Rafi Farber: Silver Doubled During the Last Asian Financial Crisis

And oh, no, silver is down again. But we’re going to have to see if the new support is the silver squeeze high of 2021. And it looks like it might be. If it is, then we could be on the road to 50. I don’t know how long that road will take, but if we can hold support at the silver squeeze top, then yeah, we’re in pretty good shape. And so far so good, though, it’s still early days in this new support zone. We have a lot of people talking about Asian premiums or Chinese premiums on silver and speculating if that is driving the silver price.

Alistair McLeod has talked about it and written about it. I personally don’t see any direct correlation between the silver price and Chinese premiums over COMEX, but I did find something related to the Asian financial crisis of 1997, 1998 and silver, which I will show you in the slides to follow. I also want to talk about liquor kiosks. I did an interview with John Titus of Best Evidence YouTube channel. He’s a really great banking expert, really understands the Fed. And we talked about federal home loan banks, which are the liquor kiosks of the banks.

And he opened up a new side to the bank system for me. And I will share with you here. And while silver broke 30, we are still at the final resistance in the silver to commodities ratio. There is a triple top. We got a breakthrough. And I think we will maybe this week, maybe next week, very soon, imminently. And in my personal opinion, the silver to commodities ratio really is more important than the silver to dollar ratio, because if silver goes up in commodities terms, that is the real silver bull market. Whereas if silver is keeping pace with other commodities and rising in dollar terms, all you have really is a commodities bull market, but not a silver bull market.

So we’re at that final resistance in the silver to CRB ratio. And I’ll show you the chart in a second. And before we get started this week, Silver Report is brought to you by Fortuna Silver Mine symbol FSM. We have here news come came out on May 22nd, 2024, which is this year at 2 a.m. Pacific something time Fortuna’s Yaramoko Mine reaches one million ounce gold poor milestone. One million times. From Vancouver FSM, Fortuna’s Silver Mine is pleased to report the Yaramoko Mine located in Burkina Faso, reached the one million ounce gold poor milestone on May 19th, 2024.

As of December 21st, 2023, Yaramoko has a remaining life of two years with proven improvement reserves of 0.9 megatons. Is that what MT is? At a grade of 7.9 grams per ton of gold and containing 219,000 ounces of gold. Now, that might seem like a short life two years, but we’re going to be in the end game within two years. I’m pretty sure about that. And as long as Yaramoko can continue to produce gold and silver, mainly gold, actually, into the end game, FSM is going to be in fantastic shape. Let’s take a look at the chart for a second here.

And we see that Fortuna has basically almost doubled since February 2024. And the recent pullback in silver has not really stopped the rally. And look at this. We’re at an interesting technical resistance here. Let’s see if we can break through six because what is six? Six is the support during the 2020 and 2021 silver squeeze explosion in silver prices that was support here. If we can break the support, we can go back into this trading range. Maybe we’ll see. It might take some time. It’s not going to break through it immediately, but FSM is in great shape.

And I think so. It’s shareholders who bought anywhere in this area over here. And even those who bought over here and average down are also in great shape. And even those who only bought here in the silver frenzy of 2020 and 2021 around silver squeeze, we are about break even or will be pretty soon. So no matter where you got in here, you’re either in OK shape or very good shape. But anyway, I digress. Let us return to this week’s silver report brought to you by Fortuna Silver Mine, symbol FSM. The first thing I want to go into today is the murmurings about Chinese premia or premiums.

I don’t know what the technical pluralization of that word is, but premia sounds more sophisticated and cool. So I’ll use that. So we have here a chart that I could jiggered from gold charts or us with my signature rectangles put in place here. I hear is the Chinese premium over comics and silver on the top here. And yeah, we’re about 10 percent, 9.4 percent. This is, I think, a chart from yesterday or two days ago. So it might be a little bit different now. And it’s three days by the time you’re looking at this.

So unless something crazy happened, it’s around these numbers. Let’s just say 10 percent. Has it been here before? Yeah, it has. It is pretty high. That’s true. And it rarely gets here. And it is here at 10 percent. And that is significant. But I don’t see any correlation between high premiums or premia in the silver price in China or Shanghai over comics and silver prices here in this rectangle. We have a discount, right? Four percent discount and high silver price. Here we have high premiums and low silver price. Here we have high premiums and low silver price.

Here we have high premiums and a crash in the silver price. I don’t see any pattern here. There might be a pattern. I’m just not seeing it. But I do see something significant with Chinese premiums. That is more global and broad based and macro speaking. Even though I don’t like that word macro because it reminds me of macro economics, which is a bunch of crap. And what is that correlation? Well, let’s first mention here that the yen is back at 157 per dollar. We are back at the final support zone or start resistance.

It depends if you want to flip the chart or not. It’s the the weak support zone for the yen at about 159, 160. The numbers are an exact here. Here is the high from 1990 when the Japanese stock market hit its all time high of 159.83 in the end to the dollar. And we hit like 160.3 or something in April 30th or May 1st or whenever it was, which also happened to be the year of the silver top, the date of the silver top in 2011. I think it was either April 30th or May 1st or second or something like that.

Think about this. The yen is back at 157 after a big Bank of Japan intervention on April 30th. And now three weeks later, we’re back at the very weak zone in that final resistance zone from 1990. And what does this mean? That means the yen is very weak. That means his trading partners in Asia are going to be pressured to devalue their currency so they can bring their imports and exports back into line because if the end gets too weak, then trade balances and trade imbalances, trade imbalances really start to go out of whack and other countries in their trading partners in Asia do not like this.

So that was what we saw during the Asian financial crisis, which began in July. I think July 2nd or July 3rd is the consensus. I love that word consensus because it’s the only thing that matters, of course. So in July 1997, it was the Thailand bot that was devalued. That was the first shot in the Asian financial crisis. And this year is a chart of silver, right, starting from the devaluation of the bot in Thailand. So we have July. That was when silver hit a low of what was it, around $4 and something or even less.

And here we have a high of about 740. So almost the doubling of silver during the Asian financial crisis here as Asian finances were deteriorating. And are we going to see the same thing? I think we will, because if you have competitive devaluations of currencies, then real money obviously becomes more valuable as fake money or money derivatives become less valuable. If it starts in Asia, so be it. And the weaker the yen gets, the closer we are to this reality. And here’s one article from the Asia Times established in 1995 about this very thing.

I’ll read the headline and a few of the paragraphs. Asia Times, May 23rd, 2024, Asia starting to feel like 1997, 1998 all over again, higher for longer. US rates keep capital zooming out of the region, depriving markets of funds and putting pressure on currencies. You know what? That’s all I’ll read, because what else do you need to know? We’re close to an Asian financial crisis because the yen is the probably the most important currency in Asia, maybe with the exception of the Yuan, whoever is first or second, I don’t care.

It doesn’t matter. It’s a very important currency. And if it crashes below 160, there’s going to be an Asian financial crisis. And the last financial crisis in Asia, silver went way up. And I think it will this time as well. If silver doubles again during this Asian financial crisis, then we would be past 50, near 60. We’ll see what happens. But it’s getting this exciting. Now, Liquor Key asks, what are Liquor Key asks? I didn’t know what they were until I talked with John Titus, who knows all about Liquor Key asks, at least for banks.

And he says those are the federal home loan banks, which are like the places that banks go for emergency money when they don’t want to go to the bar and have people accuse them of being alcoholics. They go to the Liquor Key asks, which is this. Our camera was there as this woman tried to use a wine kiosk, then she waits and waits and waits and then she has to do another breath test. And so he showed me this chart of federal home loan bank loans. And we have here every time they spike up, we have a financial crisis, right? This first spike up was in 2000 and that was the NASDAQ bubble bursting.

And here we have a spike up from 2007 to 2008. That was the great financial crisis. And here we have a spike up from 2020. The first quarter of 2020, that was obviously the naturally occurring, not lab-created bat virus thingy panic. And here we have the spike up into March 2023, quarter one, 2023 of the regional banking crisis. So right now, these federal home loan bank loans where banks go for emergency cash when they don’t want people looking at them at the Fed. So they go to Liquor Key ask instead of the bar, he said.

So right now we’re still headed down in federal home loan bank loans. So when this starts spiking up again, that means that the banking system is nearing a crisis. We’ll see if that’s this quarter. This is only a quarterly chart, so we don’t have really data between quarters here. It could have already spiked up again. We’ll see. We found another LCB employee working on a book at a kiosk in McCandless. After we’ve been watching her for a couple of minutes, she decided to sit on her book. And this is a technical chart of silver.

You’ve seen it before. I put the cross hair here at the silver squeeze high, which we see at thirty dollars and thirty five cents. The question here is, is silver squeeze the first silver squeeze that got us all excited for good reason? Is that the new support? Is the silver squeeze high the new support? If it is, we’re in very, very good shape. Well, so far it seems to be that way. We were above 3035. I don’t know exactly where we’re going to be by the time you’re watching this.

If we break slightly below it, it’s not exact numbers. You can break slightly below it and try to scare out some sell stops. But so far we’re above it and it looks good so far. We’ll see if this holds. If it does, I am very excited. Silver in real terms, right? Hitting final resistance. Now we’re focused on 3030. I understand 30. I’m also focused on 30. But there is something more important than 30 going on in the silver market in dollar terms. And it is the silver to commodities ratio, which the final resistance is at whatever this line is, point one, one, one, one.

That’s that’s a good number. That’s a very unitary number. I think it’s like one ninth if you make it into a fraction. So we have a triple top here and I’m kind of cutting this out because this is the naturally occurring non lab created virus lockdown insanity pricing of silver versus commodities. This was a real monetary panic. We will get back up here, but not immediately. We have to overcome this triple top first from before the insanity of the that non lab created virus thing. So we have a top here, a top here, a top here.

We got to break through this and we will. This I think is more important than thirty dollars per ounce. This shows the actual bullishness in silver itself rather than in commodities, generally with silver as a reflection of commodities. The gold to silver ratio. I want to show you a quick technical chart here with support and resistance and then talk about for a second of George Gaiman’s trip to Argentina, the land of silver, where I did a video critiquing it. I like the video a lot and it is valuable to go to a place like Argentina to see what’s actually happening.

You can see the video on his channel and my response to it on my channel. So here we have the resistance or support. What is it resistance? Let’s just say in the gold to silver ratio at 76 about and this has been resistance since 2022. We got to get below here. We got to get to about 65 and 65 was the point where we hit a 30 to one ratio in the 2011 top and about George Gaiman’s video. So he went to Argentina and he was not able to trade gold with people at spot prices because the gold wasn’t liquid enough, but what he was able to do was trade silver.

And why is that? Because silver is more liquid in a hyperinflationary environment like Argentina. And the and since they still have dollars, gold will not be circulating as money, though it will still be easier to circulate silver in such an environment. And this explains why we will get down to close to a 15 to one ratio in silver during the global hyperinflation, because silver is naturally more liquid than gold when there are no more derivatives to trade around. And you can see it in Argentina already.

He was able to sell silver for currency to buy stuff. And of course, in the end game, we’re not going to be selling silver for currency. We’re going to be selling silver for stuff. In other words, buying stuff with silver. If silver is more liquid than gold in a hyperinflationary country like Argentina, imagine how much more liquid will be than gold in hyperinflationary world all over the place. We will descend 15 to one for those reasons. And let’s continue with the slides. This is interesting. I checked what’s happening with SLB holdings and on this six month chart, the blue is the silver price, the black or the SLB holdings.

You see like these wild swings in the SLB holdings that have nothing to do at all with the price. Normally, if retail traders are chasing the silver price, they kind of they go together, the price of SLB and the holdings of SLB. But this is not happening anymore. There’s just like these crazy swings. I think it’s shorting and short covering or something happening with the participant banks in the fund. There’s a whole bunch of weird shenanigans going up on an SLB and it shows that the retails are still not interested in chasing silver here.

And we see that in the premiums too. Premiums are low. I think junk silver is at 9% or 8% premium, something very, very low. And so what we have here is silver on the verge of a breakout relative to other commodities. A triple tap has to break. Yes, we’re above 30. Let’s see if we can hold it as the new support. And if we can, then we’re on our way to 50 and perhaps a year. And if an Asian financial crisis breaks out, which is the speculation now in the Asian newspapers, at least the English language runs that I can read.

And we know what happened to silver in the last Asian financial crisis. It doubled. If that happens again, we’re near 60 and things can unravel quickly when currencies start to devalue due to the pressure of the yen, which is a big trading partner to everyone in Asia and pretty much everyone in the world. And with that, I bid you all a good weekend. Stay calm. Don’t mind the price swings too much. It’s going to get volatile as the silver price gets higher. But what else would you expect from a money that’s not allowed to be a money since 1873? But it will break through and will be back to a silver standard.

Probably not by statute, but by the market when we head to a 15 to 1 ratio in the final endgame. This is Rafi, the in-game investor, hoping you enjoyed this week’s silver report for Arcadia Economics. And I’ll see you guys next week. [tr:trw].

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