Rafi Farber: Extremely Rare Gold Bull Signal Triggered For First Time Since 2001

➡ Gold and silver prices are at record highs, with gold at $2600 and silver over $30. The Federal Reserve has been losing money weekly for two years, and there’s a potential for a crisis in the repo market. There’s a significant decrease in silver open interest in the futures trading market, which could lead to a rapid increase in silver prices. Lastly, Fortuna Mining has found high amounts of gold in their King Fisher Prospect and D’Ambassoud Project.
➡ The 50-week moving average for gold is about to cross above the 200-week average, indicating a rare long-term bullish signal for gold. Silver open interest has dropped significantly, with 60,000 contracts closed since May, which could potentially fuel a rise in silver prices. This is the fourth largest drop in silver open interest since 1970, but unlike previous instances, the silver price hasn’t crashed. Despite a potential short-term drop in gold and silver spot prices, the market conditions suggest a possible sustained rally in the future.

Another week. Another record high. Gold’s at $2600. Silver’s over $30 again. Hello there, my friends. This is Rafi from the M Game Investor with this week’s Silver Report for Arcadia. Economics. And there’s a lot going on, as you all know. Gold seemingly can’t go down anymore. Silver is following the trip back above 30. There is no gold short squeeze yet. Open interest rose by about 24,000 contracts this week. When new contracts are open, that means that shorts are shorting at record highs. That puts them in a very dangerous position. Repo volumes, overnight repo volumes have burst back above $2.3 trillion.

That puts the repo to reserves ratio at about 70%. You need to get to 83% before we hit a apocalypse or a clog in the repo market. This week is the second anniversary of weekly Fed losses. The Federal Reserve has lost money between a billion and two billion dollars a week, depending on the week. Since September 14th, 2022, happy anniversary. Federal Reserve losses. An extremely rare gold signal has been triggered. A golden cross in the gold to S&P 500 ratio. The last time this happened was 2001. And the time before that in the early 1970s, it did happen once in 2020, but I’m going to blame that on the lockdowns.

And we have a head and shoulders bottoming pattern in the gold to stocks ratio. But this week, I do want to focus in on silver as this is the silver report. Something very big is happening in silver open interest in the silver futures trading market. Open interest has reset lower by 33% of total open interest, meaning it went from 190,000 contracts to 130,000 contracts in only a few months. This is the fourth biggest reset down in open interest ever since 1980, which means that when gold and silver do make a run and it arguably might be doing that now, though I’m not sure because we still have to have the final dollar crunch ahead.

But when they do make that run, there’s plenty of fuel now for silver to move high fast. I’m going to show you one big thing that is different about this reset in silver open interest that did not occur in the previous three in 1980, 2008 and 2020. This one looks different. And I’ll show you why. In this recent report brought to you by Fortuna Mining Symbol FSM. Two pieces of news today out this week with Fortuna Mining Symbol FSM. Fortuna intersects 14.2 grams per ton of gold over 16.8 meters at the King Fisher Prospect at Segella Mine and Ivory Coast.

If you want to pause the video and check out what they found here, you have 14.2 grams per ton, 31 grams per ton, 29.6 grams per ton, even 64.6 grams per ton of gold or an estimated true width of 1.4 meters from 120 meters is all at the King Fisher Prospect with different drill holes. It looks very good there. It looks very productive and rich in metal that we all know is money. Secondly, we have a report from the D’Ambassoud Project in Senegal. This mine is not open for production yet, but it is being developed Fortuna intersects 6.9 grams per ton gold over 33.3 meters at the D’Ambassoud Project in Senegal.

We have here the list of fines there up to 32.4 grams per ton of gold and down here at another prospect 34.3 grams per ton 16.2. Check out the news here at their website and of course like all mining stocks this week Fortuna Mining has done very well and I expect it to continue as the Fed begins its final rate cutting cycle. So to begin with this week’s slides it looks a little bit this week that we could be entering a gold short squeeze, but no not quite yet. The reason I say that is that open interest surged higher by 24,755 contracts yesterday.

Thursday September 12th is from the CME website, a screenshot from that and this of course is gold charts are us which gives us the price action versus the open interest on the bottom here and I put in this little candle because these charts are one day lag so open interest is now at 538,000 yesterday’s was 513,000 you can see a big move in open interest higher and that means that more short contracts are being open more short positions are being open for every long there must be a short in futures markets.

If we had seen a big drop in open interest yesterday rather than a rise then we could say that we were in short squeeze but what is happening is that the shorts are opening even more short positions and they’re getting into an even more dangerous position. Let’s see historically what happens here when you have highs in price and open interest every time when we had this little quadruple top over here that was only broken at the beginning of 2024 right here at the end of this line so the last four times we hit this level we had highs in open interest, local highs in open interest and then open interest fell it means that short positions being closed and the short sellers were either making or breaking even same thing here in 2022 same thing here in 2023 same thing here in 2024 and late in 2024 where we see this peak that’s not boxed over here but what we are seeing is lower open interest from that peak and we’re still at new all-time highs where I think we at $2600 this morning so if we see open interest fall from here next week or in the next two weeks then we can say that we were in a short squeeze can’t say that yet we’ll see what happens shortly pun intended are we at about 13 weeks to a repo clock a repo clock meaning the repurchase agreements that are traded between banks every night is up to 2.308 trillion dollars in volume as the last read on Thursday and we have a total 3.32 trillion available in reserves so the amount of reserves that are taken up with repo cash is 69.5 percent about 70 percent we need to get to about 83 for a clock at this rate looks like it could happen in the next 13 weeks so this is very wiggly that could shorten or lengthen at any time but generally somewhere around 13 to 20 weeks and the most recent calculation is 13 weeks so we’re not that far out of a clock in the plumbing it should bring on the final dollar prices this is the second anniversary of weekly fed losses I highlighted here the last time the federal reserve made any money on its securities portfolio on its balance sheet that was September 14th 2022 and they made 120 billion dollars and all are million it’s million 120 million dollars and all of its earnings have to be remitted to the treasury so they can spend money with for the government and buy whatever it is that they buy bombs or welfare usually since then there has been consistent weekly losses of between 1 billion and 3 billion dollars a week we’re now at somewhere between about 1.2 1.6 billion dollars a week and these happen these accumulate every week and the total amount of losses is close to 200 billion dollars now and those dollars are unbacked by any asset at all now we have an extremely rare gold signal before i get to silver we have an extremely rare gold signal that was only last triggered in 2001 and yes it was triggered briefly here in 2020 but i’m going to blame that in the lockdown so i’m just going to conveniently ignore this over here and say that the last time has actually happened for any natural market reason is in 2001 at the beginning of the last gold bull market this is the gold to spx ratio the gold to smp 500 ratio and this ratio goes up the more gold is outperforming the smp 500 so the last time we had that golden cross of the 50 week moving average moving above the 200 week moving average in the gold to smp 500 ratio was in 2001 late 2001 early 2002 and you can see the numbers here the 50 week moving average is now at 0.44 the 200 week moving average is now at 0.44 they are almost exactly equal and when we have this next signal it’s going to be only the third time since the 1970s that this happened and last time it signaled a tremendous gold bull market relative to stocks and we’re going to see that again we’re probably going to see stocks trade in a trading range as the money printing gets fired back up and gold will just continue higher and higher and higher not stopping until hyperinflation destroys the dollar and we have to go back to physical gold and silver as money for a while until we can establish a new and more stable derivative system and if we zoom in on this chart i can see here that there is a head and shoulders bottom here and gold relative to stocks so i think the bottom has been in since 2022 october or january 2022 over here and we’re going to be heading higher for the long term going forward and you can see here the more exact numbers the 50 week moving average is about 0.440 and the 200 week is at 0.442 the 50 is about to cross above the 200 week moving average any week now could be the next few weeks and this is one of the rarest long-term gold bullish signals that exists in my bid and silver open interest has reset down 60 000 contracts since may of this year that’s 33 this is a massive fall in silver open interest in the futures market the amount of contracts that are open in silver trading you can see here that we hit 190 000 contracts which is pretty high and zoom out and you can see from the perspective in mid-may of the 190 000 now it’s 130 000 60 000 contracts have been closed and only a few months that gives silver a lot of fuel to move higher as speculators will move in especially if we sort of sustain above 30 again and then we can move from there so i want to give you this fallen open interest in context to show you how deep it actually is so the last fall we had of this breadth about 33 or 60 000 contracts anything close to that was this is actually more so the the reset open interest down during 2020 when silver hit eleven dollars or something like that or was it even 1050 i don’t remember exactly but it was a huge crap you’ll remember it this is the steepest fall in open interest since then and if we zoom out even further i’ll show you something even cooler so this goes all the way back to 1970 and this is open interest relative to the silver price so you can see here the four biggest resets in open interest in terms of the amount or the percentage of contracts closed relative to the previous high uh the number one closure of contracts falling open interest was during 1979 1980 which was a bona fide silver short squeeze over here you can see huge amounts of open interest suddenly closing and then the price rocketing higher number two was in 2008 when open interest fell from about 200 000 a little bit less maybe 180 000 contracts to about 100 000 whatever it was so it was about 80 000 slightly more than this reset that we’ve had in open interest in the last few months number three was in 2020 that i showed you in the previous chart and this is number four so this is the fourth biggest reset down in silver open interest since 1970 the only difference now is that there is minimal effect on the price here we’re still back above 30 dollars and all these other resets in open interest had crashes in the silver price here and the after 1980 top here in 2008 and here in 2020 we’re not seeing that yet now at least we’ll see what happens going into the near future but it is looking very encouraging and though i do believe there is one dollar punch ahead of us and you got to be careful of that because the spot prices for both gold and silver are going to head down in the final dollar crunch we have built up the fuel in the silver market for a sustained rally gold appears to be on the verge of a short squeeze though it hasn’t been confirmed yet and the fed is about to start its final rate cutting cycle which in my view will destroy the dollar especially once the final plumbing problem becomes known to all and they cut back down to zero and all fiat currencies will be destroyed after that this is rafi of the endgame investor this week’s silver report for arcadia economics if you want to follow along how i’m reporting on this play by play then sign up for the endgame investor on substack for free and get all the lovely philosophical treatises that i write there and if you want the market commentary you can of course become a paid subscriber very simply i’ll see you guys next week so
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