Vince Lanci: Silver Drops Back Under $30 Level

➡ Vince Lancy’s Morning Markets and Metals report discusses the recent shift of investments from gold to silver, causing market fluctuations. He also provides an overview of various market indicators, including the dollar, S&P 500, VIX, gold, silver, copper, oil, and cryptocurrencies. Lancy suggests that the market is showing signs of potential recession risk, with oil prices being a key factor. He also reviews an investor report titled “The Rise of Hard Assets” by Krescat, which includes charts showing trends in China’s gold reserves and U.S. treasuries.
➡ The article discusses three waves of inflation from the 1960s to the 1980s, suggesting we might be at the beginning of a new wave. It also talks about the current state of the US manufacturing sector and the stock market, including a glitch at the New York Stock Exchange. The article also covers the performance of gold and silver, suggesting that despite recent drops, they might still be strong investments. Lastly, it mentions geopolitical issues and upcoming economic data releases.
➡ The speaker discusses a pattern they’ve noticed where oil prices tend to drop around election time, possibly due to the incumbent party’s desire to avoid high oil prices in the headlines. They also mention that they and others are currently profiting from shorting oil. The speaker then promotes a special offer from Miles Franklin Precious Metals and reminds viewers to consult a financial advisor before making decisions based on the information provided.

Macro discretionary took some of their gold profits and put it into a silver with a vengeance when it got near that $30 area. And that drove the market up and some people got some people got really hurt. Unfortunately, then they sold some more gold out. Welcome to the Morning Markets and Metals with Vince Lancy, 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 Lancy, and today’s morning meeting, we will be going through some big picture charts from the Crescat investor newsletter.

And we’ll also be looking at some market driving news. But first, let’s look at the markets themselves and give you a chart to look at while we’re doing that. Let’s put up silver. The dollar is at $104.28 up $24. 10-year yields are unchanged. The S&P 500 is down $26 at $52.60. The VIX is $13.82 up $70, a little bit stronger overnight. Gold is down $22.9, $23.27. Silver is $29.71 down $1, 3.5%. Copper is $4.54 down $0.11, 2.4%. WTI is down another $1.14 at $73.11. Natural gas, $2.59 up $0.03. Bitcoin is $68,900. Flatt, essentially. Ethereum is $37.62.

Down, $3.00, nothing big. Platinum, Palladium are both down. Palladium is down $7.00 at $9.16, and Platinum is $1,008. Down, $3.00. Grains are all down. Wheat down the most, everything else pretty much unchanged. Soybeans are $1,175. Corn is $4.34, and wheat is $6.77 down $5.5. All right, so if you look at that chart, not that chart. If you look at that price area there, you take everything together, you’re looking at a marketplace as a whole that’s looking at deflation risk, disinflation risk, or recession risk. In a recession, when you look at recession risk, you say, well, stocks should be up because the Fed’s going to ease.

Well, if you’re in a recession risk, which we are now, at least that’s what the market’s pricing in, you wouldn’t normally have a stock market that rallies on the hopes that the Fed would be easing. But the market is progressively afraid that the market, that the Fed’s not going to ease. And so you get a stronger dollar as people say, well, if I want to get 5%, I’ll keep my money in cash. You say, well, if the Fed’s not going to ease, I’ll take my money out of stocks. And bonds are mixed.

You might see a sell-off in bonds. You might see a rally of bonds. The sell-off in bonds would come from the fear that the Fed won’t ease. The rally in bonds would come from people looking more at, say, something more global that’s deflationary in terms of risk. A war would be supportive of bonds normally. Gold and silver coming off, tell me that, and copper coming off, tell me that when you take all this together, there’s bearish economic news coming out of Asia rumbling. I don’t know what’s going on in Europe right now.

I know that they want to ease. And domestically in the US, you have recessionary forces. Oil is the key. I think if you’re looking at Asia and you’re looking at Asian economies, oil is the key. So oil took a hit yesterday. Oil is taking a hit today. And I think oil is weighing on the economies, not necessarily China, because they buy the oil, but economies like Russia and Saudi Arabia. And I think you could have a recession coming out of there. You could have a little bit of an Asian contagion coming out of China.

Anyway, it’s only two days of this, but I’d be wary of it. Because if oil keeps, put it this way, if oil keeps staying down, oil keeps dropping, as I expect it would be going into an election because wink, they can do that. Then you’re going to see pressure on gold. You’re going to, you’re going to see pressure on silver. You’re going to see pressure on copper. And not because anything’s changed, just because all that free money that the Chinese have to throw into commodities, because I think they’re going to go up because of demand, well, they might not be so willing to do that now if other economies around them are weakening.

Just an idea. Okay, so let’s get on to what we’re doing today. The Rise of Hard Assets is the title of an investor report by Krescat. And they’re usually a good read, and the charts are always visually appealing and informative. So what we’re going to do today is I’m going to go through a couple of those charts for you. And I’ll go through the rest of the charts in premium with first, second, and third level takes. So the first level take would be the title of what it’s about. The second level take would be the first interpretation, the third level take would be the implications for the market.

Okay, so let’s go. Let’s go to it. Front page. Why does anyone want more of the gold? We pretty much explained that as well as went through the Bank of America report yesterday. Options Masterclass. This is very academic, but helpful if you want to understand those reports by Zero Hedge and Spot Gamma that are about options, gamma, clenching, and unclenching. And I had a CFTC note that I put out for everyone yesterday. So a lot of content over the last three days. So here we go. Here’s a set. There’s like 24 charts, okay? And the charts are always good to look at.

And the writing is very good as well, but let’s go through a couple of charts. I’ll give you an idea of what we’re looking at here. Make it make it easier on everyone. All right. China’s gold rush. Oh, I got to make this bigger again. We’re not fitting, are we? Hold on. There we go. Let’s just start with the date. Okay, so here we go. China’s gold rush. The resurgence of gold gradually, then suddenly, you could see that as China reduces its holdings of U.S. Treasuries, it increases its holdings of official gold reserves.

That’s level one. Level two is, well, they are putting a portion of their sales and treasuries into gold reserves. That’s a correlation. And I’m telling you, the causation is something else, but those two go hand in hand. The third level is, well, they have a lot more to go. You know, the bottom of that chart is not the bottom of their selling. Anyway, nice little chart depicting, and you can ask yourself what happened and where did this start to happen? Well, it actually happened back here. And then we stopped here. See this dip here? Here’s a nice little third level thing here.

In 2016, they sold a lot of treasuries and they bought them back. Well, why is that? In 2016, the Yuan was admitted to the SDR, the IMF’s SDR. They had to do, this is a government playing some political games to keep everyone happy because the Yuan had to be strengthened. And for whatever reason, they sold treasuries to prove a point and then they bought them back. Okay, so this, look, China’s no innocent angel either. Everybody does. Everybody plays their games. Next chart. This is my favorite chart by them. It’s my favorite chart because, well, US treasuries are now more volatile than gold.

Okay, so throughout history, pretty much, treasuries have been less volatile than gold, going back to 1980, at least. And the reason for that was treasuries have been less volatile because they have been framed or perceived as a store of value that competes with, if not outdoes or outperforms gold. And that has been the case since the great inflation of the 70s was squashed. However, however, that’s a big deal. The trend is reversing. Now, the next level, the third level of that comment would be, well, these aren’t gradual trends. They don’t, this is not noise.

This is, this is a fundamental change in the market being reflected in volatility. All right, if gold is less volatile than treasuries in your big country, and you need to put your money in something that’s a safe store of value, that’s a less volatile store of value, you’re going to pick gold over treasuries. That’s the cause and result of people getting out of treasuries into gold. Next, global gold production versus gold price is a nice little chart because it shows the price of gold simply going up when production goes down. Now, the correlation is definitely over the long haul, a cause, a cause, a causation.

Over the short haul, it’s hard to see that, but you could see right now that what they’re looking at is that if production is dropping, maybe price is going to continue higher. Certainly, that’s something to look at over years, not over days or months, but it’s a pretty good comparison there. Correlation, gold goes up not just when the production goes down, but gold goes up when all the production is allocated. There’s really not a lot of gold. Here’s what I mean. Gold was going up even while production was going up here. That’s because there’s a scramble for it.

There’s not a lot of available collateral. This may actually be a big, if this keeps dropping, this could be a huge kicker once people start to pay attention to the fundamentals. Next chart, three inflationary ways in the 1970s. There was an analog going around, certainly I was one of the people doing that very early on in that there were three ways of inflation. Most people focused on the second and third waves as being the first and second wave, but here’s what we’re looking at here. In the first wave of inflation in the late 1960s, it went as high as 6%, but the economy is doing well.

GDP was, let’s say, 8%, and inflation was 6%, and everyone was working. In the second wave, in the mid-70s, inflation was as high as 12%, but everyone was still working. Now we’re in the middle of the manufacturing sector collapsing, so you’re losing your job at the Detroit plant, and you’re getting a job at waiting tables. In the third wave, between 70, this is one that I remember, between 77 and 82, you were getting fired, and the price of things that you needed to buy were going up. They contend that we’re at the end of the first wave, and you can’t argue with that analog.

The second wave, and there really was no first wave, where the first wave happened in 2011, it’s hard to say, but you’re at the end or the beginning of a wave, that’s for sure. If you believe, and here’s the third level comment, if you believe that inflation’s going to return and the government’s going to keep spending, well, then you believe that we’re at the beginning of the second wave. If you believe that we’re at the beginning of the third wave, then you also believe that the government’s going to change, and we’re going to get fiscally tight again.

Now, I don’t believe that the government’s going to stop being fiscally loose for the next three to five years, so I would have to tend to agree that we’re somewhere in here. Now, I hope, I really hope we’re in here, whereas it gets worse when the government comes to its senses, but I don’t think the government can come to its senses, so I’m defaulting in this area somewhere. Next, history of gold cycles, there’s no rules second and third levels to go through, but it’s a nice little history piece there, leaving that up there for everyone.

There are many other charts, and we’re going to go through the rest of those in premium with that second and third level commentary, but here’s a link to the actual report. It’s not just charts, it’s not just pretty, it is pretty, but it’s not just pretty. There’s a lot of argument here about the risk, the rise of hard assets, and they’re all good arguments. They’re fleshed out comments, things that other people have said, but they’re touching base and letting you know that we’re in the process of happening right now. There’s your charts embedded.

It’s a nice little write-up, and of course, it has their performance as well. Market news, going to market news. US manufacturing activity slowed for a second straight month in May as new good orders dropped by the most in nearly two years, so now look at the markets. The markets are saying, well, we think that the Fed’s not going to ease. You want to look at it through that lens, and we’re a little bit worried about that, so things are weaker. Oh, here’s a good one. Tin foil hat moment. An apparent glitch at the operator of the New York Stock Exchange triggered volatility trading halts shortly after they opened in about a dozen companies.

Well, this is completely correlated and probably related, if not exactly directly related, to the GameStop fiasco. Warren Kitty, I forget his name, Gil, he put out something on social media implying, though not saying anything, that the GameStop Open would be strong, and the GameStop Open was strong, and the New York Stock Exchange had a glitch. It’s kind of like, oh, let’s unplug the market because we don’t want things to get really too bad. That’s when I looked at it. Berkshire Hathaway went to zero on the data, and all the data feeds at mainstream media were bad, and they were literally putting out stories saying Berkshire Hathaway dropped 100%.

I should add the picture to that, but I don’t. It’s amazing. Geopolitics, mostly Israel. It’s not in here, but they’re bombing Aleppo now, and that’s where this all started in 2016, the whole Syria area. Okay, data on deck today is factory orders, so you’re going to get a lot of PMI, ISM type of data today. Tomorrow is ADP unemployment. In the premium at the bottom, I have all the charts, and we’re going to start broken out from the S story. We also have the story as well, but we’re going to go through that in a minute.

But first, let’s take a look at gold and silver. Okay, so nobody gets freaked out. Now, on a monthly basis, on a monthly chart, I know those two weeks there can be frightening if you’re a real technical analysis, technical analyst, but it’s not a disaster because it’s a higher high, and pretty much it didn’t confirm it, but it didn’t negate it as well. It’s not necessarily bullish, but you won’t know until the month is over on this chart. So let’s bring it in a little bit. On a weekly basis, it’s a trading range.

Until we get below this area, which is an area I marked off before, this is where that big buyer was before. We’re fine. It’s a big trading range. Don’t sweat it. On a daily basis, if the market can hold above here, that trading range bottom where the buyer was, and this gets to oversold. Give me an example, like down here, which happened in February, then you have another March 1st. So we would like to see the market, if we’re bullish, and we are bullish, to trend sideways, ideally holding this area while this drops, but more likely at least have a test of this area while this drops.

You have too many longs on the speculative side, too many is a subjective term. It’s too many if they lose money. It’s too many if you want the market to go down. It’s not enough if you want the market to go up. You follow? So just ignore the press if you can. All right, silver. Let’s stay with daily and go to silver. Silver, this is what we had a couple days ago. We had the sell-off that was accompanied by gold. We had the rally that gold did not participate in, and now we’re back to where we started.

This sucks. I’m not saying it’s bearish. I’m saying it sucks, because when gold sold off, silver sold off. When silver rally, gold rallied anemically. Okay, and my hope was that silver stabilized up here, and it dragged gold higher because gold is the metal everyone wants. Unfortunately, the selling came back in gold, and it dragged silver down with it. So what’s going on behaviorally? Behaviorally, is macro discretionary. Macro discretionary took some of their gold profits and put it into silver with a vengeance when it got near that $30 area, and that drove the market up, and some people got really hurt.

Unfortunately, then they sold some more gold out. So if you want to play the game, then this is where you buy silver right here, right now, or you let it go below this high, and then close back up on a daily basis, and expect us to go to the top of the range. So if you’re bullish, you see this as the bottom of a range. If you’re bearish, you do nothing until it gets below this area, and you could get chopped out as well. So silver recoupling with gold on the downside, I’m sorry, gold recoupling with silver and dragging silver down really sucks for the short term.

However, however, we’re this oversold. No, no, I’m sorry. We’re this, the RSI is here. Last time our RSI was here, we’re trading $26, $27. So maybe $30 is in support on a day-to-day basis, but $30 is an area of interest. And if this market is holding $28, and RSI is somewhere down here, the next leg is going to be higher. Remember what Michael said, the pullbacks, but we’re in the time set, the acceleration phase, he believes. So on that note, if you’re looking at the acceleration phase, you want to actually go out to the monthly, that’s kind of what he prefers.

And you say, you know what, bad start to the month, but this is not bad. Look, market makes a high, RSI makes a high, market makes a new high. It doesn’t look as great in that last week, last week was horrible. Look at this month, this is ridiculous, right? This makes a strong, this is a very strong market on a monthly basis. In terms of months, it’s not where silver opens, it’s where silver closes that matters, right? So it’s a bad start to the month. It’s a bad start to, it’s a bad end to last week, and it’s a bad start to this week.

You got to expect this market to pull back. I mean, if it doesn’t, then it should move, because this is not a range. It can’t be happy in this range, okay? Stay with us, and I’m going to go through these charts, the rest of these charts, in premium. Presley, I do want to mention something about oil. We’re going into an election, and you may or may not agree with me on the level of suspicion that I have, but I have seen elections come and go, and usually when they come, whoever the incumbent is, as they approach their convention, the commodity oil drops.

How’s that? I started first noticing it with George Bush when he was running for reelection. Oil just cratered as we were approaching his election. I think that’s the incumbent party saying to the Saudis or to their own sellers, we don’t want to have inflation or high oil prices in the headlines as we go in with our marketing plan, and I think that’s happening now. A little bit early, but jeez, yeah, it’s happening a lot, so be careful. The CTAs are also short oil. I’m making money, so the CTAs are making money right now.

I think they’re selling their gold, and now they’re getting short oil, which is goofy, but there you have it. That’s the way to do it, I guess, if you want to make money. That’s it. Hope you enjoyed this. Have a great day. Thanks for watching this morning’s markets and metals update with Vince Lancey. Brought to you each day by Miles Franklin Precious Metals, where this week’s special is 2023 dated one ounce silver cougarands from the South African Mint for only $3.10 over spot, and even with the price rallying, fortunately the premiums are still on the lower side, and to get a full price list or place an order for silver cougarands at $3.10 over spot, just email us at Arcadia at milesfranklin, and we’ll be happy to get you set up with anything you need.

And as always, thanks for watching. Hope you’re having a great day out there. 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, and thanks for watching. [tr:trw].

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