Gold's Rise and the Dollar's Demise

Rick Rule, president and CEO of Sprott U.S. Holdings Inc., shares how the worldwide explosion of negative yielding debt shapes his bullish outlook on gold. 

He examines the impact that a "war on savers" has on the global financial system and on precious metals, and he shares his ideas on where inflation fits into the equation. 

Rule explains his outlook for the future of the monetary system by analyzing the evolving relationship between cryptocurrencies, precious metals, and fiat currencies.

- Source, Real Vision

Rick Rule: This Consolidation for Gold Tells me this Market is Extremely Healthy

Craig Hemke: Exchange For Physical?

Two years ago, following a surge in the use of “Exchanges For Physical” by traders at the COMEX, Eric Sprott asked me to begin tracking and recording the daily totals for this practice as posted by the CME. It’s time for an update.

First, let’s attempt again to discern what the heck an “exchange for physical” really is, because the truth of the matter is, no one really knows. When we first wrote about EFPs back in April of 2018, this was the best summary explanation we could find:

So, these are “ex-pit transfers between two parties”. OK. If that’s the case, then EFPs are best categorized as a swapping of positions between two parties. Given the volume of these transfers each day, it’s safe to assume that the two parties in question here are almost always Bullion Banks. And what are “Bullion Banks”? These are the banks that manage the physical delivery market in London…and they operate hand-in-glove with their trading desk operations on the COMEX in New York.

(By the way, the conspiracy to rig and manipulate prices between London and New York trading is precisely what the U.S. Department of Justice is currently investigating under the RICO statutes…an investigation that has already yielded six indictments, including the former head of JP Morgan’s global precious metals desk, Michael Nowak. It’s noteworthy that up until his indictment, Nowak also proudly served on the board of directors of the LBMA. Read more here: https://www.zerohedge.com/markets/abject-corruption-exposing-financial-political-complex-protecting-its-own-gold-manipulation)

Anyway, back to the EFPs. Though this practice of “ex-pit transfer” has been around for decades, the use of this scheme has increased dramatically in the past several years, possibly coinciding with a similarly dramatic increase in total contract issuance and open interest.

How does the CME itself define an EFP? Here’s a link, an excerpt of which is pasted below: https://www.cmegroup.com/trading/metals/precious/g…

Note the last line above. “EFP is a key component in pricing OTC spot gold”. Dutch money manager Gijsbert Groenewegen offered to provide his expertise and insights to this process back in 2018, and back then, he suggested that the dramatic surge in EFP use was also a tool for Banks to directly impact price. Groenewegen theorized that The Banks do, in fact, now use EFPs as a means to control prices off-exchange and through the deliberately-opaque OTC markets. This is worth considering, and you can read his article here: https://www.tfmetalsreport.com/blog/8942/guest-pos…

But let’s get back to the sheer volume of EFPs at present, because in the end, I believe it helps to reveal again the utter scam, sham, and fraud of the current digital derivative and fractional reserve pricing scheme.

From the CME Group’s own website, it is explained that futures contracts and EFPs are utilized by “gold traders” who “frequently trade OTC with Banks to hedge gold transactions”. OK, that sounds legitimate. You’ve a big position and you’d like to hedge it? Go right ahead...

- Source, Craig Hemke via Eric Sprott's, Sprott Money

Silver and the Miners Wait Patiently for Gold

The Fed surpasses expectations for more QE to address potential liquidity issues in the repo market around year-end. This means interbank funding issues are getting worse, requiring ever more stimulus. Meanwhile, Trump announces a phase one trade deal with China “in principle”, which means nothing substantive has been agreed whatsoever. Yet, the stock market eats it up and we head to new highs. Meanwhile, the bond market takes a hit, with the 10-year yield rising back up to 1.95%.

It is no surprise that Gold, despite setting a marginal higher high yesterday, ended the day near its low.

Silver didn’t fare much better, although it did close up slightly for the day and relative to the previous close.

Miners did not escape the pain but still continue to outperform the metals. The clear standout recently has been SILJ, the junior miners ETF. It came within a whisker of its September peak at 11.57 before falling back. So while Gold and Silver continue to drift lower in their bullish flag patterns, SILJ is testing its highest level since May 2018. Unfortunately for SILJ, it also hit a negatively divergent higher high yesterday, which could signal trouble in the very short-term.

The bigger issue is that although Silver hit a positively divergent lower low this week, according to its daily RSI and both MACDs, Gold has yet to match that feat. While Silver and the miners can continue to outperform Gold, it is difficult but not impossible to see the sector move materially higher near-term without Gold establishing a clear trough. On top of that, the risk is that the rise in stocks and bond yields may have some momentum into year-end, weighing further on the metals and miners.

On the other hand, much of the good news has now been priced into stocks. The Fed has announced it will paper over any liquidity problems through year-end, and we got a trade deal in principle with China. It is not clear to me what the next catalyst will be to justify further increases in stocks and bond yields.

Simply put, we could see further downside pressure on the metals and miners in the next two to three weeks, but if and when we get that positively divergent lower low in Gold, below 1446, followed by a higher high above 1492, then we can look forward to higher highs across the sector. My preferred target for Gold on the downside has been in the low 1420s for quite some time. That represents a 50% retracement of the entire rally from 1267 to 1566. A negatively divergent peak in the 10-year yield above 1.97% wouldn’t hurt either.

December has been a very kind month to Gold in each of the past four years, but once we get that bottom in Gold, it is Silver and especially SILJ that I will be focusing on to the upside.

- Source, David Brady via Eric Sprott's, Sprott Money

Eric Sprott: Precious Metals Market and Mining Industry Update

Legendary Canadian investor Eric Sprott discusses the precious metals markets and the mining industry. He also answers listener questions regarding a few specific mining companies.

- Source, Sprott Money