Several Reasons the Tide May be Changing for Metals

[Recyclersteve]

Ray Dalio of Bridgewater Associates is a famed hedge fund manager of the world's largest hedge fund with a net worth of roughly $19 billion. Imagine that, most hedge funds aren't even worth $19B and he is worth that much all by himself! So he is someone that people listen to. He made a post on LinkedIn (maybe someone else can post the link and text here) on 7/17/19 which included a very bullish call on gold. He talked about paradigm shifts that occur about once every decade or so. He said one is "highly likely...sometime in the next few years." And he was referring to a shift where it would be beneficial to own gold. He went on to say "(m)lost investors are underweighted in (gold), meaning that if they just wanted to have a better balanced portfolio to reduce risk, they would have more...I believe it would be both risk-reducing and return-enhancing to consider adding gold to one's portfolio." Gold was $1,411 at the time of his posting and it has indeed broken higher.

Several other things have happened to add fuel to the fire and make this into a potential perfect storm for gold (I'm assuming that means for silver as well)...

1) Inverted yield curve. When the 2-year treasury yield is higher than the 10-year, that is an unusual circumstance called an inverted yield curve. It is an early indicator of a potential recession as it may flash about 1 1/2 to 2 years before the recession begins. Nonetheless, that is often a good time to own gold.

2) The Fed's started easing (reducing interest rates). The Fed's have already reduced interest rates once and there is talk that they will continue to do so.

Why wouldn't he make a bullish call on silver as well? Keep in mind that the total value of all the gold in the entire world isn't all that high. The market cap of all the silver is much smaller. So if he said anything bullish about silver, his comments might be construed to be manipulative in nature. You don't want to have people accusing you of manipulating markets. Ask the Hunt Bros. about that one.

Is anyone else following this? What else would you like to add in the way of comments?

[pennypicker]

Even though I am "long" on silver I do like to follow short-term influences like those you outlined. But the one factor I am always drawn to is the "Total US Unfunded Liability" which has now reach $125+ trillion which breaks down to $380,763 per American citizen--that's a lot of promised money that isn't funded and where is it all going to come from? There's going to be millions of disappointed people in the future and this is why I choose to be "long" on silver. Simply go to usdebtclock.org and look at that huge liability number in the red box and the lower right of the page!!!

[Cu Penny Hoarder]

I was begging people here to buy (in size) when it was in the $13's, maybe only a few did. I snagged some nice deals down there.

I also posted here many times that gold and silver (especially) were being manipulated downward. Here is the most recent trader who got arrested and charged with manipulating the gold and silver markets:
https://www.zerohedge.com/news/2019-08- ... years-jail

[JJM]

Nice humble brag!

As for the OP, I whole-heartedly believe the tide is finally changing. The next five years will be far more interesting / active in Real Cent than the last five years were....

[Recyclersteve]

Nice humble brag!

As for the OP, I whole-heartedly believe the tide is finally changing. The next five years will be far more interesting / active in Real Cent than the last five years were....

I totally agree.

[Cu Penny Hoarder]

Nice humble brag!

As for the OP, I whole-heartedly believe the tide is finally changing. The next five years will be far more interesting / active in Real Cent than the last five years were....

Yeah... hope you got some.

I've stated many times here that silver was the most undervalued asset on the planet. Biggest no-brainer investment ever.

5 years?... try 1 year. $17.80 as I type this. The guy here who sold it all at $14 might need to be put on suicide watch.

[Recyclersteve]

As I sit looking at Kitco Metals on a Friday morning at 5:20am I see that nickel is $7.61/lb. This is the highest it has been since late 2014, yet not even close to the all-time high (over $20). Just bought some more .999 Canadian nickels yesterday afternoon.

[Cu Penny Hoarder]

As I sit looking at Kitco Metals on a Friday morning at 5:20am I see that nickel is $7.61/lb. This is the highest it has been since late 2014, yet not even close to the all-time high (over $20). Just bought some more .999 Canadian nickels yesterday afternoon.

Collected about 50 pounds of those over the last 10 years. My LCS guy sells them to me for .03 cents a piece.

[Recyclersteve]

As I sit looking at Kitco Metals on a Friday morning at 5:20am I see that nickel is $7.61/lb. This is the highest it has been since late 2014, yet not even close to the all-time high (over $20). Just bought some more .999 Canadian nickels yesterday afternoon.

Collected about 50 pounds of those over the last 10 years. My LCS guy sells them to me for .03 cents a piece.

Now that is a smoking deal! I've gotten some for around 3.5 or 3.6 cents each, but most of mine were bought for 5 cents each.

Just checked Kitco Metals again and nickel has soared to $8.12! It is up close to $1 a pound in just 2 days!

[InfleXion]

Why wouldn't he make a bullish call on silver as well? Keep in mind that the total value of all the gold in the entire world isn't all that high. The market cap of all the silver is much smaller. So if he said anything bullish about silver, his comments might be construed to be manipulative in nature. You don't want to have people accusing you of manipulating markets. Ask the Hunt Bros. about that one.

Is anyone else following this? What else would you like to add in the way of comments?

Silver last I checked was in the ballpark of a $3 billion global market. Buying anywhere near that much breaks the supply chain, and then you have a shortage followed by to the moon prices. If he calls bullish on silver, then he probably has to put his money where his mouth is to maintain credibility. With $19 billion at his disposal, he probably doesn't want to be responsible for all that. There isn't enough silver to go around for the big players unless the price rises substantially to absorb it all.

[Recyclersteve]

Silver last I checked was in the ballpark of a $3 billion global market. Buying anywhere near that much breaks the supply chain, and then you have a shortage followed by to the moon prices. If he calls bullish on silver, then he probably has to put his money where his mouth is to maintain credibility. With $19 billion at his disposal, he probably doesn't want to be responsible for all that. There isn't enough silver to go around for the big players unless the price rises substantially to absorb it all.

Actually I agree with everything you said.

[68Camaro]

Apart from simple natural market inertia, one of the best reasons I've seen for the tide changing at this specific time (even moving against the rise in the USD) is the rule change for the Bank of Int'l Settlements (BIS) in the latest agreement Basel III, which begins implementation this year (banks have 3 years to comply) which is to move gold from a tier three asset (in which they only got credit for a percentage of their gold) to a full tier 1 asset. As a result a number of gold-believing countries have their central banks buying gold hand over fist. It actually started last year, but this year will see the start of an even bigger push. Gold as a tier 1 asset is a truly risk-free asset for a bank. No matter what might be said in public, you can't say that about anything else, including US Treasuries.

[InfleXion]

Apart from simple natural market inertia, one of the best reasons I've seen for the tide changing at this specific time (even moving against the rise in the USD) is the rule change for the Bank of Int'l Settlements (BIS) in the latest agreement Basel III, which begins implementation this year (banks have 3 years to comply) which is to move gold from a tier three asset (in which they only got credit for a percentage of their gold) to a full tier 1 asset. As a result a number of gold-believing countries have their central banks buying gold hand over fist. It actually started last year, but this year will see the start of an even bigger push. Gold as a tier 1 asset is a truly risk-free asset for a bank. No matter what might be said in public, you can't say that about anything else, including US Treasuries.

I feel like this should be a bigger deal. I suppose central banks have been using gold to settle debts already, so maybe this is simply more of an acknowledgement, but if nothing else it's a far cry from Bernanke's explanation of holding gold due to "tradition". A broader change in the collective subconscious can have far reaching impacts even if they aren't easy to qualify. I've always considered the reason for gold and silver having value, as well as markets in general having value, to be due to the collective subconscious, which isn't necessarily a thing but rather just a label for herd mentality, environmental conditioning, and ultimately human nature as instinct. People are going to like shiny things whether or not their parents and grandparents did, but the valuation process is based upon countless participating individuals. If those participants begin to view gold as money instead of jewelry, that's a paradigm shift, and I can't help wonder if central banks are going for that intentionally, because they've gotten by using gold just fine as a tier 3 asset, so far. It could also be that the writing is on the wall, and they are getting out ahead of it.

[Recyclersteve]

I've always considered the reason for gold and silver having value, as well as markets in general having value, to be due to the collective subconscious, which isn't necessarily a thing but rather just a label for herd mentality

Don't forget that silver is used in literally thousands of items. Let's assume, for instance, you had a trip to the hospital and were told you'd be wearing a catheter while you were there. The doctor says, "You've got two choices. One costs just a few dollars more, but it has a silver tip that greatly cuts down on your chances of getting an infection "in there". The cheaper one has no silver." I don't know about you, but even if I was on an airtight budget and paying with my own money, I'd choose the silver tipped one!

Google "silver uses" and you will be shocked at some of the items you see. Without silver the world would be a different place, and that really isn't much of an exaggeration.

[InfleXion]

I've always considered the reason for gold and silver having value, as well as markets in general having value, to be due to the collective subconscious, which isn't necessarily a thing but rather just a label for herd mentality

Don't forget that silver is used in literally thousands of items. Let's assume, for instance, you had a trip to the hospital and were told you'd be wearing a catheter while you were there. The doctor says, "You've got two choices. One costs just a few dollars more, but it has a silver tip that greatly cuts down on your chances of getting an infection "in there". The cheaper one has no silver." I don't know about you, but even if I was on an airtight budget and paying with my own money, I'd choose the silver tipped one!

Google "silver uses" and you will be shocked at some of the items you see. Without silver the world would be a different place, and that really isn't much of an exaggeration.

I'm drinking every flavor of kool-aid when it comes to being bullish on silver. It's the most reflective, best conductor of heat, and best electrical semi-conductor out of all the metals. The only thing gold has on it is anti-corrosion. Aside from the many uses which are only growing especially with solar cell demand, getting it out of landfills isn't going to be cheaper than mining, but the kicker for me is epithermal deposition in that silver's molecular density is light compared to gold, and thus only deposited near the surface of the Earth's crust. Since it's an element, we can't create more of it without a supernova, and mining asteroids isn't cheap either. The One reason it's as cheap as it is is because it's mined as a byproduct so the mines don't depend on profit from silver to offset their operating costs, but the volume will continue to decline as mines go deeper.