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Silver Fundamentals Vs. The Base Metal Bubble Part ll-Silver Undervalued Against Everything Now!

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July 13, 2017 - 11:34am

Yesterday, we learned that Donald Trump Jr. was allegedly involved in secret meetings with a Russian lawyer last year, in an alleged attempt to obtain anti-Hillary information.  This, as Trump’s snot-nosed, silver spoon son-in-law, Jared Kushner – a mere 36 years old – was collaborating with Qatarian sheiks whilst Saudi Arabia “coincidentally” declared economic war on it – under the ultimate “pot calling the kettle black” insinuation that Qatar funds terrorism.  To which, I can only say, how ridiculous is it that the President’s family is involved in such blatant conflict of interest activities; and doubly so, how screwed up has America’s increasingly Banana Republic political system become?  Which I only state, to demonstrate how painstakingly obvious the need for portfolio insurance has become – at a time, no less, when historic market manipulation has not only produced “dotcom valuations in a Great Depression Era,” but the most undervalued Precious Metal prices – on an inflation-adjusted basisever.

Yes, the Trump Jr. “news” provided the catalyst for Precious Metals’ long overdue bottom.  Likely, as the COMEX “commercials” were aggressively covering additional shorts – starting with what in hindsight can be viewed as “Operation July 4th week silver slam.”  During which, gold and silver prices were mauled – starting on the painfully thin July 3rd half-day, amidst a veritable tsunami of PiMBEEB news, with no other market materially moving.  To that end, I’m looking forward to Friday’s COMEX COT, or Commitment of Traders report, which will show us just how much more (naked) short covering was done amidst Monday’s paper carnage.  Not to mention, Thursday night’s silver “flash crash”; Friday’s post-NFP PM bashing; and Monday morning’s ugly early action.  When, following the 192nd “Sunday Night Sentiment” raid of the past 202 weekends, silver opened paper COMEX trading at a year-plus low of $15.20/oz.  This, during a week of particularly bullish physical PM news, such as India’s massive May gold purchases; seven percent of the entire COMEX registered gold inventory being withdrawn in a single day; and the world’s second largest silver mine, Tahoe Resources Escobal Mine in Guatemala, being shut down indefinitely.

On a morning when Janet Yellen is scheduled to give her semi-annual “Humphrey-Hawkins” Congressional economic testimony – in which the only material “news” is the city of Hartford, Connecticut being downgraded to junk status (get ready Chicago and Trenton, you’re next!) – I wanted to revisit my December 2016 article, “silver fundamentals versus the base metal bubble.”  The reason being, that if the dislocation between base metal and silver prices was egregious then, it’s far more so now.  In fact, comparing the financial landscape then – just after the election, when the newly fabricated “Trump-flation” meme was driving “markets”; not to mention, the equally fallacious premise that higher inflation is bad for Precious Metals; silver has not only become significantly more undervalued relative to base metals, but EVERYTHING ELSE!

Yes, the entire Precious Metal space has become – care of historic manipulation, such as the “Operation July 4th Week Silver Slam” – as undervalued as at any time in memory, with only the (Cartel-promulgated) spike-bottom low as the 2008 Financial Crisis commenced being comparable.  However, in silver’s case, the “historic valuation anomalies” I wrote of earlier this month are even more pronounced – given that they are not only relative to the broad markets, but other Precious Metals, too.

Here’s a table comparing silver with a variety of other markets.  In the first column are values at the time of December’s “silver fundamentals versus the base metal bubble” article.  I mean, just how ridiculous can this dislocation be!

For one, base metals have been flat to higher – despite not only plunging economic data, but a 10% decline in the broader CRB Commodity Index!  The dollar has been slaughtered; interest rates are unchanged; and economic data – including housing starts, a major component of base metal demand – has significantly weakened.  And yet, base metals are higher, and silver – of which, nearly three-quarters of mine supply is utilized for industrial purposes – 5% lower?  In fact, the only “improvement” since early December is in the blatantly rigged “Dow Jones Propaganda Average”; as, per what I discussed last month, “unfathomably bald-faced lies depict a Fed desperate to promulgate a dead meme”; and consequently, put off the “most overdue financial crisis in history.”  Which includes lying through its teeth about the “recovery” that doesn’t exist – even in its own economic reports; and relentlessly propping the Dow, via the ubiquitous “dead ringer” algorithm, during its 10:00 AM “open market operations.”

Otherwise, essentially all political, economic, and monetary news flow suggests higher silver prices; let alone, now that the shutdown of the world’s second largest silver mine ensures the production decline that commenced last year will accelerate.  Not to mention, versus gold – as unfathomably, during a period in which base metal and gold prices rose, silver declined 5% – resulting in a dramatic increase in the gold/silver ratio, from 70 in December to a nearly all-time high 77 today.  I mean, the only other times the gold/silver ratio has traded this high since the Precious Metal bull market commenced at the turn of the century were in the 9/11 aftermath; the height of the 2008 Financial Crisis (when physical silver prices were nearly twice the Cartel-suppressed paper prices); and the sector’s likely ultimate bottom at the end of 2015.

My friends, we are on the cusp of an historic inflection point in history – politically, economically, and monetarily.  Fraudulent memes are rapidly dying, regarding a great many things – from the omnipotence of Central banks, to the power of governments, the stability of “money,” and the ability to mask irreversible economic rot with money printing, market manipulation, and propaganda.  Let alone, in physical markets like Precious Metals and commodities; the former of which, are amidst chronic supply deficits; and the latter, chronic oversupply.

Consequently, the urgency to PROTECT your assets has never been stronger; and in the case of silver, not only is it as undervalued as ever on a nominal basis, but relative to essentially everything else!  To that end, if you are considering the purchase and/or storage of silver (see yesterday’s must-read article on silver storage), we humbly ask you to give Miles Franklin a call at 800-822-8080, and give us a chance to earn your business.

P.S.  JUST AS I WAS ABOUT TO HIT SEND, JANET YELLEN’S PREPARED REMARKS FOR TODAY’S HUMPHREY-HAWKINS SEMI-ANNUAL CONGRESSIONAL ECONOMIC TESTIMONY CAME OUT – AND WOW, WAS IT “UNEXPECTEDLY” UBER-DOVISH; AND CONSEQUENTLY, PRECIOUS METAL BULLISH!  TO WIT, “RATES WON’T HAVE TO RISE MUCH FURTHER TO GET TO NEUTRAL.”  NUFF’ SAID!

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About Andrew Hoffman / Media Director

Andrew C. Hoffman, CFA is the Media Director at Miles Franklin Ltd. Call 877-685-4705 or email ahoffman@milesfranklin.com, visit www.milesfranklin.com

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