Mike Gleason: I am privileged to welcome Craig Hemke of the TF Metals Report. Craig is a well-known call in the metals industry. It runs one of the most notably reputable websites in our space. It affords some satisfactory analyses of the banking schemes, the issues of Keynesian economics, and evidence of manipulation in gold and silver markets that you’ll find anywhere.
Craig, welcome lower back, and thank you for joining us. How are you nowadays?
Craig Hemke: Mike, Happy Pet Rock Day. As we write this, it is July 17th; this is the fourth anniversary of the infamous article written by Jason Zweig of the Wall Street Journal, in which he said, “Let’s face it, gold is only a pet rock.” So Happy Pet Rock Day, my friend.
Mike Gleason: Good beginning. Craig, I need to talk about Silver first here. Silver is showing some real existence over these remaining couple of days. It has been underperforming gold, which makes us apprehensive. We would instead see silver confirming gold’s pass better. James Turk came out with a notable statistic this week, which spoke about how there had been eleven 186 trading days within the COMEX since the prohibition of owning gold was lifted in January 1975. The ratio traded at 93 because it did only some days in the past, or higher, simplest eighty-two days. Eighty-two days out of over 11,000, you get the sensation of how brilliant the present-day bargain in silver is relative to gold.
What do you make of Silver’s overall performance to date, Craig? And then, what are you looking forward to for the white metal shifting ahead? Is the bump we’ve seen here over the last few days in silver possibly the beginning of something?
Craig Hemke: Mike, it is a question that requires many different solutions that hopefully tie together. First and foremost, humans need to understand that from 2009 to 2011, the maximum recent rate run that took us all of the manners to $49 was first-rate manifestly, but the last part of it from $38 to $ forty-nine became nearly solely what we call a commercial quick squeeze. The CTFC facts, the Commitment of Traders record, and the bank participation record all bore that out returned in 2011.
And what I always thought was taking place was that the tale of JP that ran had inherited this large quick-position from Bear Stearns and that they had been keeping it in place of getting out of it and accordingly were getting squeezed. They had no bodily silver. Back then, they were rubber-stamped in the spring of 2011 to start their personal COMEX silver vault. Within eight years, that vault controls more than 1/2 of the vaulted silver at the COMEX, more than one hundred fifty million ounces they have collected. Most of it is through their proprietary house debts, stopping 1,000 contracts every month, taking them into transport, and holding them in the eligible accounts.
The first thing you’ve got to understand is that JP Morgan has monopolistic management of the pricing structure, as a minimum, because it applies via the COMEX. They’ve labored very toughly to color silver into a nook within the last several years, and you could see that on the weekly chart. Maybe there may be a bodily floor at around $14; the charge gets tighter and tighter into a corner underneath some trend strains, the two hundred-week shifting common. Why is silver beneath-performing? I suppose this is it. I assume those banks, JP Morgan and Citi, particularly, make a boatload of cash shorting it on a steady basis, issuing new contracts, taking the hazard of being short against the speculator longs, that they could outwait until the speculator longs rollover after which get lower back out or even pass onto the fast facet.
So, I assume this is the largest component. I’ve been telling parents on my website that I would in no way be amazed to see the gold/silver ratio go to one hundred to 1 before silver subsequently breaks out just due to that monopolistic control of the pricing scheme by those banks… meaning gold ought to visit $1,600 while silver should nevertheless be at $sixteen. Now, right here this week, we’ve seen the silver rally, and there may be a lot of speculation as to what is happening with that. The aspect I assume is probably most exciting and possibly even most valid is that this concept that a few huge establishments were, because of searching on the gold/silver ratio, has been lengthy gold and quicksilver in this method. You can see … Perhaps you can see some of the information … And now they’re taking those trades off, which has maybe been retaining gold returned this week while silver has been rallying.
I do not know; there might be a few validities to that, but let’s watch it closely here, Mike, because, sure, it is interesting. Silver’s choosing up, however, guy, there is a top-notch quantity of technical, and we’ll name it bank-created resistance among approximately $15.80 and perhaps $17, so permit’s get above $17, and your antique friend Craig goes to start getting sincerely excited. Still, it will be hard to fight for this next 10% from here between now and now.
Mike Gleason: Yeah, still caught in that variety for positive, and till it pops through that one manner or the opposite, it is hard to get too, too excited, but we will be watching. You wrote something on Tuesday that I desired to get into. The cutting-edge interest rate environment is a killer for banks, to the extent they may be relying upon banking MO to borrow at lower hobby charges and lend at a better rate, making a selection. Right now, the margin is pretty low; the Fed finances rate is higher than the rate of a 10-12 months Treasury. Banks borrowing on the Fed’s cut-price window find it tough to lend profitably.
At least the modern charge environment eventually killed the loose-cash scheme, in which banks borrow at zero from the relevant financial institution to then purchase Treasuries, pocketing two or three percent. Deutsche Bank lately announced big layoffs and is restructuring its business. Your remark about the tough operating surroundings for banks makes us surprised if other casualties are coming. What are you expecting there? Talk about the banks right here, Craig.
