Rafi Farber: Silver is Acting Exactly like it Did from 1968 to 1973

➡ The central bank is printing money and trying to control it by paying interest, but this is causing prices to rise and they can’t stop it. This could lead to higher inflation. Meanwhile, there’s a lot of activity in the gold futures market, with the potential for a short squeeze. Also, the LBMA is running out of silver, and there’s a lot of gold at the Diambasud gold project, which is good news for shareholders.
➡ This article discusses the fluctuating trends in gold and silver markets over the years. It highlights how the price of gold and silver often rises during times of economic panic, and how silver tends to lag behind gold in these increases, but then experiences a sudden, sharp increase. The article also suggests that the current trend in the silver market could indicate an upcoming spike in silver prices. Lastly, it mentions the decreasing stock of silver and the potential impact on the value of bitcoin and the dollar.

And so what the central bank is doing is trying to sterilize all the money it’s printing by paying interest. And that interest goes out into the economy, into the monetary system anyway, which makes prices higher and there’s nothing they can do to stop it. So this is the point where higher interest rates actually feed into higher inflation, which is, I think, the point that we are getting to in the United States as well.

Hello there, my friends. Rafa here from the end game investor with this week’silver report for Arcadia Economics. And things are getting dark, but lighter as well. We’re going to talk today about open interest continuing to rise in the gold futures market. It is now up 140,000 contracts since bottoming out. And no, gold is not in a short squeeze yet. But I will show you what a gold short squeeze looks like.

We had one in July, August 2022. It was very minor. And with open interest rising as fast as it is, the banks are risking a short squeeze, but are not in one quite yet. I have a new chart for you guys, inspired by my interview with argentinian economist Alan Foderman, who explained to me that the amount of central bank liabilities in Argentina that are earning interest are three times the entire monetary base of the country.

So where is the US on that matrix? Well, I had one of my subscribers, Dr. John Hartnett, a physicist, jigger the charts and we will see transparent gold holdings. Paper gold funds are still losing more gold, even though the price keeps going higher and higher. Is it bitcoin that’s doing this? I don’t know. Maybe. But this has never happened before. I’m going to show you an interesting chart of the gold to silver ratio in the 1970s.

Actually from 1968 to 1980, from the fall belonging gold pool until 1980. And what was happening there is what’s happening now and how silver behaves during a gold rally like this one, which we saw in 1968 to 1973. From 1974 to 1979, it pretty much does nothing for about five years until the entire market explodes. And it’s going to do the same thing this time. The only difference is when silver makes a moonshot, that means the dollar is dead.

And when the dollar is dead, in my personal opinion though, I don’t want to offend anybody. When the dollar is dead, bitcoin dies too. Because bitcoin is based on the dollar. And you can disagree with that. That’s fine. I’m not against holding bitcoin, but I do have to spread the truth as I see it. Even though of course I could be wrong because I’m just a human being with sunglasses and a hoodie.

And a new all time low in lbma silver stocks of about 814,000,000oz and something like 60 70%. I didn’t do the calculations, but it’s something like that belongs to ETFs and the bank of England. So the LBMA is running out of silver. One more thing. It’s the last gasp for the bank term funding program, which increased by about $3 billion this past week even though it expired on March 11 because of.

The statistics include the days before March 11 when banks were taking a last minute splurge on the bailout program. And by next week the program should be down about $54 billion. And that should reflect on the Federal Reserve’s balance sheet. This week’silver report is brought to you by Fortuna Silver mine, symbol FSM. There’s an entire press release here. Well, an entire press release. Of course, it’s not half a press release.

There’s the press release of a whole bunch of mining statistics of drilling and meters and depths and geological stuff that looks pretty impressive. But I am not a geologist, so if you want to go into this, go to the Fortuna Silver website and check out the specs here. I just wanted to quote the most exciting part of a quote from Paul Whedon, senior vice president of exploration at Fortuna.

He said in addition to the exploration success at Kingfisher, drilling for coola underground mining potential has resulted in several high grade intersections. This includes a 68 grams per ton of gold over an estimated true width of 2. 1 meter in SGRD 1780 as part of a larger interval of 22. 5 grams per ton gold over an estimated true width of 9. 8 meters, highlighting the opportunity for underground mining.

This is far above my pay grade. I’m just a monetary guy and I don’t know much about geology, but there appears to be a lot more gold at the Diambasud gold project. And this is exciting for shareholders and potential shareholders. And yes, I own Fortuna silver mines. And do your own due diligence and let’s continue with this week’silver report. I’m not sure if my beautiful face is blocking the numbers here, but I’ll read it out loud on the title.

Open interest in gold futures is now up about 140,000 contracts. So this chart here is from gold charts R Us and it shows here the open interest. I drew a line where we are now at about 541,000 or 539,000 somewhere around there. So we draw a line here and it brings us all the way back to the last time we at this number, which was July of 2022.

And what was happening at that point? I’m not necessarily saying this is going to happen again right now, but there is always a potential for a short squeeze. There was a minor one here. And how do you know it was a short squeeze? Because open interest was falling in the face of a rising gold price. And what this showed to me is that we were very near the bottom over here, which was around 1700, and the bottom happened to be at 1618 or 1610, about two months later.

So close to the bottom? Not quite the bottom, but it did signal that the bottom was close. So this is a short squeeze because here you see the green lines. Are they green? The green lines were falling from about 540,000 in open interest to about 450,000. And as those contracts were closing, the price was rising. This wasn’t a crazy short squeeze like we’re seeing in chocolate right now, or cocoa.

We’re seeing a major short squeeze in cocoa. That’s probably also because of physical reasons. There is a shortage of cocoa, and people want chocolate because they’re depressed and they want more chocolate. I understand that. Try it again. I’m kaka for cocoa puffs. No, damn it. Take 26. I don’t know anything about chocolate markets, but I want to try those fruits and have some actual chocolate. Fruit. What do they call those things? They look yummy.

I never had one. So anyway, at this point, if we have another short squeeze at all time highs, it would be very different than a short squeeze like this, which came from 1700 and didn’t get us that far. But the higher open interest goes here, the bigger potential we have for a short squeeze. But we’re not in one yet. If the banks start covering and price starts rising, that’s what we will be in.

We’ll see in the weeks and months ahead. Now, I have this very interesting chart from Dr. John Hartnett, who is a subscriber to the endgame investor. He is a very smart physicist man, and I talked to him a lot, and so does Chris. So he jiggered this chart for me after argentinian libertarian economist Alan Footerman, who I had an interview with on my channel, informed me that the amount of reserves that are earning interest at the argentinian central bank is three times the entire monetary base of the country.

Central bank liabilities that are earning this 100% nominal rate per year are three times the monetary base. I’ll give you a number. It’s about. I think, if I’m not mistaken. From what I saw last week, it’s about 30 trillion pesos. Really, it’s a lot more. Okay, then 100 billion. And so what the central bank is doing is trying to sterilize all the money it’s printing by paying interest.

And that interest goes out into the economy, into the monetary system anyway, which makes prices higher, and there’s nothing they can do to stop it. So this is the point where higher interest rates actually feed into higher inflation, which is, I think, the point that we are getting to in the United States as well. So here you see the blue line. This is the amount of reserves earning interest at the Fed.

Forget the other line for now. This is reserves plus the reserve reverse repos that are earning interest at the Fed. And this is the percentage of the monetary base. So here we had a maximum here of about 110% of the monetary base earning reserves at the Fed. In Argentina, it’s 300%. It’s going down now because the reverse repos are declining. But during the next printing round, this number is going to go way up.

And we saw during the 2020 printing round, it went from about 60, 58%, something like that, to 110%. So this time it’ll probably go up to something like 200%, maybe more, and if it really gets out of control, it’ll go to 300% and we’ll be in the same place as Argentina, at least in terms of the amount of liabilities earning interest at the central bank. And so here I wanted to go into the total transparent gold supplies in gold funds that are recorded.

So here, there’s two boxes I put here. This is from 2012 to 2013. We saw here basically that as the gold price rose, gold stocks rose with transparent funds with it, as people were buying more gold, as the price was rising and it was creating a fever and people were into it. But you see, as the market reversed in 2013, so did the amount of gold in funds, as people redeemed their funds and took their dollars back and gold was sold.

Then we see here in 2016, as the bull market fired up again, we saw that the same thing was happening, that more people were chasing gold and going after it. And the peak happened in 2020, when there was a huge influx into gold, as there was a monetary panic because of all the stuff that was going on in 2020. And I want to go into it, I’m sure you know what it is.

But here we see something very, very different. The gold price is heading up, even to new all time highs. And still the transparent funds are losing gold. Could they be going to central banks. Could it be that people are liquidating their gold and going into bitcoin? I think it’s a combination of the two. But the point being, when the paper stackers and the physical stackers get back into this market from an all time high, the price could begin to go out of control.

In other words, there’s a lot of fuel left to this rally. Here is the gold to silver ratio in 1970s, 1968 to 1980. 1968 was a monetary panic. It was essentially the collapse of the London gold pool. So that was a monetary panic. And we see that whenever there is a monetary panic, where do we get to 15 to one three times? 1919, the end of World War I, that was also a monetary panic.

1968 was a monetary panic, and 1980 was a monetary panic. Each time during those panics, 15 to one. What does that mean? That silver is fully remodeledized by the market, not by statute, not by central banks, but by the public. So we saw in 1968 was gold was going higher and higher and higher. Nixon just closed the gold window over here. And what was the response of silver when Nixon closed the gold window? It just kept falling relative to gold.

And silver. Bugs were like, what’s going on? He closed the gold window. Why is silver so weak? And so we see 1970, 1968 to 1970, the gold to silver ratio was climbing. And even after the gold window closed, it started climbing again, meaning silver was weakened relative to gold, up to about 42, 43, maybe 44 to a high there. And then it started to fall. Only in the last five years, from about 1975 to 1980, did silver finally catch up.

And when it did, it caught up like crazy and went to an all time high of 50, which is about $300 or something in today’s dollars. But who knows where it’s going to go? My point is that this has happened before. Silver has lagged gold during periods of bull market movement. And I’ll show you more of this in the slides ahead. What tends to happen is that silver does nothing, nothing, absolutely nothing, for about five years until it makes a parabolic spike.

We see here the chart from 1968 to 1973. And you should remember, even if you weren’t alive, that 1973 was a year of inflationary major panic. If you look at the CPI charts going back to 1973 especially, that was the oil embargo. That was the breakout, the outbreak of the Yom Kippur war, which created an inflationary spike over all the world because OPEC was embargoing oil even in 1973.

With that inflationary panic, silver was only able to meet its previous high of 1968. So silver bugs, of course, were like, what the hell is going on? Silver sucks. It’s manipulated. It’s not a money. It’s horrible, et cetera, et cetera. Five years of absolutely nothing. 1968 to 1973. And only then did we have a parabolic spike in 1974. Four to six and a half dollars. $6. 50. The same thing happened from 1974.

Remember that spike back here? Well, that spike was this tiny little thing in 1974. From that spike to six and a half dollars. It took another five years. I’ve showed you this before. In 1979, to finally break through, and gold was making new highs, new nominal highs, and new real highs, but silver was not. And silver bugs were all disappointed. And they’re like, what the hell is going on? What happened to this parabolic spike? I want that to continue.

But it didn’t until 1979. And then 1979 happened, and everything went crazy. And finally, what do we have here? The same thing. 2020 to 2024. I can’t show you the rest of this chart because it doesn’t exist yet, not in this temporal universe. And I’m not a navy. I’m not a prophet, so I can’t tell you exactly when it’s going to happen. But I do see that the same thing is happening again, and I believe that time can come again.

Four years of absolutely nothing. A top at 30, a double top at 30, and we have not reached a new high. We have not reached 30 again. While gold is making new highs. This is the same thing that has happened twice before. 1960, 819, 74, and now. And the final thing I wanted to show you is that there is a new all time low in lbma silver stock for down to 814,000,000oz.

Here. Look at that. It makes an arrow. That’s cool. And I don’t know what the percentage is, but I think 60% to 70% of that is owned either by the bank of England or by the ETFs, mainly SLV. So, yeah, the silver is draining out faster. Now, we had a little bit of a lull here, but since mid 2023, the silver is draining out even faster, almost at this same rate from 2022.

And so it’s getting pretty thin out there. And this is the last gasp for the bank term funding program. You can see this little movement jig up here about $3 billion. How is that possible if the bank term funding program ended on March 11? Well, these numbers take into account the days before March 11 and the days before March 11. Banks were taking a final run at the bank term funding program and getting the last little bit of cash they could out of it, which kind of signals that they expect bonds to fall in the year ahead, because if they’re taking out loans and exchanging these treasuries for cash now, even when it’s not advantageous in terms of interest rates, it means that they think that treasuries are going to fall in 2024 and they’d rather have the cash for face value.

So next week, right. March 22. It’s now March 15. It’s the ides of March. And in March 22, $53 billion or $54 billion is coming due because these loans are out for one year. And if $54 billion are coming due, then that should be erased from the fed’s balance sheet, and that should be $54 billion of QT. Is it going to lead to a fault line and something in the plumbing? I don’t know, but it will continue into April, where I think this is $80 billion.

And the final thing I wanted to say here is that, yeah, we are waiting for the parabolic spike in silver. That is when the public no longer trusts the dollar as a gold derivative. And so they can’t use it to divide gold into little retail amounts. So they have to go back to the physical stuff, to the actual silver material. And when that happens, I don’t think bitcoin is going to survive because bitcoin depends on the dollar, and a silver spike means that the dollar is dying.

So, yes, bitcoin is outperforming in dollar terms right now. But wait for the silver spike. You can’t have both a silver spike parabolic and a bitcoin spike. It doesn’t make any sense. So just watch out for it. I’m not against bitcoin. I am just wary of it. Enjoy your gains if you have them, I’m very happy for you. But don’t forget where money originated. This is Rafi, the Endgame investor, with this week’silver report for Arcade Economics.

You can tune into the endgame investor at endgameinvestor substack. com for free, or you can become a paid subscriber and you’ll get more stuff, including whatever it is that I write. And you can be my patron on Patreon for as little as $3 a month to get my biblical angle on what is going on in the world in money. And this week, we’re going to talk about why we say Lahaim.

I found out that it has to do with the death penalty, actually. And what does it have to do with money? Tune in. You’ll find out. .

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