasonal effect. I’m not sure how that would affect the spot market, but nevertheless, be aware that they do have crops and seasonality that play with that market. And there’s WTI chart. Gold, we discussed at length this weekend in a two-hour founders discussion, which we’re going to share with premium as well, obviously. We do every week. That basically said Friday’s activity in gold, this was a very weak six days, and this damn Friday was very encouraging, at least for a one to three day move higher.

So we’re in the middle of the one day move higher right now. Let’s see how the rest of the week shakes out. We have a detailed explanation of the combinatorators and who’s doing what. Quick adjustment. There we go. All right. Let’s get to the stories. Last week, Chris Marcus from Arcadia and myself, we sat down with, well, we had a conversation with a Latin American mining executive. And the purpose of the conversation was to learn a little bit more about the concentrate and dory bar side of precious metals, specifically the silver aspect of it.

And what we came away from that conversation with was more than we had hoped, specifically confirmation of information that I had coming from the China side of the supply chain. There were claims made by these people in China that they were doing buying concentrate in Latin American. And that was confirmed. And on top of it, the prices that were being offered for the concentrate were off the scale, historically speaking. And we had a nice conversation with the executive on that topic. And I’m putting that out in a two part post. Part one, which we’re going to talk about today, is the bottom line.

China is effectively laying claim to Latin American silver before it is refined and crowding out Western buyers by paying higher prices for ore without directly affecting spot price. Right. So coincidentally, today, Bai Xiaojun posted at the market data on SGE and SFE were out. But he also noted that CN customs, China’s customs data in June, 110 tons of silver ingots and which is silver bars and 100 and whatever tons of silver concentrate, which is equal to about 1400 tons of refined silver were imported. That’s a big increase to me. Now, the key word is silver concentrate there.

And Chris and I recently here’s basically what I just said, right, discussing silver supply chain dynamics from a miner’s perspective during that conversation. I expect an important corroboration was given regarding China’s actions in Latin America. The final result is, okay, it’s almost like I read that verbatim, but I swear at it. And there’s a nice little picture of the China silver muncher. Backtracking for a second, here’s the homepage. There’s that story that I just discussed, right? There’s the heart net walkthrough. And there’s Trump’s Bitcoin. So there’s, you know, as usual, there’s plenty up there.

All right, so back to back to our conversation. So these are the parts of that part one. I’m gonna give you a quick breakdown of it. The bottom line is supply demand economics mean that China is paying more for silver than we are. That’s it. Two, why is China buying the silver because they’re applying it more aggressively in industrial use. So solar silver, they have 80 to 90% of solar silver chain. So they’re basically dominating the market, almost almost car telling it, which is why side note, why I’ve been saying that I think there’s going to be a silver OPEC type of situation.

So a side pack coming out of this relationship between Latin America and China. Third, we go into China’s negotiation style trade negotiation, how they get these deals, what they do. Fourth, two examples, Trinidad and Tobago is one example of this style. And Argentina is another two that we witnessed personally firsthand, from experience analyzing market structure, and an overview of part two. And in part two, we will post the specifics from that conversation with the mining exact analyze the direct implications and comment on longer term economic effects of the strategy. So basically, that’ll be like a reconstruction of the of the interview.

I’m proud of private and there’s the link to that. Right. So I would say, if you’re looking, if you’re if you’re a vault watcher, the vaults are up, the vaults are down. For about a year, we’ve been saying that the vaults don’t matter in the traditional way anymore. The silver trade is not a stock trade. That’s not how much silver is or is not in the vault. It’s where it’s coming from, and where it’s going to. So the vault has become a toll booth, checks in, it gets weighed, and it goes to China, right? So now you have to look at the China vault, and it checks in, it gets weighed.

And for the most part, it disappears. Now, they’ve had a recent influx, but that’s that’s the point. The point is, you want to know where the silver is coming from and going to now, because the vault is really just a way station, like like a trucker’s way station, like, you know, on the highway. So moving from vaults, what matters? Well, who’s getting it? And who’s receiving it? So you want to go to the end of the supply chain, right? We know who’s receiving it. And we know where it’s going where, you know, track, not literally, figuratively tracking it out of the vault, what’s happening to it, we want to know where it’s coming from.

And we know it’s coming from Latin America increasingly now. And so if you’re a vault person, you want to be a concentrate person now. If you’re a vault person, you want to be a dore bar person. Now, if you’re a vault person, you want to find out where it’s coming from. And where it’s going to, not where it’s sitting in the vault right now, because it’s moving in the vault, it’s no longer just filling or draining. Now it’s volatile, right? And it’s volatile because it’s just a way station. All right, that’s that.

There’s the there’s that story, which I showed you on the front page. Let’s move on to Bank of America on oil, they put out a chart package. Pretty good one, actually. There’s only three charts in it. But I think they’re very detailed. And they explained the position very well. And I might add very accurately, if you’re a technician, technicians know about wedges and channels and what have you. And triangles and wedges and penance and channels are pretty much invalid if the market gets through the tip, the end of it, they have to break out around the two thirds mark.

And Bank of America knows that. And they talk about this at length in basically three charts, but they go through the fact that it’s kind of getting very fractal. So let’s just read a little bit of that. Oil prices have been trading at a narrowing range or a triangle pattern for over a year now. A triangle pattern is technically synonymous with a compressed coil or spring. When it becomes too tight and what’s holding it, let’s go. A sharp and sudden breakout trend occurs, which we estimate to be in August of October 24.

The three main points are the narrowing consolidation is nearing an end. The compressed spring may be released August to October. The cyclical bear market that we’re in right now is within a secular bull trend. They have very specific levels, very specific prices, and they have weight counts and what have you. So here’s a couple charts that we just kind of our own charts that we put up there. This is a monthly chart kind of within it showing the weekly, you know, so you have a pennant within a pennant. There’s a daily, I included as well, but I’m not showing you here for some reason.

All right, moving on. That’s in premium at the bottom. Market news. There’s a lot of market news, but the market news I think that garnered the most attention was Donald Trump overtly courting Bitcoin and other crypto investors’ votes by basically saying there’ll be a Bitcoin in every pot if he’s elected. Essentially, he said there’s going to be a Bitcoin SPR. I’m here to tell you there already is one. A strategic Bitcoin reserve is something you would want to do if the United States, because if other countries were to use it effectively, it would undermine dollar strength.

Therefore, the United States has to own as much Bitcoin as possible. It is a weapon of financial destruction, or it’s a weapon. So the United States needs to own as much of it as they can. Meaning, you create an ETF so America can own Bitcoin through its people. See, that’s what you create, but custodial business started in 2122. So for Donald Trump to say, okay, I’m going to just call it like it is, folks. You don’t announce they’re going to create a Bitcoin strategic reserve. So everyone in the world can front run it.

That’s moronic. Okay. So for him to say this, it’s not that he’s a moron. He’s just getting votes. Right. And it just shows you that whether you’re 20 and think you’re smart, or whether you’re 80 and think you’ve seen everything, there’s people at both age groups that will believe anything that’s said to them. There’s already a Bitcoin strategic reserve. It’s the money that we, it’s the Bitcoin we confiscate from people. Anyway, it’s just funny to watch these Bitcoin people, which I am once say, Bitcoin is going to cure society’s ills.

Bitcoin is the cure for whatever. Right. And then as soon as they rise, someone’s going to buy, it’s going to go up and say, I’m not worried about that anymore. I’m making money. So, you know, there’s no difference. History repeats itself with regards to greed. Moving on to the politics and geopolitics. Hezbollah, a dozen children were killed and more were injured by a rocket that hit a football pitch in Golan, Golan Heights, probably according to Israeli channel 13. And that’s the provocation that Israel would need to respond in kind or worse. So you may have a northern front battle with Hezbollah and that’s the internet’s been down.

There’s been some GPS problems in that area in the last 24 hours. So it’s quite possible Israel is getting ready to do something, although I don’t know. Data on the week. Well, it’s a big data week in the sense that on Wednesday is the FOMC rate decision. I want to spend a second on that to prepare you for the week. The marketplace, the prices in the market as they currently exist are discounting a almost 100% chance of a rate cut in September. If there’s going to be a rate cut in September, it can very likely be announced Wednesday.

On Wednesday, he could just come out and say, we’re going to have a rate cut in September. That’s not a July rate cut. That’s a September rate cut. And it would fulfill what the market thinks. There is also talk of a July surprise rate cut, meaning he comes out and says, I’m cutting rates today. While that’s possible, I don’t think it’s warranted to have as much press as it’s getting. That’s just hopes bringing eternal. So when he comes out on Wednesday and makes the rate decision, it’ll be unchanged. And then at 230, there’ll be a conference and the conference will say, we’re going to cut in September.

So it’s almost like there’s two rate decisions this Wednesday. There’s Wednesday where he says, we’re lowering rates or we’re not lowering rates. Assume that he’s not lowering rates with a chance that he could. And then in the conference at 230, he’s going to say, we’re going to lower rates in September or we’re not going to lower rates in September. Now, the market is very lopsided expecting him to lower. Okay. And there’s a lot of cash on the sidelines, so it really could move higher if he does cut, which makes no sense in the sense that we’re on the all-time highs and the market can move higher.

But rate cuts generally are when they start, that’s generally the high in the market. It’s like a buy the rumor, sell the news type of thing. But on the day that the rate cut is announced, it would be very bullish if it happened. And on the other hand, if it doesn’t happen, you might have some disappointed bulls. But as we could see with the rest of the world going to shit, the markets don’t seem to care about anything in Israel or in Ukraine or unemployment up-ticking or inflation under control, but not gone at all.

So, it’s a big week and the focus of the week will be on Wednesday’s rate cut decisions. So, think of it as two rate cut decisions again. All right, so there’s the premium, there’s the header for the Bank of America report. I’m Vince. Everyone have a great day. Cheers. Please note that this video is not intended as legal, licensed, financial trading advice and is to be used for informational purposes only. Please contact your financial advisor before making any decisions. And thanks for watching. [tr:trw].

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