Richard Russell – World’s Supply Of Silver Dangerously Low
Today the Godfather of newsletter writers, Richard Russell, warned his subscribers “… the world’s supply of silver has grown dangerously low.” Russell also had some fascinating comments regarding gold, and stocks, including some great charts. Here is what Russell had to say: “If a problem has no solution, it may not be a problem, but a fact — not to be solved, but to be coped with over time.” (Shimon Peres) As I read the quote, I relate it to the FACT of the US’s debt. This is a situation that can never be solved honestly — it’s a fact. A fact that our children or our grandchildren will have to cope with. How they cope with it will set the course of the world of tomorrow.”
“The month of January was a winner, and according to Yale Hirsch (he edits the Stock Trader’s Almanac) if January is an up month the odds are that the rest of the year will also be up. Newspaper or magazine headlines seldom get it right, but courageous Barron’s keeps trying. The cover of this week’s Barron’s shouts in large red letters — STOCK ALERT! GET READY FOR A RECORD ON THE DOW.
I’ve posted five years of the Dow on the chart below. At the bottom of the chart we see the 89-day rate-of-change. It seems so easy — all the Dow has to do is climb another 174 points, and eureka, it’s at a new record high, and at the same time it has confirmed the new record highs in the Transportation Average. Wait, note that RSI is at its severe overbought zone for the first time in almost two years. In the last five years, RSI has signaled overbought five times. At the bottom of the chart we see the 89-day rate-of-change (this is momentum).
I keep thinking about that giant surge among the silver miners. Was that surge telling us that silver is preparing to take off to the upside? I’m not sure, but it has certainly worked to keep my eyes on silver. I know that the world’s supply of silver has grown dangerously low. Whereas ten years ago there were three billion ounces of silver above ground and there for the taking, today there are less than one billion ounces of silver available. And unlike gold, silver is actually consumed.
I find the chart below of silver to be interesting. For the first time in many months, silver has closed above its 50-day MA (moving average). MACD could be in the process of turning up. Silver has now closed above its declining trendline.
Below, I keep a sharp eye on the US dollar, and you can be sure the bond market is also watching the dollar closely. Actually, all commodities should be watching the dollar, because if the dollar breaks down, it’s going to require MORE dollars to buy commodities, which is inflationary. Also, if the dollar breaks down our foreign creditors will demand more yield (higher interest rates) for buying and holding dollars.
The daily chart below shows gold’s latest action in a down-slanting flag. This flag should break to the upside, putting gold above 1700. The higher horizontal line denotes tough resistance at 1800. We should see some significant action in gold and silver this week. At the bottom of the chart we see the Dollar Index, which is declining. The declining Dollar Index should be a plus for gold.
Statistics: Posted by DIGGER DAN — Wed Feb 06, 2013 6:57 pm
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2013 a year of living dangerously says ArabianMoney investment newsletter
Posted on 31 December 2012 with no comments from readers
2013 is not going to be a good year for most asset classes but there will still be a few standout winners, according to the January edition of the ArabianMoney investment newsletter out today (subscribe here).
The newsletter is the companion of this website and lists the actual investment tips and financial instruments that we are unable to offer for free on this website. Subscribers also get our full thoughts on the bigger picture ahead of the general readers.
Fraught with big picture problems and dilemmas, 2013 is going to be a year of living dangerously for investors. Only those in the right asset classes and the right investments within those asset classes will shine in what will probably be a down year for global equities, bonds and real estate.
ArabianMoney thinks money printing will continue and accelerate in 2013 as the only policy response available to global central banks as the pressures mount on their economies from the ongoing worldwide debt deleveraging process. Debt reduction is deflationary whereas money printing is inflationary.
In theory the two should cancel each other out but in economics such neat prescriptions seldom work in reality. More likely some asset classes will boom as a protection against inflation while others will falter and find debts a bigger and bigger burden.
You want to be positioned in precious metals and oil-related assets to benefit from this dynamic as even the once ultra-safe haven of government bonds starts to come under pressure from the weight of debt. Equities will struggle to maintain profits as input costs rise. Highly-geared real estate will implode as interest rates pick up.
During 2012 we published a number of articles referring back to the late 1970s as a paradigm for what is happening now. History never repeats exactly but it does rhyme. The 1970s were also a time of money printing, real estate busts, stock market crashes and high inflation and unemployment.
The last two factors are obscurred today but still very evident. US unemployment seems stable until you look at the doubling of the number of people on food stamps to 47 million since the global financial crisis, a true measure of the idle poor. Likewise inflation is all around us but not in the official statistics.
Investors who position themselves for the next stages of this big picture will be winners but there are going to be far more losers. Don’t be one of them!
Statistics: Posted by yoda — Mon Dec 31, 2012 12:05 am
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Rule – The Physical Silver Market Is Getting Dangerously Tight
With continued volatility in global stock markets, and gold staging a big rally off of the lows, today King World News interviewed one of the wealthiest and most street-smart pros in the business, Rick Rule. Rule told KWN that when it comes to silver, “there is the strong case for some very substantial upside.”
Rule, who is now part of Sprott Asset Management, discussed silver and gold at length. He also talked about the problems the world currently faces. But first, here is what Rule had to say about Sprott’s very successful offering in the Sprott Physical Silver Trust: “I think it’s evidence of two things: One, we felt we had reasonably good chances of buying the silver if we raised the money. Second, this points to the continuing strength of the high end retail investment market for silver in North America.”
“The offering was well received. It was sold out, including the green shoe (over-allotment). This is also evidence of the fact that while some of the more leveraged institutions have been forced sellers of silver, there is still very strong high end retail demand. These are individuals who don’t feel financial stress, and who feel better owning physical silver.
I think this is the kind of thing you will see Sprott do, from time to time, when there is demand in the market, and also when supplies can meet that demand. As you know, with regards to the Sprott Trust, unlike some of the ETF’s, we own physically our silver. There are no deposit receipts and our silver is never hypothecated.
Although supplies might be adequate for us to buy that silver, the fact is that the physical market continues to get tighter….
“Eric Sprott has pointed out that on a daily basis, the paper markets (futures markets) in silver trade about 100 million ounces, while the physical market produces less than 3 million ounces each day. That’s an indicated 97 million ounce shortfall on a daily trading basis.
I would also like to add that 90 to 120 days ago, Eric Sprott was saying to me that the amount of silver available for good delivery, on the various metals exchanges in the world, was about 40 million ounces. So if you think about the fact that there were 40 million ounces available for good delivery, but 100 million ounces a day are traded, this would suggest that all of the available silver was traded before lunchtime.
I would also say that if this market begins to move to the upside, it would appear from the disparity of silver available to trade and the amount that actually does trade, that there is the strong case for some very substantial upside.”
Rule had this to say regarding gold: “I think it’s interesting that we have had a shift in gold, and I would suspect that shift has been from institutional investors and momentum oriented ETF’s, again, in favor of private buyers. The indications are that the private buyers were, in substantial measure, Chinese and Indian individuals.
You will recall that the Indian government put an excise tax in place against gold, in an attempt to try to decrease internal demand for gold, and also to increase the rupee. That attempt was markedly unsuccessful and extraordinarily unpopular in India.
As that tax was repealed, the traditional Indian demand for gold has increased. I think that’s been part the relative strength, and the apparent basing in the gold market.”
Rule also warned: “I think the really big problem that we face, Eric, is that our political response to what is obviously a solvency crisis, meaning Western governments owe more than they can service, but the political response to a solvency crisis has been liquidity. We aren’t in a liquidity crisis.
The banks, in the short-term, are awash in cash. And people who are looking to borrow money for the very short-term are awash in cash. The difficulty isn’t liquidity, it’s solvency. The idea that you solve a liquidity crisis by blowing up balance sheets and encouraging people to take on more short-term debt doesn’t seem to be very intelligent to me.
I think that we need a reckoning. Hopefully we have a slow reckoning. But we need to deal with the fact that we owe more money than we can service, and that we have been consuming more than we have been producing. Until we recognize the nature of our problem, I don’t think we will be able to deal with it.”
Statistics: Posted by DIGGER DAN — Tue Jul 17, 2012 9:32 pm
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