Vince Lanci: China Still Wants More Silver Than They Have | Arcadia Economics

That’s an important statement. Shortfalls are nothing new in silver. Yet silver prices have been range-bound between 2020 and 2024, averaging around 23.5 an ounce, owing to the piggy bank being rated by bullion banks using it to satisfy BRICS demand. 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 and today’s Market Rundown we’re going to discuss gold’s highest daily all-time close. And we’re going to take a look at a pivotal silver report from Bank of America.

A lot to squeeze in, so I may have to move quickly. First, let’s look at the markets. Dollars up 2, 10-year yields are down 1. S&P 500 is up 14 at 53.57. The VIX is 20.45. Down 27, gold is down 7, bucks was down around 10. 24.65 after having all-time high close. Silver, 27.79. Down 67 basis points after ripping yesterday. Copper, 404 down 2.5 cents after aiding and abetting silver on the rally yesterday. Crude, chopping around unchanged. Down 8 cents right now, 79.70. Natural gas, 220 down up 4.5 cents. Bitcoin down 5.23 at 58.25. And Ethereum, 26.43.

Platinum, Palladium are mixed. Palladium is 9.20. Platinum is 9.35. Holding relationship at all the grains are lower. Soybean is the worst of the three. 9.95, 3.82, 5.47 at soybeans. Corn and wheat down 17, down 3, and down 4. Figure it out because I can’t. All right. There’s the front page. Gold’s ETF cherry on top. Commemorating, acknowledging, noticing that American and European demand is back in investor form. Again, it could be short-lived. This is very Fed-related, I would think. But nevertheless, it is there. The Gold Gang gets capped and traded. Always studying Philadelphia title. The content is basically that there are buyers out there that are being patient.

Depending on someone else to keep a cap on the market while they buy. And there’s a Rowan Atkinson’s, you know, of the Mr. Bean fame, discussing freedom of speech. Those are all there. Gold Rally, China Silver. Lame title, I know, but let’s work on that. First, Gold’s New All-Time High Close. Gold’s New All-Time High Close. That’s a monthly chart. I’ll pop it up there for a second. On a monthly basis, it’s pretty obviously bullish, okay? But we’re not done the month yet. On a daily basis, it may not seem as obvious. I’ll show you what I’m talking about.

You’re like, okay, that’s a good chart, but that’s the highest close we’ve ever had. And the fact that they, and by they, I mean the market. We know who they can be. But the fact that they are not selling it, or don’t feel confident selling it, and are letting it get into a wick. Above two wicks, this way, I think someone is either low on bullets, has a little bit of gunpowder they need to keep in reserve for when the CPI comes out, or is just downright scared. Whoever they are, they’re short the market, and they’re having a hard time keeping a cap on it.

And as a result of that, yesterday I said on Twitter, X, whatever we’re calling it, I said that gold should trade $2,500 in spot by the time CPI comes out, or I’ll eat my toupee. It’s because I have real hair, I don’t have to eat a toupee. I do have hats, so I’m not going to eat my hat. You get the idea, right? All right, I think gold’s going higher. Approach it in a number because, right, and I don’t make predictions, because I think this. There’s no one out there who wants to sell this market.

No one, except longs that are taking profits. So you need to wait for your opportunity to pounce if you want to sell it. Now’s not a time to sell it. We’ll see. I have a feeling, I have a feeling that, well, that the CPI was going to be higher than expected, this market would be already lower, as it would be leaked to big players, but we’ll see. All right. Oh, let me bring, here’s the daily, right? What did I draw yesterday? We drew together a trend line, right? I drew it on the, I looked at the daily, I drew on the four hour, and then I drew it on the one hour.

This trend line is a good trend line. If we go below it, you probably don’t want to buy that dip, but you want to buy dips approaching it. If you need to move the trend line around, that’s fine. Another corroboration of the trend line is when moving averages start to corroborate it. I’ll show you what I’m talking about. There, this moving average, it’s a 50 hour moving average, is now becoming the trend line. So I think this is going to hold this trend line. It’s an hourly trend line going into CPI, and then all bets are off.

So you should be long. I should be long, not you. You should do what you want to do. All right. Let’s get back to the Bank of America. Analysis, which is what I wanted to focus on today. I’m going to have to move quickly through it, but we have the report for premium subscribers at the bottom. I’m going to give you a little taste of it. These are things that I pulled out of it. China wants more silver than they have, and there’s a chart to that effect. Silver market is in deficit. Bank of America expects the silver market to remain in deficit, with declining inventories making these deficits more impactful.

That’s an important statement. Shortfalls are nothing new in silver, yet silver prices have been range bound between 2020 and 2024, averaging around 23 and a half an ounce owing to the piggybacking, the piggy bank being rated by bullion banks using it to satisfy BRICS demand. That’s me talking, not the report. So you have a market that’s not producing enough to satisfy demand, and you don’t have available scrap or easily available scrap or easily available recycled silver, however you want to call it. So you start to draw down on the vaults while you look for scrap, and that gives us this chart.

Between here and here is the time frame that Bank of America is talking about. Silver drops. Between here and here, inventory silver drops. So once upon a time, they compensated for the shortage in supply, fresh supply, by using the vaults. I don’t think they’re able to do that anymore, especially in London. Because they can’t draw down the vaults as much anymore, this will increasingly help make the deficits in supply, fresh supply, more obvious, especially as demand is bouncing back too, which brings us to demand bouncing back. China has shifted to a net importer of silver driven by both increased imports and reduced exports, signaling a rebalanced domestic market.

What does that mean? Well, increased imports, they’ve already depleted their own silver concentrate as an offload of zinc, and now they’re looking for it elsewhere. Latin America is one of them, so now they’re importing. They’re reducing exports. Now, the export number doesn’t matter as much. They export silver to Japan, so Japan can send it back in a different form, powder or paste. So there’s a rebalancing of the Chinese domestic market, meaning they don’t have as much indigenous supply, so they have to go out for it now. And these charts explain that. The concentrate comment I said, China’s domestic silver has tended to be oversupplied partly because its producers churned out silver as a byproduct at its base metal smelters.

Now, there’s less silver byproduct coming out of smelters. You will hear from many people that that is because there’s less smelter activity. That is true. So there is also less of it to be had because in the run up starting in May, China was going out to its base metal refiners and saying, pull your silver out now. They’ve already taken that silver, so there is no more due to scouring reported. China, demand X China is also rising. The West imports are rising. Japan imports are rising. I think the rest of the world is catching up to what China is doing.

Now, that’s really not even investment demand yet. Why is this? Well, there’s increased silver demand in solar PV, let’s face it. The West has to catch up where China is going to own that market. They believe that there is a gold to solar ratio drop expected, 75 or lower. We went down to 75 and went back up to 85 almost 90. Company all this silver prices on China’s domestic market have been trading at a premium to quotations X China. What does that mean? The price of silver is higher in China than it is everywhere else in the world, despite what you may hear elsewhere.

Now, they don’t mention, Bank of America does not mention the VAT as the reason for the higher price. Now, either that’s because the VAT isn’t the reason for the higher price or because their analysis is not thorough. You’ll have to find out for yourself. We pretty much know what we think it is, but the full analysis and full report are at bottom. It’s very thorough. I discussed that a little bit. Oh, the stock is down. The flow must compensate. This had been heavily influenced by healthy inventories, but those inventories are now too low to train further without replenishing the silver must now come from elsewhere.

All right. So a lot of people look at the vaults. We all our community looks at the vault roll down the vault roll down. That’s a stock trade as you’re pulling silver out of inventory. You’re saying, oh, there’s demand. They’re pulling silver out. Well, they’re not pulling it out anymore. Does that mean there’s no demand? No, that means they’re getting it somewhere else. That means they’re they’re, you know, melting down iPhones, whatever, you know, they’re they’re rating grandma chandelier. And consequently, that means this is at least in London, kind of a bottom. They don’t want it to get any lower than that.

You’re actually probably want to see silver increase because that’s over. That’s been pulled out of iPhones, you know, put into a refined form and put into the vault. Anyway, we’ll see how that goes. But this increasingly helps make the deficits more obviously, especially as industrial demand is bouncing back to yada yada. What we want to know now is we’re going to pull be a little bit more of a Colombo. We want to say, OK, the vaults are drawing down or the vaults are drawing down anymore. Does that mean silver is not being demanded or the vaults are going up? No, that silver is being demanded.

Just it’s just it’s passing through the vaults now. The above ground deficit in silver supply is being offset by banks going to scrap dealers by banks going to base metals refiners and saying, give us your silver off your silver byproduct. And that’s what’s going on. So until production gets caught up, that’s what’s going to happen. So the vaults are going to be hard to see that way. All right. Moving on. We had some news today, but I’m running a little bit late. So let’s let’s let’s take this up. Data on deck this week, CPI, PPI housing starts today’s PPI.

PPI is a forward looking with regard to see it doesn’t predict CPI doesn’t predict this CPI predicts kind of the next CPI or two CPI stem. So let’s see what happens there. There’s the Bank of America report. Silver sparkles brighter than gold. And by the way, you know, Bank of America has a a big short position in silver futures. That’s probably because they’re long, a lot of physical silver, just like Bank of just like JP Morgan is they’re not bearish. They’re they’re players in the market. All right. I’m Vince. One more check of the markets. Gold down seven and change expect stability, which maybe some violent jerks down $10 between now and then.

The market I’m looking at is the 10 year bond. I’m wondering what should happen next. Really? If the Fed Eases in that bond doesn’t rally, then we’ve got inflation. It’s going to come back like overnight. Anyway, I’m Vince. Have a great day. To purchase gold and silver. This week’s deals include constitutional junk silver for only two dollars and 50 cents over spot. And that’s for the half dollars with the dimes and quarters being even a little bit less. Miles Franklin also has the Trump fight for America. One ounce colored bars that are six dollars over spot.

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Please contact your financial advisor before making any decisions. And thanks for watching. Thank you. [tr:trw].

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