SD Bullion

These Four Banks Control Gold and Silver Prices

On the heels of the United States' Office of the Comptroller of the Currency (OCC) publicly admitting at the end of the first quarter of 2022, that the major US precious metals trading markets are derivatives-dominated by only a few highly leveraged commercial bank players.

To be more precise, only about four counterparty-risk laden commercial banks often really run the price discovery show. The largest being JPMorgan Chase, then Citibank, Bank of America, and finally Goldman Sachs.

At the end of March 2022, they were then counterparty to +97.5% of all US derivative bets involving silver prices, platinum prices, palladium prices, and gold prices within complex derivatives like swaps, options, and futures contracts. The latter COMEX & NYMEX futures contracts hold huge sway over the prices quoted for precious metals around the world (gold, silver, platinum, palladium).

Stocks and Bonds Still Showing Record Losses

Precious metal spot prices are showing continued weakness. 

How far might the silver spot prices dip? Where might the spot gold-silver ratio climb to?

The first half of this calendar year, 2022, is now over.

And record-sized losses are becoming the norm in the world’s largest paper asset classes (e.g., bonds, stocks).

The numbers are extraordinary in sheer size and also in a historical financial market context. 

We also examine new data which illustrates it is already an economic recession in the USA this summer of 2022.

Silver and gold spot prices increasingly sold off throughout this week’s trading.

When Will Gold Replace Fiat? Eventually.

David Einhorn of Greenlight Capital made an elegant presentation on his gold bullishness earlier this month, making his case for why they are going into gold now and not later.

Increasingly you will see more famous hedge fund managers and financial whales making the base case for gold bullion as the fiat Fed and US Treasury have painted themselves into a coming gold bullion mania corner. David is perhaps a bit early but many more big-money investors are soon going to come to similar conclusions with increasing capital flows to gold as well.

Will Gold and Silver Bullion Outperform Stocks Again?

After now, a decade and a handful of years of reckless financial policies have brought about nominal price bubbles at still dangerous levels in various major asset classes. 

And after the fiat Federal Reserve’s leaders kicked off a secular price inflationary regime policy in August 2019.

They want you, me, and other financial market participants to somehow believe they can manage a soft landing of their fiat financialized asset bubble economy with a mere orderly decline in said bubbles.

We begin this week with a linear chart of the US stock market's S&P500 index over the past 100 years. Fiat financialization kicked off in the 1980s. But it was not until after the 2008 global financial crisis got papered over with more than $100 trillion in international debt levels that imaginary nominal paper wealth numbers in the US stock market blew through the roof.

Inflation Continues to Record Highs, Good for Gold?

Price inflation in the USA continues to come in at record high levels. 

The current head of the US Treasury's public policy on raging price inflation has now apparently been reduced to…

Hopium - (n) an irrational or unwarranted optimism that things might change sooner rather than later (in this case, regarding raging price inflation escalations to come).

Last week's +8.6% consumer price inflation year over year data point is still only underreporting price escalation facts of real-world costs rising. More often now legit journalists are finally beginning to expose how bad real price inflation has been underreported and compounding for decades. This brutal price inflation information becoming more common knowledge better clears runways for precious metals to eventually ramp manically in price and value ahead.

Even official price inflation is already at a level the nation has not seen since the last time gold manically revalued upwards to a spot price so big for some time (1980), the USA could have gone back on a more disciplined quasi-gold standard had it so chosen.

Price of Gold Remains Poised as Stocks May Double Their Losses

Economic recession fears have plunged U.S. stocks into a bear market, with the S&P 500′s decline now over 20% from it's all-time high to start January 2022.

The tech stock-driven Nasdaq is already deep in the bear market territory, trading down over 31% off its highs. These are a few names that surged during pandemic lockdowns that have been crushed this year.

Jeremy Grantham, the famed investor with a track record of identifying market bubbles, says today's bubble is worse than 2000, and he calls for US stocks to at least double their losses ahead.

Massive Paper Gold and Silver Selloff Continues

The strength that the fiat financial powers collectively built is price inflation indeed.

This week the government’s underreported inflation figure came in at 8.3%, higher than expected for April but slightly lower than the 8.5% y/y figure reported the month of March prior.

Of course, one of the crucial factors running within CPI data wrangling is found in underreported housing costs that they consistently, consciously misconstrue using wild data input guesses like owner’s equivalent rent figures. 

Clearly You Don’t Want to Own Stocks and Bonds?

The US stock market, still at historically high bubble valuation levels, is off to its worst start since 1939.

We also continue to see the worst bond market performance start a year throughout this fiat currency era of over five decades running.

Billionaire financial market trader Paul Tudor Jones went on CNBC to hammer home some of the worst financial asset classes when inflation cannot be bottled up nor quickly tamped down.

Cheapest Silver in the World

Playing dumb after premeditated policies that injected massive currency creation into the global economy, does not make amends. Billions of people are currently suffering under high price inflationary outcomes and actions.

Following the preplanned and coordinated policies of major central banks 'Going Direct' in September 2019, the United States led the world in fiat M2 currency supply expansion on a percentage basis. 

We are now suffering inflation rates likely in the mid-teens in real terms. Levels of price escalations not since the last time free-market gold forces pushed official US gold bullion reserve values higher than the then fiat monetary base outstanding in early 1980.

This week, Germany reported a producer price increase spike that, on a price chart, looks like something their Weimar forefathers constantly warned against reliving.

US Mint Has Largest Gold and Silver Sales in 23 Years

Last week Paypal co-founder Pete Thiel spoke about gold's value now versus where gold's value has been (and could go again). 

While open discussions of the coming global sovereign Central Bank Digital Currency system are increasing in the public arena. The world's head central bank of central banks, the Bank for International Settlements this week, published a speech in which they acknowledged we are now living in an era of 'The Return of Inflation."

Surely the CBDC systems the BIS is helping 100+ nations build will help quell potential revolts from increasingly higher prices ahead for food and energy in the years to come.

China and Russia are increasingly trading commodities for the Chinese yuan directly. Specifically, energy inputs like coal and oil for yuan trades are increasing despite ongoing western sanctions.

The Central Bank of Russia will no longer buy gold at a fixed domestic price of 5,000 fiat Russian rubles per gram. Instead, Russia will buy gold at a negotiated price ahead.

Judging by the strength of the Russian ruble this past week, it seems the bid for rubles in international commodities training remains strong, having erased nearly all its losses from western sanctions related to the Ukrainian invasion to date.