Prophet of Doom
In 1976, economist Herbert Stein, father of Ben Stein, the economics professor in Ferris Bueller’s Day Off, observed that U.S. government debt was on an unsustainable trajectory. He, thus, established Stein’s Law:
“If something cannot go on forever, it will stop.”
Herbert Stein, looking worried about the budget deficit. [PT]
Stein may have been right in theory. Yet the unsustainable trend of U.S. government debt outlasted his life. Herbert Stein died in 1999, several decades before the crackup. Those reading this may not be so lucky.
Sometimes the end of the world comes and goes, while some of us are still here. We believe our present episode of debt, deficits, and state sponsored economic destruction, is one of these times.
We will have more on this in just a moment. But first, let us peer back several hundred years. There we find context, edification, and instruction.
In 1696, William Whiston, a protégé of Isaac Newton, wrote a book. It had the grandiose title, “A New Theory of the Earth from its Original to the Consummation of all Things.” In it he proclaimed, among other things, that the global flood of Noah had been caused by a comet.
William Whiston, reading from his doom by comet scroll. [PT]
Mr. Whiston took his book very seriously. The good people of London took it very seriously too. Perhaps it was Whiston’s conviction. Or his great fear of comets. But, for whatever reason, it never occurred to Londoners that he was a Category 5 quack.
Like Neil Ferguson, and his mathematical biology cohorts at Imperial College, London, Whiston’s research filled a void. Much like today’s epidemiological models, the science was bunk. Nonetheless, the results supplied prophecies of the apocalypse to meet a growing demand.
It was just a matter of time before Whiston’s research would cause trouble…
In 1736, William Whiston crunched some data and made some calculations. He projected these calculations out and saw the future. And what he witnessed scared him mad.
He barked. He ranted. He foamed at the mouth to anyone who would listen. Pretty soon he had stirred up his neighbors with a prophecy that the world would be destroyed on October 13th of that year when a comet would collide with the earth.
Jonathan Swift, in his work, “A True and Faithful Narrative of What Passed in London on a Rumour of the Day of Judgment,” quoted Whiston:
“Friends and fellow-citizens, all speculative science is at an end: the period of all things is at hand; on Friday next this world shall be no more. Put not your confidence in me, brethren; for tomorrow morning, five minutes after five, the truth will be evident; in that instant the comet shall appear, of which I have heretofore warned you. As ye have heard, believe. Go hence, and prepare your wives, your families, and friends, for the universal change.”
13th October 1736, according to William Whiston. Today he would be a “climate scientist”. [PT]
Clergymen assembled to offer prayers. Churches filled to capacity. Rich and paupers alike feared their judgment. Lawyers worried …read more
Consumption without Production
“Every man is a consumer, and ought to be a producer”, observed 19th century philosopher Ralph Waldo Emerson. “He is by constitution expensive, and needs to be rich.”
Ralph Waldo Emerson (May 25, 1803 – April 27, 1882), who inter alia opined on consumers and the need to not only consume, but also produce. The latter activity has recently become even more severely hampered than it already was. And yet, government is spending like a drunken sailor. [PT]
These days Emerson’s critical insight is being taken to its extreme. Consumers, many whom lost their jobs due to government lockdown orders, no longer produce. Yet they still consume. They are expensive. Not rich.
What’s more, this consumption is not funded through personal savings. Nor is it funded through government transfer payments. Rather, it is funded via the printing press.
Emerson, no doubt, was lacking in the unique perspective we are presently granted. He did not have the special opportunity to watch his government destroy the economy in short order. Perhaps if he had, he would have penned a neat axiom to distill the essence of what happened.
The world today looks nothing like Emerson’s day. The 19th century was an age of honest money. Central bankers did not roam the land.
Printing money to buy bonds and stocks, and to sprinkle on people, would have been quickly dismissed. The experience of the Continental Congress during the American Revolution, and their over-issuance of paper “continentals”, had shown that resorting to the printing press was an act of suicide.
Promises, promises… “not worth a continental” became a saying after this early experience with paper money. [PT]
Currently, printing press money is considered enlightened central banking policy. Inflation targets, zero interest rate policy (ZIRP), direct bond purchases, twisting the yield curve, unlimited credit. This is merely a partial list of the trouble central bankers are up to.
Despite all the well-meaning intentions they may have, the efforts of central bankers in 2020, let alone the 21st century, have been a disaster. Where to begin…
During the Great Recession, money supply expansion was mainly restricted to financial markets via ZIRP and Treasury purchases. Stocks, bonds, and real estate prices increased much faster than worker incomes. Financial assets holders, mainly the rich, got the nirvana of Fed inflated wealth. Wage earners and savers got exactly squat.
Money supply expansion for the 2020 bailouts, as initiated by the Fed’s Primary and Secondary Market Corporate Credit Facilities (PMCCF and SMCCF), also puffed up financial assets. However, in addition to financial markets, the 2020 bailouts, as initiated under the CARES Act, directed bailout funds into the real economy through stimulus and unemployment checks. This money was intended to compensate for spending lost from mass unemployment and business closures.
According to the Bureau of Labor Statistics, the consumer price index (CPI) increased 1 percent over the last 12 months. Here at the Economic Prism we’d prefer a stable money supply and no price inflation. But what do we know. We don’t think like central planners.
Headline CPI, annual rate …read more
The Sage Does a 180
The big news in the monetary metals is that Warren Buffett — famed disliker of gold — sold bank stocks to buy gold mining shares. What is interesting to us is not that we think he has any special powers to predict the gold price. After all, he famously bet on silver, and lost.
GOLD, daily, over the past two years. The Sage is a bit late to the party, but his entry confirms that the sector is now entering the “recognition phase” – the stage at which the investoriat-at-large realizes something is afoot. [PT]
What is interesting is that he understands, intuitively, that owning a piece of gold is not an investment. He may have been disingenuous in his dismissals of gold, which he did to defend the regime of irredeemable paper. However, he has a point. A lump of metal does not produce anything.
And unless he has suddenly changed his views, his buying a gold mining stock indicates that he now thinks that it is better to own a metal which produces nothing — and of course loses nothing — than to own stocks. Or at least bank stocks.
Yes, we know that he did not buy gold metal. He bought a company that he expects to be geared to the gold price.
And Here is Why
We won’t opine on Barrick shares, but we note that Buffett is not alone in expecting that a lump of metal will outperform stocks. Or, to put this in clearer, starker terms: stocks will fall when measured in gold (but perhaps not, when measured in dollars).
Buffet is indeed shorting, if not the economy, then at least commercial bank, investment bank, and credit card companies. He compares them to a cube of gold—and finds them wanting.
We Fully Agree, Warren
We hope that our message to the gold community may be heard above the din of people cheering. It is not good when business prospects are bad, and doubly not good when the prospects of banks are bad. We are not asking anyone to shed a tear for banks.
We are looking through the banks to the slow-motion train wreck that is real estate. Residential, commercial, retail, restaurant, and hotel are all going to experience massive defaults by borrowers. Including the loans that financed those glorious and hip interiors.
We are also looking through the banks to the liability side. Most people think of a bank’s liabilities as money. Banks borrow from everyone, to make loans. If those loans go bad, then that puts stress on the banks’ ability to repay.
Now we see that Warren Buffett, who knows the finance business well, and who has invested in it for decades, is running away from it. And we expect many others are running too.
Last Monday’s Silver Activity
Here is the chart you have been waiting for:
Spot silver (gray) vs. September basis (blue), August 17, intraday. [PT]
Two things stand out on this chart.
One, the basis …read more
It has been a rough go for California Governor Gavin Newsom. Late last week it was revealed that the state Department of Public Health had tickled the poodle on its COVID-19 record keeping. Somehow the bureaucrats in Sacramento under-counted new corona-virus cases by as many as 300,000.
Governor Newsom gesticulating his way through the pandemic… [PT]
Perhaps this oversight prompted Newsom to imbibe a little meditation and reflection. At his Wednesday corona-virus news conference, shortly after quoting Voltaire, Newsom offered the following epiphany:
“Businesses can’t thrive in a world that’s failing.”
Often the simplest insights into reality are the most essential. We will give Newsom that. Yet, this is hardly an insight. Rather, it is readily obvious… even to a numskull.
The world that is failing, where businesses cannot thrive, is a direct consequence of government lockdown orders. And Newsom, more than any other public official, has his fingerprints all over the offense.
If you recall, California, under Newsom’s command, was the first state to order lockdowns. It’s a shame he didn’t pause for meditation before committing the state to ruin.
The dynamics of what would follow Newsom’s lockdown orders were predictable. When government decrees froze the economy, bills were still due. Yet many people’s incomes, in the form of paychecks, disappeared.
For businesses, outstanding accounts payable were still due, while accounts receivable quickly became overdue. In short, the flow of cash, as delivered by an open economy of give and take, broke down.
Certainly, Newsom thought he was doing the right thing. He had to keep everyone in the Golden State safe by locking them down. Many governors followed Newsom’s lead, producing the same disastrous results.
But that was just the beginning. Soon the uplifters in Washington swung into action…
Printing Press Money
The opportunity to face the economic depression honestly – through bankruptcies, write downs, and a broad financial purge – came and went with the rollout of massive fiscal and monetary stimulus programs. Crackpot schemes like the CARES Act, the PPP, the PMCCF, and the SMCCF, among others.
The general objective of these programs was to replace the personal and business cash flows that the lockdown orders destroyed. The intentions may have been good. But they paved the road to hell, nonetheless.
The infamous road paved with good intentions… [PT]
Zealous efforts to paper over the drop off in what people and businesses earn and what they owe, could never be covered for long. What’s more, these programs were flawed from the get go. Because they relied on printing press money – credit conjured from thin air – to make them work.
This, no doubt, is a serious flaw. Printing press money may appear to work, in the short term. But it is not without consequences. First, it destroys money that has been earned and saved. Second, it turns the stock market into a barometer for the expansion of the money supply.
Yet the relationships between printing press money and the financial and economic distortions it causes are increasingly perilous. The stock market may be the barometer for the expansion of the money …read more
Insulting the Captive Audience
This week, while perusing the Federal Reserve’s balance sheet figures, we came across a rather curious note. We don’t know how long the Fed’s had this note posted to its website. But we can’t recall ever seeing it. The note reads as follows:
“The Federal Reserve’s balance sheet has expanded and contracted over time. During the 2007-08 financial crisis and subsequent recession, total assets increased significantly from $870 billion in August 2007 to $4.5 trillion in early 2015. Then, reflecting the FOMC’s balance sheet normalization program that took place between October 2017 and August 2019, total assets declined to under $3.8 trillion. Beginning in September 2019, total assets started to increase.”
Directly below this note is the following chart:
Total assets of the Federal Reserve since 2008 – never-ending expansion (shaded areas indicate recessions) [PT]
Does this look like a balance sheet that expands and contracts over time?
Quite frankly, the Fed’s balance sheet chart, and the extreme dollar debasement that it illustrates, is a disgrace. The fact that the Fed had to add this flagrantly false note as preface to its disgraceful chart is an insult.
This is a direct offense to anyone who has built a modest savings account by exchanging their time for dollars. The time and effort put to obtaining these dollars is being stolen by the insidious process of central bank engineered money supply inflation. Year in and year out, these earned dollars will be worth less and less.
Moreover, normalization is a Fed lie. It never happened. Yes, $700 billion was contracted from the Fed’s Balance sheet between October 2017 and August 2019. But that was in the wake of a $3.5 trillion expansion. And it was quickly followed by another $3 trillion balance sheet expansion this spring.
The Fed’s real priority was never to reduce its balance sheet. The Fed’s real priority is to keep the Treasury and the big banks flush with cash.
As of June 2020 the year-on-year growth rate of the US broad true money supply TMS-2 accelerated to 34.4%, setting a new multi-decade high and surpassing the previous Greenspan and Bernanke shenanigans by a huge margin. [PT]
Money Printer Go BRRR
A secondary effect – for now – of the Fed’s balance sheet expansion is a booming stock market. This, like the Presidential election, is a distraction.
The real noteworthy thing taking place that will have a real impact on your life, has less to do with the stock market or who will be the next President. Rather, the real noteworthy thing taking place today – at this very moment – has everything to do with the Fed’s attempt to suspend the credit cycle.
What we are talking about here are interest rates. If you have not noticed, they have been going down as of late. In fact, they have been going down a lot. The yield on the 10-Year Treasury note dropped to nearly 0.5 percent earlier in the week.
Explosive Days in Silver
The silver market witnessed another explosive day!
At midnight (in London), the price of the metal was $26.90. By 9pm, it had rocketed up to $28.95, a gain of 7.6%. This is not normal.
But then, we are not in a normal world.
After several years of going nowhere and a downside fake-out in March this year, silver has come to life rather dramatically… [PT]
The Republicans are spending like drunken Modern Monetary Sailors. And there is some chance that their even-bigger-spending rivals will be in full power after the November election. The deficit is now likely to be $6 trillion. The risk of holding dollars (or its derivatives such as pound, euro, yuan, etc.) is rising. And the return for taking this risk is falling.
Send In the Metals
So it is logical that people turn to the monetary metals. The price of the dollar is now at a record low: 15.17mg gold. This is mathematically equivalent to saying that the price of gold is $2,050. But economically, it is quite different.
We are insisting that the declining credit of the Fed be measured in money, rather than the other way around. Imagine if people went around saying that the meter stick is 47.2 gummy bears long. An hour is 20.0 pop songs in duration. A pound is 2 sacks of feathers heavy.
Anyway, it is obvious that the dollar is at a record low price in gold terms, because many people realize that the government is abusing its credit, and they simply don’t want to hold its debt paper. However, when priced in the other monetary metal, silver, the dollar is far from its record. It is currently 1.07g of silver, but in April 2011 it was at 0.63g (i.e., silver was $49.21).
Some speculators are betting that if the dollar can make a record low in gold terms, it could do so in silver terms as well. If gold should be $2,050, then why shouldn’t silver be $52?
That would give us a gold-silver ratio of 41. Which is not an extreme. If the ratio moved to the opposite extreme from its March high—i.e. 31—then at $2,050 gold silver would be $66. In other words, the price would be more than double its current level. Assuming that the price of gold did not budge during such an epic event in silver.
We do not offer this as a prediction. Just food for thought. When markets get to moving, they can keep on moving longer than anyone would expect. And move farther, even when there are no fundamentals to drive the move.
Check the Fundamentals
Are the fundamentals of silver waning? Let us take a look at the August 6 intraday fundamentals, as shown by the silver basis overlaid on the silver price.
Spot silver vs. September basis, August 6, intraday
In Phase I, we just have a falling basis while price is rising. That is falling abundance of silver, even …read more
On Monday, Silver got Scarcer – and Simpler
On 23 July, we said:
“Well, it’s complicated.”
The action on 27 July was not.
Silver spot price vs. September basis
Notice the big drop in the basis starting around midnight (London time). It falls from over 7% to under 2%.
To refresh: Basis = Future(bid) – Spot(ask)
For the first two and half hours, the spot price is not moving. So, the only way the basis can drop is if the price of the September silver future is dropping. In other words, selling of futures. But while that was going on, there was enough buying of spot to keep it steady.
Then, perhaps some market participants became aware of the buying of spot. Or perhaps some other buyers got excited. Somebody was buying in size, because between around 2:30 and 3:00am, the price shot up from around $23.10 to $24.40. +$1.30.
After that, the price jitters sideways but ends up to about $24.65. And the basis ends up around 3%. There are periods when the basis correlates with price, e.g. from 10:00 to 14:00. During these periods, the price was driven by speculators in the futures markets positioning and repositioning.
And there are also times when they move in opposite directions, e.g. from 6:00 to 7:30. This means that price was driven by buying and selling of physical metal.
It is important to note that the price of silver went up, a lot, while the abundance of the metal to the market went down a lot. The Monetary Metals silver basis reading for Friday was 5.3%.
We have written a lot in recent months about the absence of the market makers. This is why the basis has been so high. If the market makers came back, we would expect the basis to be pulled in quite a bit.
We do not believe that this occurred, suddenly, between midnight and 3:00AM Monday morning in London.
There is now ferocious buying of silver metal.
And of course, with this, there was a breathtaking plunge in the gold-silver ratio. From its COVID-19-induced peak of 125, it has dropped well below 80 by now.
Gold-silver ratio – bid and offer
Learn more about these fundamental indicators on the Monetary Metals website, by viewing our proprietary Silver Basis Continuous charts.
Dr. Keith Weiner is the president of the Gold Standard Institute USA, and CEO of Monetary Metals. Keith is a leading authority in the areas of gold, money, and credit and has made important contributions to the development of trading techniques founded upon the analysis of bid-ask spreads. Keith is a sought after speaker and regularly writes on economics. He is an Objectivist, and has his PhD from the New Austrian School of Economics. He lives with his wife near Phoenix, Arizona.
Charts by Monetary Metals
Chart captions by PT
© 2020 Monetary Metals
A Really Neat Bridge
But, Mousie, thou art no thy-lane,
In proving foresight may be vain;
The best-laid schemes o’ mice an’ men
Gang aft agley,
An’ lea’e us nought but grief an’ pain,
For promis’d joy!
– Robert Burns, To a Mouse, on Turning Her Up in Her Nest With the Plough (in extract), 1785
Installation of the final cable support pipes on the Gerald Desmond bridge replacement. Here is a drone video of the project. [PT]
Photo by Scott Varley
The grand plans of our local officials in Long Beach have been foiled by the corona-virus bug. After seven years of construction, at a cost of $1.5 billion, they can’t even hold a proper ribbon-cutting.
The special occasion is the grand opening of the new, yet to be named, Gerald Desmond Bridge replacement. To prevent the spread of COVID-19, a virtual ceremony is planned for the Friday leading into the Labor Day weekend.
Virtual ceremonies, like professional baseball games with recorded fan noises, are Dumb with a capital D. But, perhaps, this is the fitting grand opening of an edifice that was planned and constructed for a world that may never arrive.
Certainly, the new bridge structure, which has the highest vertical clearance of any cable-stayed bridge in the US, is a remarkable engineering achievement. The cable-stayed design also has a signature aesthetic. We have watched it go up over the years; it really is extraordinary.
The two towers rise up to roughly 515 feet above mean sea level, and include 40 cables per tower. The bridge’s linear extent is approximately 8,800 feet. The cable-stayed span alone is 2,000 feet.
Construction included 18 million pounds of structural steel, 75 million pounds of rebar, and 300,000 cubic yards of concrete. The new bridge will improve connection between downtown Long Beach with Terminal Island, and through the Port of Long Beach / Port of Los Angeles mega San Pedro Bay ports complex.
The old Gerald Desmond Bridge that it replaces was constructed in 1968. According to Duane Kenagy, capital programs executive at the Port of Long Beach, the old bridge had become “functionally obsolete.”
Maybe so. But the new bridge, while really neat, may be functionally unnecessary. Here is why…
Global Trade Contractions
To meet the relentless expansion of international trade over the last 20 years, berths have been widened, and channels have been deepened to accommodate the definitive absurdity of perpetual credit creation: The CMA CGM Benjamin Franklin.
Extra-large container ship CMA CGM Benjamin Franklin – a floating monument to a bygone era? [PT]
This mega container ship, if you are unfamiliar with it, is over 20 stories tall, the width of a 12 lane freeway, and longer than four football fields. It has enough cargo space to hold 90 million pairs of ‘Made In China’ shoes.
The purpose of the bridge replacement is to provide greater clearance into the Port’s Inner Harbor for mega container ships. The general philosophy of the bridge’s proponents is that global trade expands in perpetuity.
Hence, …read more
Deep-Seated Racism and Happy-Smiley Hypocrites
In Delhi, people of the northeastern part of India, who have mongoloid features, are derogatorily called “chinky.” It is not unusual for men in Delhi to stop their cars to proposition a random girl from the northeast for a sexual encounter, assuming her to be “loose.”
Indians’ ignorance about the geography of their own country, their irrationality, superstitions and bigotry have been fertile ground in these days of Covid-19. People from the northeast have faced massive problems based on the assumption that they are carriers of the virus. They have been refused services at shops and have been thrown out by landlords.
Indians from the northeast being denied entry into a shop
The girl from the northeast was spat at and called “corona,” instead of “chinky.”
Girls from the northeast threatened with eviction for “being carriers of corona-virus” being saved by the police
To visit monuments in India, an Indian pays a much lower charge than a non-Indian. Most Indians buy their entrance tickets, but not those from the northeast. They must prove that they are Indian by showing their IDs. Even then, the ignorant-ticket seller might still insist on the price foreigners pay.
Indians like to believe that they have a great family system and that they are generous and welcoming. Quite in contrast, surveys show Indians to be among the most race, color, caste, and religion conscious people in the world. My friend in Delhi had one of the happiest families I have seen. When I probed, she told me that hers was a “happy-smiley” family.
I didn’t know what that meant. She told me it was about a family in which everyone hated each other, but which made a great public display of their cohesion. While I had forgotten about this hypocrisy, I recalled how completely blown away I was when I met real, functional families in the UK during my first visit abroad.
India, one of the most racist countries
Since 1962 China has been regarded with derision in India. Contrary to the indoctrination Indians get, it was an extremely embarrassing defeat for India, which offered no resistance in most places. In those days, India’s GDP was higher than that of China.
Today, China is five times richer than India and invests a higher proportion of its budget in its armed forces. By that measure, any renewed armed conflict between India and China will likely give China an even more comfortable win over India.
India had a larger GDP in 1962; Now China’s is five times larger
Most Indians, who are vicariously proud while sitting in front of their TV, think that it is China that is afraid of India. It is so easy to feel courageous when the person who dies is not you or your son.
India has complicated relations with all its neighbors, perhaps with the slight exception of Bhutan, which …read more
Coming and Going Like a Wildfire
Second quarter 2020 came and went like a California wildfire. The economic devastation caused by the government lock-downs was swift, the destruction immense, and the damage lasting. But, nonetheless, in Q2, the major U.S. stock market indices rallied at a record pace.
The Nasdaq 100 (NDX), daily – the strongest of the major US stock indexes. Since its 2019 low it has roughly doubled. Needless to say, neither the economy nor corporate profits are twice as good as they were in 2019. [PT]
The Dow booked its best quarter in 33 years. The S&P 500 posted its best performance since 1998. And the NASDAQ had its biggest increase since 1999… jumping 38.85 percent in just three months.
The economy, on the other hand, was severely scorched. Decades of debt had built up like dead wood amongst a forest under-story. Then, at the worst possible time, government lockdown orders sparked a match and set it ablaze.
The results were predictable to everyone but the experts. Supply chain disruptions followed by retail disruptions, followed by declining sales, followed by disappearing cash flow, followed by layoffs, followed by business closures, followed by shrinking tax receipts, followed by no longer serviceable public and private debt, followed by mass bankruptcies, followed by riots, followed by full societal breakdown. The economic wildfire raged through so fast most people don’t comprehend what has happened.
The interim solutions from Washington, in concert with the Federal Reserve, have been to add more fuel. That is, the solutions have centered around mega efforts to paper over the economic depression with massive amounts of fake money.
Money Printer Go BRRR
Mass corporate bailouts were just the beginning. Payroll Protection Program (PPP) loans were made to over 650,000 small businesses, including presidential candidate Kanye West’s clothing brand, Yeezy, and Grover Norquist’s anti-tax group, Americans for Tax Reform.
On top of that, the Fed began creating money from thin air for the purpose of buying individual corporate bonds. As of June 28, the Fed’s bought $428 million worth of corporate bonds in 86 different companies. These companies include Berkshire Hathaway Energy, McDonald’s, Southwest Airlines, CVS, AT&T, Boeing, Coca-Cola, Exxon Mobil, Ford, Walmart, United Health Group, Philip Morris International, and many, many more.
Broad true US money supply TMS-2: into the blue yonder (see also “Pandemic Moonshot” for a recent comprehensive update). [PT]
The CARES Act also gifted the lowly working stiff a $1,200 stimulus check. But it was the unemployed who really made out. Roughly 20 million unemployed Americans scored an additional $600 weekly payment to supplement their existing unemployment benefits. Has being unemployed ever been more lucrative?
But, alas, for every beginning there is an end. The $600 weekly additional CARES Act payments are scheduled to end on July 31. The problem, however, is that many of the jobs lost because of government lock-downs aren’t coming back. So what’s an activist government to do?
Currently, a second round of stimulus checks is already a foregone conclusion. In fact, Senate …read more
Gold’s Little Brother
Today I want to put a popular precious metal under the magnifying glass for you: silver.
Silver, often referred to as the “little brother” of gold, has a particularly interesting seasonal pattern I would like to share with you.
Shiny large good delivery door stops made of silver – about to enter interesting seasonal phase. [PT]
Silver’s seasonality under the magnifying glass
Take a look at the seasonal chart of silver. In contrast to a standard price chart, the seasonal chart shows the average pattern of silver in the course of a calendar year. For this purpose, an average was calculated from the price patterns of the past 52 years. The horizontal axis shows the time of the year, the vertical axis depicts price information.
Silver price in USD per troy ounce, seasonal pattern over the past 52 years – Silver starts to rise at the end of June
As the chart illustrates, there are two favorable seasonal phases in silver. The first one begins in mid December (i.e., on the right hand side of the chart) and lasts until February (due to the turn of the year on the left hand side of the chart; arrow to the left).
The second one starts at the end of June and lasts until the end of September (arrow to the right).
In addition I have highlighted the beginning of this second phase with a circle.
The silver price rose in 31 of 52 cases!
The imminent strong seasonal period in silver begins on 28 June and ends on 21 September. A positive performance was recorded in 31 of the 52 cases under review.
During this phase silver generated an average gain of 4.87 percent, which corresponds to an annualized return of 22.71 percent.
The bar chart below shows the return generated by the silver price during this seasonally strong period in every year since 1968. Blue bars indicate years in which gains were achieved, red bars show years in which losses were posted.
Silver in USD, return in percent between 28 June and 21 September in every year since 1968 – gains predominate.
On two occasions the price increase reached even more than 70 percent. A particularly strong advance of 75.15 percent was recorded in 1979. The largest loss was posted in 2008. At 23.08 percent it was noticeably smaller.
In short, the imminent strong seasonal phase not only includes an above-average number of especially strong gains, but also fewer and less pronounced declines.
What is the situation with gold, platinum and palladium?
Something you may not be aware of: although the price of silver has a strong positive correlation with the gold price, in part its seasonal pattern differs significantly. The same applies to platinum and palladium. If you want to examine the precise seasonal patterns of gold and the other precious metals, take a look at www.seasonax.com!
PS: Silver is glittering again – don’t focus exclusively on equities!
Dimitri Speck specializes in pattern recognition and …read more
A Failure to Integrate Values
The only region in the world that has proactively tried to incorporate western culture in its societies is East Asia — Singapore, Japan, Hong Kong, South Korea, and Taiwan. China, which was a grotesquely oppressed, poor, Third World country not too far in the past, notwithstanding its many struggles today, has furiously tried to copy the West.
Famous Greek philosophers: their thoughts are a cornerstone of Western culture. [PT]
Western culture, which developed organically over at least the two and half millennia, starting from Greco-Roman philosophers, is not easy to duplicate. This culture requires thrift, honesty, hard work, liberty, individuality, dispassionate reason, objective justice, loyalty, honor, stoicism, a desire to rise above oneself, and many other factors that perhaps cannot be seen or isolated but must be absorbed subliminally in all their complex interactions. These are reflected in social, religious, and political structures of the West — the three independent branches of government, the rule of law, compassion for others, charity, family system, etc.
The West and East Asia, including China, comprise a mere 2.5 billion people.
“The Rest,” the Third World, comprises 5 billion out of 7.5 billion people on the planet. The cultural factors underpinning the West sound like clichés until one who gives up political correctness for the truth starts to see that the Third World, despite its several centuries of interactions with the West, simply fails to understand them.
The Third World is blind to what makes the West a civilization. It is as if the Third World cannot rise above animal instincts — craving for food, power over others, sex, and for the material.
Over several centuries of western colonization and missionary activities, an attempt was made to infuse Western cultural factors into the Third World. It was only a marginal success. Since the third world countries achieved political independence, without constant Western involvement, all has been lost. Christianity became voodoo, and the political system became a tool for tribalism and tyranny.
Focus on Materialism
The Third World is tempted by only the physical products of Western society. They are pleasure-centric. When they look at the West, all they see is entertainment, an easy-going lifestyle, freedom from responsibility, liberal governments, free health-care, consumerism, social welfare, and good salaries. They either want to be economic migrants to the West or copy the Western lifestyle, without an iota of an understanding that they must have wealth-generating capabilities first and that there is something at the foundations of Western culture.
The lure of materialism [PT]
There is a virtual absence of reading habits in the Third World. If they end up reading Ayn Rand, all they see in it is a drama. They fail to see a non-collectivist philosophy embedded in it. If they watch movies like the Matrix, all they see is a sci-fi movie. They fail to see any suggestion that they might be getting indoctrinated by their leaders.
What they see as the culture of the West from their narrow worldview is primarily …read more