Vince Lanci: Expectations On Gold vs. Silver For Rest Of 2024 | Arcadia Economics

They will sell silver. Literally, they will sell silver in the hopes of dragging gold lower. And in doing so, the whole market will back off. Welcome to the Morning Markets and Metals with Vince Lancey, where each day he brings you the precious metals in financial news to get you ready for your day. And now, here’s Vince. Good morning everyone. I’m Vince Lancey and today we will look at gold versus silver for the next five months going into the election. We will also take a look at a new report by ANZ Bank and their take on silver and gold, which I thought was particularly interesting on silver.

But first, let’s look at the markets. You can see I left gold and silver up there. We’ll talk about that in a minute. The dollar is down nine. Ten-year yields are down almost two basis points. S&P 500 is down 24. F5535. The VIX is 1635, down 16. Gold is 2403, up three bucks. Stable anywhere between up one buck and up one five bucks. Silver down 36 cents at 29 and change. Not stable, obviously for the moment, down 1.2 percent. And copper is 420, down 70 basis points. So silver acting like a Chinese industrial metal today.

WTI is down 35 at 79.56. Natgas is 218, up seven cents. That’s significant, but still now we’re in a new range, natural gas. Bitcoin 849, down 1.2 percent. That’s not futures. That’s Bitcoin proper, we’ll call it. At 67,345, Ethereum is 3488, down 46. Palladium is up six. Platinum is down eight at 913 and 955, respectively. You could see the gold and silver ratio there and on your screen. And grains are all up, pretty much escalating in uniform fashion. Soy is up 14 cents at 1116. Corn is up almost six cents at 392. And wheat is up 11 cents at 553.

So wheat leading the grain, the granular charge, I guess is how you look at it. All right. Let’s start here. Today we’re going to talk about gold versus silver for the next five months. And the expression that I think you want to keep in mind, or the expression that made me think of this, a little bit of adjustment here, is when an immovable object meets an irresistible force. There’s a paradox there and gold and silver. I think it’s a good representation of that now. And it’s not the first time we’ve done this, meaning it’s not the first time it has done this.

On the front page, we had a special about trading gold for the next six months. I’d have to say this gold silver commentary today is going to be kind of a corollary to that. But this was a very, let’s put it this way. This was a work of passion. This is, that was a portfolio assessment for myself, going from a secular down to the micro and showing levels that I thought the market would drop to if it continued to drop with the hopes, obviously, that it would rally. But you can’t play hopes when there’s money on the line.

India needs the gold. Also, another very nice piece, coincidentally by ANZ. And there’s the top stories today. Dems go full throttle on Kamala. After Biden drops out, 2024, click on that for a second. This is basically headlines and links. This is available to everyone. So we all know, we probably all know that Biden said he will not run again. And in doing so, endorsed Kamala Harris to be his successor. There are plenty of takes and interpretations on that. And we actually put out initial comments on that last night that was here. And in that story, basically, that’s a rundown of what actually happened.

And that story basically said, Kamala, they’re going to get behind. If the Democrats are united, they’ll get behind Kamala. If not, they will not. And as we go to the convention, you could have a, I’m not sure what they call it, not an open convention per se, but let’s put it this way. 2024 could be like 1968 for the Democrats. It’s in the same city. History is definitely rhyming. And I would say if you’re going to, if you want to get a good take on this from anyone, get RFK’s take. He has a, he has skin in the game.

He wants to get on this ticket, one way or another, in my opinion. But when he’s not talking about himself or say sucking up to Biden, there’s an aspect of that. He’s giving a good take on what’s going on now, historically. We haven’t listened to the whole thing yet, but he’s been saying some pretty relevant things to the situation. Anyway, moving on premium markets. Oh, we shouldn’t be on that page. We should be on that page. All right. So here we go. The ANZ on silver and gold and the gold buying meets silver sign.

Ooh, a little uncoordinated right now. Let’s get focused here. Let’s start with the ANZ. ANZ puts out a mid-year commodity report and in it, they go through every commodity and you could see by the cover page, this year is very energy oriented for them. But when is it not in this world? However, they have silver, gold, and copper to discuss. And it’s a very heavily chart-laden book, but it’s not without some good points. So most of the precious metal section is developed to gold, is focused on gold. But there are two comments on silver that I think are worth mentioning here because they tripped an alarm bell for me.

All right. So anyway, first of all, the backdrop I’m reading this is I’m worried about Chinese recession or deflation, pulling industrial demand from silver and investment demand from silver, even as copper has already started crapping out. All right. So even as gold is rallying. So here we go. They believe investor demand for silver is picking up as the gold price rises. Now you may say, that’s obvious. It’s not obvious. See, gold gets to a precious metals, but you know, gold’s gone too far too fast. I’m going to buy some silver. And that happens.

And that’s when we see those four, six, 7% spikes in silver, because these guys decide to buy and they cause all the guys who’ve been shorting it for the last six months to cover. They believe the gold to silver price ratio has normalized 77 to 78. Well, call it between 75 and 82. That might be right. However, and this is what, you know, when they said that, I’m like, yeah, this is right. However, we getting industrial activity in China will be ahead when if the gold price consolidates again, another seemingly obvious statement, but it’s not what they’re saying is we do not have any cut and a global economy, specifically China, a global economy that’s going to put tailwinds behind the silver price.

So silver will outperform gold on the upside in spurts, but not as much as it would if there were economic tailwinds. So the US is headed towards recession. We’ve been hearing that for about a year now, but I think, I think it’s, I think it’s happening now based on the fact that the fed might actually ease China while they had a nice little pop, there is back into recessionary path. So just keep in mind if gold falters, silver is not going to hold up. That’s a macro comment. But the micro comment is what I’m going to get to next.

And that is they’re selling silver to buy gold. We’ll get to that in a second. So here’s a couple charts, China’s silver imports are picking up. This is what caught my eye. It’s not bigger, specifically caught my eye because well, you know, why are China’s silver imports picking up if they’re doing, if they’re struggling? I think that’s interesting. And I think that’s investment related, not industrial related. So I’m looking for that to continue, even if there’s a recession. Also, this is at the same time, India’s silver imports are slacking off.

Remember that, remember, China was buying gold, India was buying silver. Now, China is buying silver and India is buying gold. These guys are working in tandem, I think. I mean, the evidence suggests it, you’ll never have proof, but I’m working with that theory. I own gold, moderating US inflation and a weakening labor market are bolstering the case for two cuts this year. That’s a good assessment. Any delay in the Fed rate cut to beyond September will trigger itself. Right now, the market is discounting a almost 100% probability of a rate cut. Doesn’t mean it’ll be a rate cut, just means the market thinks there will be.

If the Fed does not cut rates, or the Fed gives an indication that they’re not going to cut rates, well, then you got a problem. And that problem is they’re going to have to lay the rate cut. It’s coming, but they’ll delay it. Okay. So gold is vulnerable to that. Meanwhile, gold ETF holdings are recovering. So there’s investment money coming back into the market. Next, gold silver. All right. Let me start with, let me start with, let’s go, let’s zoom out a little bit. All right. I have been trading the gold silver spread as a spread since 2001.

Okay. But that was as part of my market making and options duties. I would have to look at one volatility versus the other. I have been trading it actively against each other since 2011. I would trade silver versus gold versus copper in like a three-way trade. Now here’s a gold silver monthly chart. See this pattern here. This is when silver made the $50 high. And then from here on in for years, six years, silver got crushed relative to gold in an orderly fashion. I believe, but cannot prove that this is when the world central banks literally started saying, ah, great financial crisis 2012, we should start buying a little bit of gold.

And so you started to see gold be bought, not necessarily silver sold, but gold. No one’s going to sell silver after this rally to a $50 silver started to be, uh, depreciated against gold in 2016. When this happened, I got long silver saying, you know what, this is over. Silver’s got to catch up the gold. This is, I didn’t look at it as a technician and it just continue to see this here. That’s someone selling silver to buy gold. That was very painful for me. Uh, I was out long before this, but it was very painful.

Now, why am I giving you that history? Well, look at this here. It’s not the same channel, but it’s virtually the same angle until recently. So let’s now we start to zoom in a little bit. There’s the weekly. This is a channel that I had drawn going back, uh, when I saw right around here, uh, in September of 2022, I was closely monitoring these and gold was trading 1708 and silver was trading 1767. And I was wondering where they’d be trading if it got off to this top of the range again.

Anyway, this channel is not that channel, right? But it’s similar in angle and it’s similar. I think it behaviorally mon modeling the world’s appetite for gold, not their appetite for silver or lack of appetite, appetite for gold. And this is a market that’s being bought by central banks and being, uh, uh, not buying silver now. And as such, you will see, I see this here. Those are central banks, you know, buying gold and summer selling silver. And I, this graph, if you’re familiar with Michael Oliver’s work, it’s basically the way that we normally look at it, you know, as it goes down, silver is going up relative to gold.

Michael inverts it and puts it really in the more intuitive way to look at it. Silver as a percentage of gold. And so he has this, he had had, he has had this line going back for a significant amount of time, probably as long as I have. And when we got for our chart below this line, he said, well, there you have it. Uh, we’re in a breakout of a major structure where breakdown on my chart and the market should, uh, silver should start to out to outperform gold. And I agree. However, I also know that the market tends to end rallies when it spikes lower.

It ends rallies in silver now, but that didn’t happen. And I was, you know, enjoyed by that. I was enjoyed listening to me. I enjoyed that very much. And then we had this little move here. Now we have to go to the daily. There’s your daily, right? So there’s the line and daily, and now here we are. Right? So this is silver playing the game in there. All right. So what, what, what am I trying to say here? Here, what I’m trying to say is silver gold buyers here. Gold versus silver. Gold’s buying is an immovable object.

They need to buy it between now and the BRICS summit. It’s not the election. It’s the BRICS summit that they’re looking at right now. All right. Sorry about the noise. Gold’s buying is an immovable object. They need to buy it there here, wherever that is, they’re buying it. They’re not going away. Yeah, they may lower their bid. They may go raise the bid, but they’re buying it. Right. The bullion banks also need to buy gold so they can sell it to other people. The bullion banks are the irresistible force that needs the market to go down.

They can’t sell gold anymore. They are selling silver to help them facilitate buying gold. Okay. So the immovable object is gold. The buying is not going anywhere. The irresistible force are bullion banks selling silver so they can buy gold. And the result is, and here’s where it becomes practical for everyone. The result is, we’ll go to daily. The result is wild swings in the gold and silver ratio. The result is when gold rallies and the buying stops, the bullion banks can no longer just nakedly sell gold like they used to because there’s real buying and that’s the immovable object.

And so what they do is they will sell silver. Literally, they will sell silver in the hopes of dragging gold lower. And in doing so, the whole market will back off. Now, taking the paranoia out of it, the market is also a they. And the market is saying, you know what? We need the gold for the multipolar monetary reset. We don’t need the silver because of recession. So there are two players in the market for getting the tinfoil hat stuff. We need the gold as collateral now. We don’t want bonds anymore.

Let’s buy it. We like the silver, but if China is going to weaken and the US is in recession, let’s look at it like it’s industrial. And so the natural, genuine behavior of the market is to buy gold at any price and to sell silver if the economy looks weak. And so you get this, right? And then you get the funds selling silver harder and harder because they think they’re making money. And this ends with those six to seven move rallies in silver. Now, is one of those going to happen tomorrow? No, but I’m saying this is the immovable object is the gold bid.

And as long as that immovable object remains immovable, you’re going to see this happen to silver. And then when gold takes another leg higher, you’re going to see silver rally. So it doesn’t have to be manipulation. It is gamesmanship. These people are playing a game in the market. They lose money when the market rallies and they lose money, big silver rallies, five, six, seven percent. But right now, right now, I’m saying to you that the world is looking at, again, recession. They’re selling silver, right? Are the bullion banks also selling silver? Of course they are.

Of course they are because they’re bearish gold, but they can’t sell gold because there’s just too much fine. Anyway, so that’s it. I think I think between now. All right. So just to tie this all together in a more organized bow for you, since this is very extemporaneous. Between now and the election, the buying in gold will remain incessant. It may be lowering of its bid because prices lower in silver. It may be raising of its bid as the clock gets closer to the election, but it will not go away. Silver, on the other hand, will rally when gold rallies too much.

And when gold goes sideways, silver will go down because people are looking at it saying recession, I’ll sell silver. But when gold rallies to go recession, maybe I won’t sell silver today. Okay. So between now and the election, gold will have a bid. That bid may be here, that it may be here, and the bid may be here. Between now and the election, silver will have an offer. The mid, the selling will be into weakness or not at all. Okay. If silver drops, they’ll sell more of it. But if silver rallies on the back of gold rallying, 10% moves are going to start happening.

So that’s it. That’s the gold and silver relationship. And right now, the best way to look at gold and silver are two different commodities. Silver is a hybrid of industrial and precious, and gold is beyond precious. Gold is like a lot of precious metal. It’s something they absolutely need. And that’s why you’re seeing that. Silver drops 45 cents. They just got gold on their unchanged. I mean, look at this. It’s ridiculous. They have to go to the daily. We’ll go to the hourly. All right. Silver is 45 cents lower to get gold to crack unchanged.

There’s nobody who can sell gold right now. Now there is one cohort that can sell gold. Those are all the crazy funds that bought last week. So the gold market will go down, but the silver market will lead its way lower. Back to the markets, you can see what’s going on there. As to the effect of the Biden announcement on gold and silver, don’t think it affects gold and silver. The election will certainly affect gold and silver in terms of certainty and uncertainty. I speak about that a lot, but the changes right now don’t add uncertainty to the current view of the outcome.

Trump already beat Biden. He already beat him, right? Now Trump’s got to beat who? So the certainty is Harris, as the Democrats are putting on a brave face. Kamala, Kamala, Kamala, it’s going to start happening now, right? They’re going to try and change the focus from the economy, the inflation side of the economy, to the social issues again, women’s rights. So Kamala’s there, women’s rights are going to try and motivate their base. It’s an I’m with her moment. That’s going to happen, right? And they need to solidify that between now and the convention.

If they don’t, you’ll have a chaotic open convention. You’re already seeing it. You’re already seeing the brave face thing. However, and all the endorsements for Kamala that came out, the Clintons endorsed her, but Hillary will pick up the phone if they call. Everyone else that matters endorsed her, you know, Pelosi, who probably is the one that got Biden to step down. But there’s one auspicious non-endorsement and that is Obama. And he’s feeling it out. That would be for Michelle or whatever her name is. So here we go. Silver’s down. If gold cracks while silver is down, you don’t buy the dip.

Okay. All right. If gold pops and silver pops with it, you buy the silver. That’s how I’m looking at it. All right. Have a great day. I’m Vince. Well, thanks for joining us here today for the Morning Markets and Metals with Vince Lancy, which is brought to you each day by Miles Franklin Precious Metals, who we encourage you to use when you’re buying or selling gold or silver. We’re proud to be a licensed representative for Miles Franklin, where this week’s specials include constitutional half dollars for only $2.50 over spot and one 10th ounce American gold Eagles for only $39 over milk.

And you can contact us for more information or to place an order by calling 833-326-4653 or emailing our Katie at milesfranklin.com where we’ll be happy to get back to you. And you can also reach me if you have questions that you’d like to discuss and we’ll be happy to get you set with all of your gold and silver needs. So call us at 833-326-4653 and thanks again for watching. 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.

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