Vince Lanci: Weekend Fireworks In Silver Leave Price Near $32 Again | Arcadia Economics
Summary
Transcript
In two down days, silver went to here. Call this a nothing day, okay? In one day, it rerallied. It doesn’t really do that in a bear market. It makes two down days, pauses, and then rallies anemically or sells off again. So it took almost, it took one day to almost recoup all the losses in two days, right? So that’s a sign of a bull market. 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. I hope you had a great Memorial Day weekend with your families. We had some fireworks over the weekend in silver, as I’m sure you know. If you don’t know, you’re about to find out all you need to know about it in what I think will be the definitive silver update. Before we get to it, the dollar is down 21 at 104.36. The 10-year yield is 4.46 unchanged. These are prices after Monday, summer after Monday, summer after Sunday. Gold is down $6 after rallying about $20 on Monday at $23.44.
Silver is down $0.8 at $31.55 after rallying about $1.20 on Monday, which is what we’re going to be covering. Copper is $4.78 after also being very strong. Not as strong as silver, obviously. WTI was strong on Monday and continues to follow through higher at $79.20 of $0.25. Natural gas, $2.49 stable, but down $0.04. Bitcoin, $68,402 down $1,000. And Ethereum, $38.98. So Bitcoin is stable. Ethereum is stronger. This is the whole Ethereum spot rotation starting to happen. Whether you want to do that or not is up to you, but that’s what’s going on.
Platinum palladium, palladium down $13, platinum down $4. So platinum, the stronger of the two, and it will remain that way unless some news comes out. I would tend to think that people are literally selling platinum palladium now to buy silver. It sounds crazy, but it’s not. Gold silver, $74.25. I mentioned that because that’s been a canary in the coal mine, surprisingly actually to me, meaning it broke out, but it stayed out. Usually it breaks out and comes back in, which is another sign that this market is for real. Grains, soybean down $0.04 at $12.34, corn $4.58 up $3.75, wheat $7.1440 up $0.11.
So it’s all about wheat right now. All right. The definitive silver update. Let me reload. Stay with me by the way. At the end of this, we’re going to have an extended version for premium. All right. So the definitive silver update, we’re going to talk about silver from three risk management perspectives. The first is what happened on Monday and what we think happened on Monday. The second will be how does Shanghai factor into this? Everyone talks about Shanghai now, but not many really don’t know what they’re talking about. Unfortunately, we’re going to try and help frame that for you so you can think on your own when you see information and there is information out there now.
And thirdly, I guess this would be the dessert. Michael Oliver on Sunday in his 360 degree weekend report, which covers all the macro markets, had a nice feature on silver. And I look, I really appreciate the work that comes in looking for the potential problem after the home run, not the home run per se, but, you know, the after the breakout, we’ll call it that. And that’s what he did. And that’s why I continue to focus on his work because he basically says on Sunday, I wouldn’t sell if I were you.
And then we had a rally Monday. It’s a good feeling. I know he doesn’t play for the short term, but it’s a good feeling to be right like that. I’m sure. All right. So here we go. Front page, gold fix, BRICS, G7 divorce agreement has been helpful in seeing the geopolitical events that have happened since the joint statement by Russia and China would really happen. Lockdown until vaccination. That’s an unlocked post. We didn’t write that, but we thought it was pretty evidentiary for how the vaccinations were used as a strong arm method and a Memorial Day.
Happy Memorial Day. We sent a lot of content in that, although we didn’t advertise what it was. Theorem, gold, silver, oil, pretty much everything that was in our group’s interests. All right. So the main event. Silver’s rally Monday, Shanghai connection, Michael Oliver’s silver comment. Again, this will be extended at the bottom of the conversation in premium. All right. Silver’s rally Monday. I love to put up the 15 minute charts and and go through this because it’s just visually very appealing. But I’m going with this today because it’s as obvious here as it is anywhere else.
In two down days, silver went to here. Call this a nothing day. Okay. In one day, it rerallyed. It doesn’t really do that in a bear market. It makes two down days, pauses, and then rallies anemically or sells off again. So it took almost it took one day to almost recoup all the losses in two days. Right. So that’s a sign of a bull market. That’s what caught our eye. And it happened on a Monday on a holiday when U.S. banks were sleeping. That also historically is appealing to us because that’s how players play.
When the masses are sleeping, they tend to put positions on or exacerbate situations that are bad. If you’re short copper and copper goes up during Asian hours, you’re apt to cover when the text opens if you’re sleeping. Same thing works for silver. Holiday weekends make for more fireworks. Now, the market is not showing you that this morning, but that’s not the point. The point is the market’s in play. All right. So two down, one up. So this is an impressive move, okay, because it wasn’t done on light volume. It was done on heavy Asian volume.
And we’ll talk about the Asian connection in a second. But this is also significant because people like Peter Schiff said it should hold at $30. Now, everyone says that all the time when it gets to a level, but it’s a pretty significant statement to say $30 has been resistance forever. Right. I wouldn’t know that it’s resistance forever, but let’s face it, they’re not happy when it gets about $30 and now it doesn’t get below $30 the first time down there. That’s amazing. It’s amazing because well, this is how macro discretionary works.
Macro discretionary, we noted had been buying, uh, in here and they started buying at the end of, uh, April and they’re not fully invested. So macro discretionary is buying this. No one’s talking about silver at the bank level for good reason. That’s the first part. So macro discretionary enters the chat. We sold what they did in gold. You know, I’ll put that up for you. This is macro discretionary entering and that’s macro discretionary selling some. Okay. Just keep, keep that in mind. All right. Back to, uh, the, the story. Macro discretionary enters the chat.
That’s what happened on Monday. Now, what should happen today before I get to the next part? Well, there is no should, but what could happen today is the market could have been called a lot higher, but it’s not the market can stabilize here as people who bought it on Monday in Asia, sell it on Tuesday here, or the market can go sideways, which is kind of what it’s doing now, stabilize for a couple of days and then rally higher. Those are the three things that I think are the most probabilistic. And the first one obviously been taken out.
Uh, we’re not, you know, 20, 50 cents higher. So, uh, the fact that we haven’t dropped 50 cents is important, right? I mean, we’re coming into the LBMA time and I don’t think the LBMA has metal to sell anymore. I think it’s all being spoken for. Second part, the Shanghai connection, what it means. All right. SGE is physical. I want you to think about that. If you’re American, like that’s the LBMA. SFV is futures. That’s futures. Think about that. Like the COMEX, the spread between these two would be similar to the EFP in the US.
Now, starting with, um, starting with, well, let’s start with silver because this is mostly about silver. All right. The Shanghai futures exchanges trading 35 41 at yesterday’s close, which is, you know, depending on how you look at it, anywhere from three to $4 and 50 cents higher than US silver on futures equivalent. Now there are some differences that are not accounted for, uh, like insurance costs, storage costs, cost of capital in China, capital controls, but, uh, they don’t eat, uh, $4 out. Uh, will it persist? Yes, it will persist for some time and it will persist until either it’s closed financially, which is not happening.
Right. And there’s a reason for that. The world is not talking to each other or someone delivers a silver to China, which is not happening from the COMEX, uh, because silver is just too expensive to ship relative to gold. As long as the gold arbitrage is there, meaning gold’s trading higher, then the silver arbitrage, uh, will remain because it’s gold takes up less space. Now, if silver were trading $3,000, uh, you would see the silver arbitrage close, but that’s the point. So looking at these numbers and trying to get them, uh, uh, in perspective, this is from by the Shanghai futures exchange is trading 3541 at a premium to the COMEX.
All right. Now going up top, the Shanghai gold exchange silver is trading 3551. That’s very significant because the spot market is trading higher than the futures market. That means there is a, that’s literally what a short squeeze looks like. This is the beginning of a short squeeze in China. Now how long it will last or how long to persist? I do not know, but you can, you can bet that JP Morgan and Goldman Sachs and, uh, the, the better, not necessarily bigger billion banks are involved in this. Now moving to gold for a second here, gold is also at a premium to the U S but that premium has come in.
When this premium collapses, you may see the silver premium collapse aggressively. So just keep an eye on that. The second part of that is notice that gold futures 2023 83 are not above gold spot because that is not a short squeeze in gold. All right. If you get a real short squeeze in gold, it’s the end of the world. Forget about it. Silver will be the end of the world too, but it’s not the way we say. So there you have it. The Shanghai gold exchange, the Shanghai futures exchange shows a persistent premium in China that is not being arbed out financially or physically from U S gold, which means that silver, which means they have to literally find the silver next.
Michael Oliver, I’m just going to read what he said here and draw some attention to pictures that he’s looking at. This is Michael Oliver’s report on Sunday. If you panicked at each drop, referring to silver, including the genuine correction in January, 2011, you’d likely have missed the massive acceleration portion of this multi-year bull trend from 2011 to 2011, $20 to $50 and three quarters. He has a chart here, right? I’m going to read. So he has ovals, circles, ellipses, however you want to call them, over certain areas, right? This one here, 5% drop in one day.
We’re talking about 2010, right? So these are corrections running into the bull market that ends in 2011. So it starts in 2010 on his chart and it ends at pretty much the peak in 2011. So 5% in one day, 8.5% drop in six days. That’s a lot, right? 5% in one day. We didn’t even have one of those yet. Third, 5% drop in three days. Well, there it is. 15% drop in five days, 5% drop in three days, 9% drop in two days, 16% drop involving a month. This is significant. He writes about that.
A 7.7% drop in two days, an 8.7% drop in six days, and a 5.5% drop in two days. Well, my comment to what he’s saying there is this. It’s pretty much self-evident. If you sell too soon, you’re probably going to miss the boat. We’re not even in these areas of 5% drops, 8.5% drops, 15. We’re not even there yet. So he’s saying as long as the bull structure is in place, you’re not even worried about a 2% or 4% retracement. That’s the cost of doing business on the way to what he feels is a much bigger breakout.
He goes on to define the onset of something worth calling the correction much more at the bottom, meaning what we had these two days here, that’s not a correction. That’s a pullback. We haven’t even had a correction yet. This is healthy, and I can’t disagree with him. We’ll talk about that more at bottom. He goes on to define the onset of something more. He said that already. All right, so moving on to the news. Stay with us, though. We’ll have a little bit more to add at the end of this.
Market news. China’s smartphone market. So the market news over the weekend is basically China is buying less smartphones from the US and more from Hawaii and Samsung. Geopolitics shits you over the weekend. There’s a lot, but I only put a couple here. The key point is Israel has really moved in on its Rafa invasion or attack. We’re offensive, however you want to look at it. Civilians are dying. Bombs are going off near hospitals and other civilian areas. And the accusations of, how do I put this? The accusations of just indiscriminate bombing are really rising now.
And so to the point where you’re specifically France and the US are possibly going to, I think probably might be, are probably saying, that’s it. We’re done with this. And my guess, I have very little to say to this. My guess is that’s probably because it’s almost over, meaning they’re going to complain about what Israel is doing as they’re finishing. It is what it is. Israel immediately, leaders of opposition parties will discuss them on the formation of an alternative government and the ouster of Netanyahu. So this is getting big. Netanyahu’s really buckled in.
China is conducting more military. This is me just summarizing. China is conducting more military exercises. The West is now pushing back on the Israeli strikes in Rafa and civilian tolls are rising. And North Korea is shooting more missiles. Ukraine is relatively calm, but we get a little bit of a break today. Data on deck. Well, yesterday was Memorial Day today. We have speakers at 10 a.m. consumer confidence. Wednesday, beige book. It’s all about GDP and PCE on Friday. Chill out is probably not the right phrase there. I didn’t refresh this. All right.
Stay with us. We’re going to go through premium and we’re going to add a little bit more color on Michael Auburn. So I’ll be doing interview with him with him on on Wednesday. I’ll give you more on that more details than that as I find out. All right. So let’s go back to the markets. Silver’s down three cents. Let’s go to a 15 minute chart. So here’s all right. I will go to one hour. So it’s less squished. So here’s the two day sell off. Boom, bought, boom, bought. And then you get that right.
Now we have Monday. All right. These are stops going off. Somebody got her to thirty one dollars. There’s someone short and covered and you have the sell off. This is profit taking. See that we have an algo in the market. Interesting. OK. So someone caught the sell off. There’s buying underneath. Anyway, trend line might not be a bad place to look on this now. All right. So I’m Vince. Have a great day. Thanks for watching this morning’s markets and metals update with Vince Lancy brought to you each day by Miles Franklin precious metals where this week’s special is twenty twenty three dated one ounce silver cougarands from the South African Mint for only three dollars and ten cents 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 three dollars and ten cents over spot. Just email us at Arcadia at Miles Franklin 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 license 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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