tag:blogger.com,1999:blog-63368896343735150742024-03-14T09:39:46.441-07:00Calamity CountdownRandy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.comBlogger184125tag:blogger.com,1999:blog-6336889634373515074.post-22552995550010277452024-02-17T11:54:00.000-08:002024-02-17T13:42:40.774-08:002024 Is Likely To Be Another Year With A High Level Of Hurricane Intensity <p><span style="background-color: white; font-family: arial;"><span face="Verdana, Arial, Helvetica, sans-serif">According to </span><a class="bbc_link" href="https://tropical.atmos.colostate.edu/Realtime/index.php?arch&loc=northatlantic" rel="noopener noreferrer" style="border-bottom: 1px solid rgb(137, 151, 167); color: #171b21; text-decoration-line: none;" target="_blank">https://tropical.atmos.colostate.edu/Realtime/index.php?arch&loc=northatlantic</a><span face="Verdana, Arial, Helvetica, sans-serif">, the accumulated cyclone energy of North Atlantic cyclones has been above 95 for each of the past 8 years (2016 thru 2023) and above 100 for 7 of the last 8 (2022 was the outlier with 95). Comparing this result to the previous 30 years, 14 out of the previous 30 years had accumulated energy below 95 (47%). I doubt many readers of this blog will be surprised by the fact that years with accumulated cyclone energy of North Atlantic hurricanes with high intensities are becoming more frequent.</span></span></p><span style="background-color: white; font-family: arial;"><span face="Verdana, Arial, Helvetica, sans-serif">I conducted this review because I speculated it highly likely that given the warmer ocean temperatures, that the Carribean Islands, Atlantic and Gulf of Mexco coastal communities are likely to be devastated by the next round of hurricanes following the flip of ENSO to La Nina.</span><br /><br /><span face="Verdana, Arial, Helvetica, sans-serif">However, when comparing accumulated energy years to El Nino and La Nina years, I found that while there is definitely a correlation, it is not as strong as I had expected to find </span><a class="bbc_link" href="https://ggweather.com/enso/oni.htm" rel="noopener noreferrer" style="border-bottom: 1px solid rgb(137, 151, 167); color: #171b21; text-decoration-line: none;" target="_blank">https://ggweather.com/enso/oni.htm</a><span face="Verdana, Arial, Helvetica, sans-serif">. While El Niño generally tends to suppress Atlantic hurricane activity, and La Niña tends to enhance it, an eyeball review of the results suggests that it does not appear to be highly predictive of whether there will be destructive hurricane activity in 2024. Thus, if there is a flip of the ENSO cycle from El Niño to La Niña, as some forecasters are predicting, it makes a devastating hurricane season more likely but not a certainty.</span><br /><br /><span face="Verdana, Arial, Helvetica, sans-serif">While coastal communities may not be as vulnerable to hurricanes in 2024 as I had supposed before starting this review, I fear that the warmer ocean temperatures will lead to more devastating Atlantic hurricanes in the not too distant future during both El Niño and La Niña years.</span></span>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-58573594705896335282024-01-14T11:50:00.000-08:002024-01-14T13:02:05.743-08:00Why Do The Gullible Folks In The Right Wing Echo Chamber Think That A Regional Winter Cold Snap Proves That Global Warming Is A Hoax?<div style="text-align: left;"><span style="font-family: arial;">We're in the midst of winter and much of the US is in the middle of a cold snap. Shocking, right? Yet, as typically happens during a regional cold snap the right wing echo chamber is filled with posts claiming that frigid weather during winter and rescheduled NFL games proves global warming to be a hoax. These claims ignore that t<span style="background-color: white; color: #212121;">he portion of the U.S. hit by this cold snap is a fraction of global surface area. Moreover, it is common for localized incursions of Arctic air masses to be compensated for by warmer-than-normal conditions in other areas of the mid-latitudes.</span>Frankly, anyone that is paying attention should realize that weather is so variable that regional US cold temperature records are commonplace even while locations south of the equator are sizzling. For reference, f<span style="color: #032849; font-size: var(--base);">rom January 2020 through November 2022, <a href="https://www.climatecentral.org/climate-matters/daily-heat-records-rising-2022" target="_blank">91% of 245 locations measured had more record heat than record cold</a>. </span></span></div><div style="text-align: left;"><span style="font-family: arial;"><span style="color: #032849; font-size: var(--base);"><br /></span></span><span style="color: #032849; font-size: var(--base);"><span style="font-family: arial;">Here's a news flash, when the US suffers through what is likely to be the hottest summer in recorded history during 2024 with hot temperature records being set throughout the country, there will almost certainly be cold records set during the winter season south of the equator. However, it seems probable that globally the hot temperature records will be about 3 times as frequent as the cold termperature records.</span></span></div><div style="text-align: left;"><span style="color: #032849; font-size: var(--base);"><span style="font-family: arial;"><br /></span></span><span style="color: #032849; font-size: var(--base);"><span style="font-family: arial;">If along the lines of climate science deniers, I was to cherry pick a variable data set to make an outrageous claim, it would be that sea level rise has gone parabolic. Check out the chart below. The increase in sea level between May 4 and September 29 is a bit frightening. If the 4.7 mm (0.36 inches) increase in sea level rise is extrapolated out to a full year, that's about 0.8 inches of sea level rise per year and over 8 inches per decade. Whoa, sunny day flooding is already becoming a problem. Eight more inches of sea level rise by 2034 would convert sunny day flooding from a major nuisance into a coastal real estate catastrophe. Even if there is another 0.8 inches of sea level rise in 2024, it will be a problem for low lying coastal cities such as Charleston.</span></span></div><div style="text-align: left;"><span style="color: #032849; font-size: var(--base);"><span style="font-family: arial;"><br /></span></span><span style="color: #032849; font-size: var(--base);"><span style="font-family: arial;">However, a close review of the chart indicates that upward spikes occurred in 2011-2012 and 2014-2015 and were both followed by declines in sea level. Thus, reversion to the mean of about 1/8th inch of sea level rise per year seems at least as likely as a continued rise of 0.8 inch a year. </span></span></div><div style="text-align: left;"><span style="color: #032849; font-size: var(--base);"><span style="font-family: arial;"><br /></span></span></div><div style="text-align: left;"><div class="separator" style="clear: both; color: #032849; font-size: var(--base); text-align: center;"><a href="https://climate.nasa.gov/vital-signs/sea-level/" style="margin-left: 1em; margin-right: 1em;" target="_blank"><img border="0" data-original-height="480" data-original-width="616" height="277" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjVtHxJ21BaxfHqwXRIdo7THwLb_i-C-N_WVr5obQrZgBSOhreqahOur9URG3W8l0ymXubwouy98UyLvK5yyT4H_1EGx110WG3ugASlQvXtUfjvLqorT8dggc0EJeh79xcMVShoH5cNKIsyJcJodFHegSNGsD0a_fJOTP2Jc3Oc7nOBZhv_MBP1CITSDAY/w356-h277/Sea%20Level%20Change.png" width="356" /></a></div><div class="separator" style="clear: both; color: #032849; font-size: var(--base); text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: center;"><span style="color: #032849;"><a href="https://climate.nasa.gov/vital-signs/sea-level/">https://climate.nasa.gov/vital-signs/sea-level/</a></span></div><div class="separator" style="clear: both; text-align: center;"><br /></div><div class="separator" style="clear: both; text-align: left;"><span style="font-family: arial;">In conclusion, t<span style="background-color: white; color: #222222;">he right wing echo chamber is very effective at amplifying climate disinformation. They cherry pick data, utilize obscure data sources, and make a big deal of the wildest faulty predictions made by individual climate researchers which never obtained widescale acceptance. On the other hand, </span>climate science researchers don't need to do any cherry picking as the results of a warming planet are abundant.</span></div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;">Related Posts</div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;"><a href="https://www.blogger.com/blog/post/edit/6336889634373515074/564834921733346583">Climate Science Deniers Have Uncovered 1,600 Scientists Who Signed A There Is No Climate Emergency Declaration. That is 0.02% of the 8 Million Scientists In The World</a></div><div class="separator" style="clear: both; text-align: left;"><br /></div><div class="separator" style="clear: both; text-align: left;"><a href="https://www.blogger.com/blog/post/edit/6336889634373515074/7295481796245432218">Got A Climate Change Denial Opinion Piece For The WSJ? No Need To Worry About Editor Fact Checking - Global Temperature</a></div><br /><span style="color: #032849; font-family: arial; font-size: var(--base);"><br /></span></div>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-27938679218984943252023-12-22T06:28:00.000-08:002023-12-22T06:28:29.197-08:00Large US Treasury Bond Auctions May Be Good Gold and Silver Dip Buying Opportunities<p><span style="background-color: white; color: #141415;"><span style="font-family: arial;">The market is starting to choke on the massive size of US Treasury auctions. Auctions sizes are particularly large currently as Treasury refills its coffer after emptying most of the surplus during the close to the wire negotiations on the US debt limit. We're talking $500-600 billion in debt being auctioned off every week to pay off the expiring bonds that fund the soon to be $34 trillion debt, as well as to cover the monthly deficits. And with the US running $100-200 billion monthly deficits, that's an additional $25 billion or more in debt that needs to be raised every week.</span></span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #141415; font-feature-settings: inherit; font-kerning: inherit; font-optical-sizing: inherit; font-stretch: inherit; font-variant-alternates: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; font-variant-position: inherit; font-variation-settings: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><span style="font-family: arial;">On Wednesday demand for the 20 year bonds being auctioned off was underwhelming. So, interest rates went up, the US dollar index (DXY) responded by going higher, and that led the alogos to sell off gold and silver futures. The Wednesday dip in the price of gold and silver futures was reversed the next day.</span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #141415; font-feature-settings: inherit; font-kerning: inherit; font-optical-sizing: inherit; font-stretch: inherit; font-variant-alternates: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; font-variant-position: inherit; font-variation-settings: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><span style="font-family: arial;">In a more rational world, weak bond auctions would be a sign of trouble for the US dollar, and the prescious metal futures would go higher. And eventually, that will be the case. But for now, don't be surprised by dips in the price of gold and silver after weak US bond auctions. </span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #141415; font-feature-settings: inherit; font-kerning: inherit; font-optical-sizing: inherit; font-stretch: inherit; font-variant-alternates: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; font-variant-position: inherit; font-variation-settings: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0px; vertical-align: baseline;"><span style="font-family: arial;">While there are no long term bond auctions scheduled for the rest of 2023, there will be a heavy schedule next month. But with the enormous funding requirements, Treasury auctions can not be completely shut down for the rest of December. There will be 5 and 7 year note auctions next week (12/27 and 12/28), but these auctions are much less likely to lead to fireworks than long term bond auctions</span></p>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-5648349217333465832023-09-12T10:13:00.003-07:002023-09-12T11:01:03.765-07:00Climate Science Deniers Have Uncovered 1,600 Scientists Who Signed A There Is No Climate Emergency Declaration. That is 0.02% of the 8 Million Scientists In The World<p><span style="font-family: arial;">Most people know someone that is brilliant yet has no common sense. Thus, the fact that climate science deniers are making a big deal about finding 1,600 scientists from random fields that have signed a declaration that "there is no climate emergency" is little more than fodder for their echo chamber. I'm pretty certain with a sufficient effort I could find 1,600 scientists to sign a declaration stating that "God (or the devil) placed dinosuar bones in the ground to test Christians' faith".</span></p><p><span style="font-family: arial;">To deny that there is a climate emergency, these 1,600 scientists (0.02% of the total) have to overlook the following:</span></p><p style="text-align: left;"></p><ol style="text-align: left;"><li><span style="font-family: arial;">Hurricanes and typhoons are growing in intensity at rates never experienced during the satellite era. They are becoming increasingly deadly (the climate science deniers talk about there not being a significant increase in the number of hurricanes, but there has never been a consensus among mainstream climate researchers in regard to frequency, only that intensity would increase).</span></li><li><span style="font-family: arial;">Deadly flooding is becoming increasingly common. <span style="background-color: white;">A warmer atmosphere holds more moisture—</span><span style="background-color: white;">about 7 percent more per 1.8°F (1°C) of warming</span><span style="background-color: white;">—and a significant increase in atmospheric moisture is present due to the air holding more moisture as it warms.This added moisture powers heavy rainstorms becoming flooding events.</span></span></li><li><span style="font-family: arial;"><span style="background-color: white;">Sea level is rising by 1/8th inch per year globally and by more in many locations. </span><span style="background-color: white;">In the past 20 years, the rate of sunny-day flooding has doubled. </span><span style="background-color: white;">Compared to 2000, it's increased 400% on the East Coast and 1,100% on the Gulf Coast.</span><span style="background-color: white;"> As an example, Charleston SC flooded about 1 out of every 5 days in 2019, and the sunny day flooding problem is worsening.</span></span></li><li><span style="font-family: arial;"><span style="background-color: white;">Some areas of the Middle East are too hot for human survival without </span>the aid of air conditioning, fans or shade. The limit is somewhere between 104 and 122 degrees Fahrenheit if you're sitting perfectly still, according to a study conducted in the United Kingdom. Other research focuses on <a href="https://grist.org/extreme-heat/parts-of-the-world-have-already-grown-too-hot-for-human-survival/" target="_blank">wet bulb temperatures</a>.</span></li><li><span style="font-family: arial;">The capability of the oceans to support seafood harvesting is diminishing.</span> </li></ol><blockquote style="border: none; margin: 0 0 0 40px; padding: 0px;"><p style="text-align: left;"><span> </span>A. <span style="font-family: arial;"><span style="background-color: white;">Coral bleaching is occurring globally </span><span style="background-color: white;"> For example, a recent paper </span><span style="background-color: white;">shows that around </span><span style="background-color: white; box-sizing: border-box;"><a href="https://phys.org/news/2022-12-florida-coral-reefs-eroding.html" target="_blank">70% of reefs are now net erosional in the Florida Keys</a></span><span style="background-color: white;"><a href="https://phys.org/news/2022-12-florida-coral-reefs-eroding.html" target="_blank">,</a> meaning they are losing more habitat than they build. And the Great Barrier Reef has experienced m</span><span style="background-color: white;">ass bleaching events in </span><span style="background-color: white;">1998, 2002, 2016, 2017, 2020 and 2022. An estimated 25 percent of all marine life, including over 4,000 species of fish, are dependent on coral reefs at some point in their life cycle. T<span style="letter-spacing: 0.3px; white-space-collapse: preserve;">he reefs provides essential food, shelter and the spawning grounds needed for their species’ survival. When their homes disappeared, the fishing industry becomes less productive.</span></span></span><span style="background-color: white; font-family: arial;"> </span></p></blockquote><blockquote style="border: none; margin: 0px 0px 0px 40px; padding: 0px; text-align: left;"><p style="text-align: left;"><span style="background-color: white; font-family: arial;">B. The </span><span style="background-color: white; font-family: arial;">acidity of the ocean has increased by 26% since the beginning of the industrial era. </span><span style="background-color: white; font-family: arial;">For oysters, scallops and other shellfish, </span><span style="background-color: white; font-family: arial;">lower pH means less carbonate</span><span style="background-color: white; font-family: arial;">, which they rely on to build their essential shells. As acidity increases, shells become thinner, growth slows down and death rates rise.</span><span style="background-color: white; font-family: arial;">The shellfish industry is experiencing higher mortality rates. Many shellfish farmers have had to add</span><span style="background-color: white; font-family: arial;"> soda ash</span><span style="background-color: white; font-family: arial;"> to their hatcheries</span><span style="background-color: white; font-family: arial;"> to permit the seed clams, oysters and geoduck to thrive. </span></p><p><span style="background-color: white;"><span style="font-family: arial;"><b>Conclusion</b></span></span></p></blockquote><p><span style="font-family: arial;"><span style="background-color: white;">The social conservative echo chamber is very effective at amplifying climate disinformation. They cherry pick data, utilize obscure data sources, and make a big deal of the wildest faulty predictions made by individual climate researchers which never obtained widescale acceptance. The amount of coverage of a declaration by 0.02% of scientists from an assortment of fields is a good example of how effective the social conserative echo chamber is at promoting their denial of climate science.</span></span></p><p><br /></p>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-19932009304460079092023-08-17T13:18:00.000-07:002023-08-17T13:18:41.778-07:00Will Climate Change Suppress The Price of Tech Stocks Due to Crop Failures Keeping Food Costs and Inflation High?<p><span style="background-color: white;"><span face="Verdana, Arial, Helvetica, sans-serif">In the financial markets, it seems stunning how nonchalant the vast majority of investors and commentators are to the risks to stocks and bonds from climate impacts. However the world's largest investor, Norway's sovereign wealth fund, is cutting their tech exposure due to global warning.</span><br style="font-family: Verdana, Arial, Helvetica, sans-serif;" /><br style="font-family: Verdana, Arial, Helvetica, sans-serif;" /><span face="Verdana, Arial, Helvetica, sans-serif">For reference, Norway's sovereign wealth fund, the world's largest stock market investor with $1.4 trillion in assets under management,made a stunning profit of $143 billion for the first half of 2023, due to the growth of U.S tech companies (the AI craze).</span><br style="font-family: Verdana, Arial, Helvetica, sans-serif;" /><br style="font-family: Verdana, Arial, Helvetica, sans-serif;" /><span face="Verdana, Arial, Helvetica, sans-serif">But they are cutting back on tech exposure. Their CEO stated that global warming is lowering food harvests, and thus increasing food prices. The fund expects it will be difficult to reduce inflation worldwide due to high food prices. And high inflation leads to high interest rates. High interest rates produce a poor risk reward for owners of pricey tech stocks versus earning substantial interest fees from bonds. This makes tech investments signifiantly less attractive and far less likely to increase in price.</span><br style="font-family: Verdana, Arial, Helvetica, sans-serif;" /><br style="font-family: Verdana, Arial, Helvetica, sans-serif;" /><span face="Verdana, Arial, Helvetica, sans-serif">While food shortages may be the first climate impact to hit the financial markets, the markets seem oblivious to the multitude of long term impacts that are likely to wreck economies worldwide (along with potentially causing mass starvation and making large swathes of the globe unlivable).</span></span></p>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-72954817962454322182023-07-08T11:28:00.002-07:002023-07-08T11:44:45.310-07:00Got A Climate Change Denial Opinion Piece For The WSJ? No Need To Worry About Editor Fact Checking - Global Temperature<p><span style="font-family: arial;">Climate change deniers have a couple of go-to websites; temperature.global and UAH Global Temperature. The deniers cherry pick data from these two websites and ignore the fact that the information these two sources provides <span style="background-color: white;">is at odds with all other credible global temperatures, land air temperatures, marine air temperatures, sea surface temperature, sub-surface ocean temperatures, lower atmospheric temperatures, sub-surface land temperatures, and sea level rise as a metric of a warming climate system. A sampling of the more credible sources are</span> NOAA, NASA, the UK Met Office, and the Japan Meteorological Agency.</span></p><p><span style="font-family: arial;">In a July 8 Opinion article published in the Wall Street Journal, the author claims "Hottest Days Ever? Don't Believe It". Steve Milloy's data source supporting his claim is the obscure weather.global website. Milloy suggests that the University of Maine's Climate Reanalyzer report that July 3 and 4 were the hottest days on record is not believeble because it is not comfirmed by temperature.global. However, Milloy conveniently fails to mention that NOAA also confirmed this factoid (<span style="background-color: white;">The National Oceanic and Atmospheric Administration is a scientific agency within the United States Department of Commerce), And given that killer heatwaves are scorching the US Southwest and Louisiana, Mexico, China, India, and the Middle East, it's challenging to give credence to a data source that has failed to measure a July temperature spike.</span></span></p><p><span style="font-family: arial;"><span style="background-color: white;">The WSJ's editors seemingly failed to catch this bit of hypocracy. Milloy argues that temperature stations utilize corrupted data. But guess what the temperature.global site utilizes to compile it's reports? Yup, surface temperature measurement versus the satelite data utilized by Climate Reanalyzer. And NOAA's methodology is provided on the following webpage: </span><a href="https://www.ncei.noaa.gov/products/land-based-station/noaa-global-temp">https://www.ncei.noaa.gov/products/land-based-station/noaa-global-temp</a></span></p><p><span style="font-family: arial;">It's long past time for the WSJ to stop allowing their "Opinion" section to be filled with misleading climate change editorials featuring manipulated data and cherry picked data sources.</span></p>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-12333367898361195612023-05-06T11:25:00.001-07:002023-05-06T11:25:17.016-07:00Fed Chair Powell's Attempt At Stand-Up Comedy<p>Guest post by <a href="https://www.reddit.com/user/OtaraMilclub/ " target="_blank">OtareMilclub</a>, a frequent contributor to Reddit.</p><p><span style="background-color: white; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-size: 14px;">At his May FOMC press conference, Mr. Powell tried his hand at stand-up comedy by saying "banking conditions have broadly improved since March." Could it really be possible that he can be so blind to what is actually happening within the banking system?</span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-feature-settings: inherit; font-kerning: inherit; font-optical-sizing: inherit; font-size: 14px; font-stretch: inherit; font-variant-alternates: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; font-variation-settings: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">A banking system can only function properly when certain parameters are in place. Banks need to pay depositors a rate that is close to what they can receive from short-term Treasuries and that interest rate should also be above the rate of inflation. Most importantly, the rate paid on banks' liabilities (deposits) needs to be below the rate it receives on its assets (loans). A steep yield curve, where short-term rates are several hundred basis points below long-term rates, is conducive for a healthy banking system to exist.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-feature-settings: inherit; font-kerning: inherit; font-optical-sizing: inherit; font-size: 14px; font-stretch: inherit; font-variant-alternates: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; font-variation-settings: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">In this scenario, deposits are sticky because there is no motivation to leave the banking system for the relative safety of T-bills; and banks can easily turn a profit due to the positive-sloping yield curve. The situation we have today is the exact opposite. Banks are now paying depositors far below what they can receive from a risk-free, short-term Treasury Bill, and that rate is nowhere near the increase in the Consumer Price Index. The risk of bank runs increases when the deposit rate cannot compete with that of inflation and the rate offered on T-bills. It just does not make any financial sense at all to keep your money in a place where the risk is greater, and the reward is far less.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-feature-settings: inherit; font-kerning: inherit; font-optical-sizing: inherit; font-size: 14px; font-stretch: inherit; font-variant-alternates: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; font-variation-settings: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Case in point, the FDIC placed First Republic Bank (FRB) on Receivership last Friday. It is the 4th such bank since early March to fail. The list so far is Silvegate Bank, First Republic Bank, Silicon Valley Bank, and Signature Bank. These are not all insignificant financial institutions. Excluding Silvergate, they were the 2nd, 3rd, and 4th largest bank failures in history. The deposits and assets of the erstwhile FRB bank were sold to none other than Jamie Dimon's JP Morgan (JPM). Of course, the shareholders get wiped out; but JPM gets their assets for dimes on the dollar, and the deal comes with a government backstop on potential losses as an added incentive.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-feature-settings: inherit; font-kerning: inherit; font-optical-sizing: inherit; font-size: 14px; font-stretch: inherit; font-variant-alternates: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; font-variation-settings: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">I'm sure there's nothing to see here, though; these collapses are just aberrations. So, just buy, buy, buy stocks. But please indulge me while I inject some reality into the evaluation. Do you want to know what is really plaguing the entire banking system? It is actually very easy to understand once you open your mind to the simple truth. A plethora of high-risk loans were made when money was virtually free during 10 of the last 14 years. This secular system of free money led to a 40-year-high rate of inflation. CPI at over 4x the Fed's target compelled Mr. Powell to jack up interest rates by over 500 bps in just over one year. Hence, bank assets, and the income stream they provide, are worth far less than T-bills.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-feature-settings: inherit; font-kerning: inherit; font-optical-sizing: inherit; font-size: 14px; font-stretch: inherit; font-variant-alternates: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; font-variation-settings: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">For example, one of a bank's largest assets is mortgages. The Fed pushed the overnight interbank lending rate to the floor and bought $2.6 trillion in mortgage-backed securities to push the cost of buying a home to a record low. In fact, the 30-year fixed mortgage rate was below 3% from July of 2020 thru March of 2021. Rates even plunged to a record low of 2.65% by early 2021. And, 30-year Fixed rate mortgages have been below the current Effective Fed Funds Rate (EFFR), which is now just over 5%, since May of 2010. This was not an issue for banks as long as inflation remained quiescent, and both the EFFR and T-bill rates were near zero percent. But that all changed when the CPI soared to 9% by the summer of 2022, and the risk-free rate on short-term government debt climbed to match that of the Fed Fund's target rate of 5-5.25%.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-feature-settings: inherit; font-kerning: inherit; font-optical-sizing: inherit; font-size: 14px; font-stretch: inherit; font-variant-alternates: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; font-variation-settings: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">The problem is banks cannot pay depositors anything close to what they can now receive from a risk-free T-bill yield. Otherwise, they would be paying depositors more than they are currently receiving from a good percentage of their assets, and their profit margins would disappear. However, if banks don't begin offering much better rates to their customers' liquid deposits, it will lead to more money fleeing the banking system, which is a drain on reserves and curbs banks' ability to lend. This exacerbates the drain on reserves already occurring from the Fed's ongoing QT program. Banks are then forced to sell assets to meet liquidity requirements, which then puts further downward price pressure on these same assets and attenuates banking reserves further. Thus, expediting and intensifying the recession that is already in progress. In the end, the size of the bank is irrelevant. All banks suffer under this same dynamic—even the bigger ones—just to different degrees. Banks have already significantly tightened lending standards. And now, they will be forced to tighten lending practices even further due to the escalating deposit flight and increased regulatory oversight. Of course, mortgages are not the only loans made to consumers and businesses during the Fed's ZIRP regime that would face margin pressure if banks deigned to pay depositors a rate that is even close to what they can receive from T-bills. Net interest margins would shrink across the board.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-feature-settings: inherit; font-kerning: inherit; font-optical-sizing: inherit; font-size: 14px; font-stretch: inherit; font-variant-alternates: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; font-variation-settings: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">The deep state of Wall Street is desperately trying to convince investors that the current array of banking failures is idiosyncratic and isolated. That is the new definition of insanity. Think about it…what do you think will happen to banks' assets when the unemployment rate begins to rise? Or, how much damage will be done to the commercial mortgage-backed securities market when the $2.5 trillion worth of "vacant" commercial real estate loans have to be refinanced? How about the Trillion-dollars' worth of collateralized loan obligations that will falter as the economy begins to contract?</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-feature-settings: inherit; font-kerning: inherit; font-optical-sizing: inherit; font-size: 14px; font-stretch: inherit; font-variant-alternates: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; font-variation-settings: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">In other words, we have yet to see the recession become manifest, which is so very clearly predicted by the National Federation of Independent Business' small business survey, the Index of Leading Economic Indicators, plunging money supply growth rates, the soaring net percentage of banks that are tightening lending standards, and inverted yield curves. The Fed's additional 25bp rate hike after the May FOMC meeting will serve to exacerbate and expedite the coming recession. And, once that economic contraction finally does arrive, we can expect the stress in the banking system to greatly intensify. The mainstream financial media is ignorant of this fact, but the regional banking index is not. The KRE regional bank ETF is down over 40% since February 7th of this year.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-feature-settings: inherit; font-kerning: inherit; font-optical-sizing: inherit; font-size: 14px; font-stretch: inherit; font-variant-alternates: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; font-variation-settings: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Sorry, Mr. Powell, the trouble in the banking system has only just begun. Investors would be wise to stay extremely defensive with their asset allocations until the Fed and Treasury are able to adequately re-liquify the financial system. But let’s see them try doing that without causing inflation to run intractable.</p><div class="_2-UiOdhyj4wHBv7Rc2FeDr " style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-feature-settings: inherit; font-kerning: inherit; font-optical-sizing: inherit; font-size: 14px; font-stretch: inherit; font-variant-alternates: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; font-variation-settings: inherit; line-height: inherit; margin: 24px 0px; padding: 0px; vertical-align: baseline;"><div class="_3Oa0THmZ3f5iZXAQ0hBJ0k _2LjgQiHLCZ9LDbCQx5KaOi " style="border: 0px; display: flex; font: inherit; justify-content: center; margin: 0px auto; padding: 0px; position: relative; vertical-align: baseline;"><a class="_3m20hIKOhTTeMgPnfMbVNN" href="https://preview.redd.it/golfh6c1n5ya1.jpg?width=400&format=pjpg&auto=webp&v=enabled&s=94a0663374afd1cfbaf9aaeaf306423a7feefe6e" rel="noopener noreferrer" style="border: 0px; font: inherit; margin: 0px; padding: 0px; position: relative; text-decoration: inherit; vertical-align: baseline;" target="_blank"><img alt="r/SilverDegenClub - Must Read if you have the time ex Pento" class="_2_tDEnGMLxpM6uOa2kaDB3 ImageBox-image media-element _1XWObl-3b9tPy64oaG6fax" src="https://preview.redd.it/golfh6c1n5ya1.jpg?width=400&format=pjpg&auto=webp&v=enabled&s=94a0663374afd1cfbaf9aaeaf306423a7feefe6e" style="background-color: var(--newCommunityTheme-post); border: 0px; display: block; font: inherit; margin: 0px auto; max-height: 1400px; max-width: 100%; padding: 0px; position: relative; vertical-align: baseline;" /></a></div></div>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-4468994661973232962023-03-23T10:59:00.002-07:002023-04-07T08:07:57.487-07:00Magical Growth In US Construction Employment According To BLS<p><span style="font-family: arial;">Here is a number that does not pass the sniff test. </span></p><p><span style="font-family: arial;">According to a US Bureau of Labor Statistics, "<span style="background-color: white;">Construction employment grew by <b>24,000 in February</b>, in line with the average monthly </span><span style="background-color: white;">growth of 20,000 over the prior 6 months". </span> </span></p><p><span style="font-family: arial;">The question becomes how much of the overstated number is due to: 1) crappy survey methodolgy; 2) a flawed seasonal adjustment factor; or 3) a ridiculous assumption about the "birth" of new constuction firms.</span></p><p><span style="font-family: arial;">Does it seem likely that construction employment is growing when office construction is in a death spiral due to work from home, retail constuction is stunted by Internet shopping, and new home construction is being blunted by lack of affordability due to 7% mortgage rates. It seems instructive to review construction job openings. Construction job opening plummeted by a shocking 240,000 in January (the most recent report) <span style="background-color: white;">according to an Associated Builders and Contractors analysis of data from the U.S. Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey.</span><span style="background-color: white;"> </span> </span></p><p><span style="font-family: arial;"><span>And I'm not the only one that questions the BLS employment numbers. On </span><span face=""Droid Sans", sans-serif" style="background-color: white;">December 12 the Philadelphia Fed’s new experimental algo predicted that the BLS had overreported tolal jobs growth by 1.1 million.</span></span></p><p><span style="font-family: arial;">Time will tell whether the BLS releases more magical employment numbers in the upcoming months.</span></p><p><span style="font-family: arial;"><br /></span></p><h2 class="post-title" style="background-color: white; border-bottom-color: rgb(212, 212, 212); border-bottom-style: solid; border-image: initial; border-left-color: initial; border-left-style: initial; border-right-color: initial; border-right-style: initial; border-top-color: initial; border-top-style: initial; border-width: 0px 0px 1px; box-sizing: inherit; color: #535353; font-family: inherit; font-feature-settings: inherit; font-kerning: inherit; font-optical-sizing: inherit; font-size: 2rem; font-stretch: inherit; font-variant-alternates: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; font-variation-settings: inherit; font-weight: 500; line-height: 1.1; margin: 0px 0px 0.5em; padding: 0px 0px 0.3em; vertical-align: baseline;"><br /></h2>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-32374990758378766242023-03-10T12:37:00.006-08:002023-03-10T12:37:47.226-08:00More US Dollar Debasement. The US Government Ran Up A $262 Billion Deficit In February. Up from $217 Billion Year Ago<div class="_3xX726aBn29LDbsDtzr_6E _1Ap4F5maDtT1E1YuCiaO0r D3IL3FD0RFy_mkKLPwL4" data-adclicklocation="media" data-click-id="text" style="background-color: white; border: 0px; font-family: IBMPlexSans, Arial, sans-serif; font-feature-settings: inherit; font-kerning: inherit; font-optical-sizing: inherit; font-stretch: inherit; font-variant-alternates: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; font-variation-settings: inherit; line-height: inherit; margin: 12px 0px 0px 8px; max-width: 800px; padding: 5px 16px 5px 0px; vertical-align: baseline;"><div class="_292iotee39Lmt0MkQZ2hPV RichTextJSON-root" style="border: 0px; font-family: "Noto Sans", Arial, sans-serif; font-feature-settings: inherit; font-kerning: inherit; font-optical-sizing: inherit; font-size: 14px; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-variation-settings: inherit; line-height: 21px; margin: 0px 0px -1px; overflow: auto; padding: 0px 0px 1px; vertical-align: baseline; word-break: break-word;"><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="border: 0px; font: inherit; margin: 0px; padding: 0px 0px 0.25em; vertical-align: baseline;">The US debt continues to explode higher. February deficit was $45 billion dollars higher than the year ago February deficit. Receipts were down and outflows were up</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="border: 0px; font-family: inherit; font-feature-settings: inherit; font-kerning: inherit; font-optical-sizing: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-variation-settings: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><span style="font-weight: inherit;">February </span><b>receipts</b><span style="font-weight: inherit;"> - $262 billion vs $290 billion previous year</span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="border: 0px; font-family: inherit; font-feature-settings: inherit; font-kerning: inherit; font-optical-sizing: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-variation-settings: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><span style="font-weight: inherit;">February </span><b>outflows</b><span style="font-weight: inherit;"> - $525 billion vs $506 billion previous year</span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="border: 0px; font: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><span class="_12FoOEddL7j_RgMQN0SNeU" style="border: 0px; font-family: inherit; font-feature-settings: inherit; font-kerning: inherit; font-optical-sizing: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-variation-settings: inherit; font-weight: 700; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">Deficits by month so far this fiscal year</span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="border: 0px; font: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">October - $88 billion vs $165 billion previous year (only month with a bigger deficit last year)</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="border: 0px; font: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">November - $248 billion vs $191 billion previous year</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="border: 0px; font: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">December - $85 billion vs $21billion previous year</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="border: 0px; font: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">January - $39 billion deficit vs $119 billion <span class="_12FoOEddL7j_RgMQN0SNeU" style="border: 0px; font-family: inherit; font-feature-settings: inherit; font-kerning: inherit; font-optical-sizing: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-variation-settings: inherit; font-weight: 700; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">surplus</span> previous year</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="border: 0px; font: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">February - $262 billion vs $217 billion previous year</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="border: 0px; font: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Fiscal 2023 Year To Date Deficit After 5 Months - $723 billion</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="border: 0px; font: inherit; margin: 0px; padding: 0.8em 0px 0px; vertical-align: baseline;">So that makes 5 consecutive months in which the deficit has been $45 billion or more larger that it was in the previous year (fiscal 2022). And in both this month and in November, the outlays were essentially double the receipts. </p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="border: 0px; font: inherit; margin: 0px; padding: 0.8em 0px 0px; vertical-align: baseline;">Would you be surprised if the US hits the debt ceiling even earlier that Janet Yellon is projecting?</p></div></div>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-87743785856562769332023-01-29T11:00:00.003-08:002023-04-07T09:14:30.941-07:00Will The Massive Monthly US Trade Deficit Reports Be Reflected In The Price of Silver?<p><span style="font-size: medium;">There has been a lot of recent attention focused upon the US debt, deficit, and debt limit. And while the US debt is a critical source of US dollar debasement, surprisingly little attention is being paid to the US trade deficit. This is in large part due to many economists argueing that the US trade deficit doesn't matter.</span></p><div data-reddit-rtjson="{"entityMap":{},"blocks":[{"key":"fhg3n","text":"There has been a lot of recent attention focused upon the US debt, deficit, and debt limit. And while the US debt is a critical source of US dollar debasement, surprisingly little attention is being paid to the US trade deficit. This is in large part due to many economists argueing that the US trade deficit doesn't matter. ","type":"unstyled","inlineStyleRanges":[],"entityRanges":[],"data":{}},{"key":"8qqhb","text":"Here's the current situation according to the Council On Foreign Affairs, \"The US dollar’s role as the global reserve currency and primary tool for global transactions means that many other countries rely on holding dollar reserves, creating massive demand for U.S. financial assets. This means that the U.S. pays little for its foreign borrowing, allowing it to finance its high consumption at low cost.\"","type":"unstyled","inlineStyleRanges":[],"entityRanges":[],"data":{}},{"key":"fu64j","text":"But since the BRIC countries and even Saudi Arabia have indicated a desire to reduce their dependence on the US dollar, the DXY (US $ index) has been declining. And since the DXY does not include the currencies of any of the BRIC countries or Saudi Arabia, the actual decline of the US dollar may not be adequately reflected by this index (The U.S. Dollar Index contains six component currencies: the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc**).**","type":"unstyled","inlineStyleRanges":[],"entityRanges":[],"data":{}},{"key":"8rn9b","text":"So in this enviroment of de-dollarization being bandied about and support for the petroyuan, I suspect that the era of the US trade deficit not mattering may be coming to an end. If China and other export oriented economies lose interest in recycling the dollars they obtain by supplying the US with goods into US treasuries, the trade deficit will matter.","type":"unstyled","inlineStyleRanges":[],"entityRanges":[],"data":{}},{"key":"em7ch","text":"In regard to how little the markets seem to judge that the US trade deficit matters, it may be illuminating to look at what has happened to the Comex price of silver on the days when the US monthly trade deficit has been reported. And given that the price of silver has been driven largely by moves in the DXY index, it would seem logical that if the trade deficit mattered to the markets, then the DXY would be down on days when the massive US trade deficit was in focus and that would lead to the Comex price of silver being up. But as shown below, this has not been the case:","type":"unstyled","inlineStyleRanges":[],"entityRanges":[],"data":{}},{"key":"4f9r4","text":"US Trade Deficit Report by U.S. Bureau of Economic Analysis (Initial Report) ","type":"unstyled","inlineStyleRanges":[{"offset":0,"length":60,"style":"BOLD"}],"entityRanges":[],"data":{}},{"key":"6hj9t","text":"Report Date - 1/5/23 - November deficit - $61.5 billion - Comex price of silver - Open $23.94 - Close $23.37 Change - Down $0.57, -2.25%","type":"unstyled","inlineStyleRanges":[{"offset":23,"length":16,"style":"BOLD"},{"offset":120,"length":4,"style":"BOLD"}],"entityRanges":[],"data":{}},{"key":"d6a23","text":"Notably, this report was spun as being good news as the deficit declined from the previous month. Yikes, but I have trouble wrapping my mind around how a trade deficit of $61.5 can be good news","type":"unstyled","inlineStyleRanges":[{"offset":0,"length":193,"style":"ITALIC"}],"entityRanges":[],"data":{}},{"key":"q94l","text":"Report Date - 12/6/22 - October deficit - $77.8 billion - Comex price of silver - Open $22.43 - Close $22.34 Change - Down $0.10, 0.37%","type":"unstyled","inlineStyleRanges":[{"offset":24,"length":15,"style":"BOLD"},{"offset":120,"length":4,"style":"BOLD"}],"entityRanges":[],"data":{}},{"key":"e33pk","text":"Report Date - 11/3/22 - September deficit - $73.3 billion - Comex price of silver - Open $19.23 - Close $19.43 Change - Down $0.20, -0.84%","type":"unstyled","inlineStyleRanges":[{"offset":24,"length":17,"style":"BOLD"},{"offset":121,"length":5,"style":"BOLD"}],"entityRanges":[],"data":{}},{"key":"6u3gl","text":"Report Date - 10/5/22 - August deficit - $67.4 billion - Comex price of silver - Open $21.13 - Close $20.68 Change - Down $0.58, -2.63%","type":"unstyled","inlineStyleRanges":[{"offset":24,"length":14,"style":"BOLD"},{"offset":119,"length":4,"style":"BOLD"}],"entityRanges":[],"data":{}},{"key":"66gt3","text":"Report Date - 9/2/22 - July deficit - $70.6 billion - Comex price of silver - Open $20.34 - Close $20.14 Change - Down $0.20, -1.1%","type":"unstyled","inlineStyleRanges":[{"offset":23,"length":12,"style":"BOLD"},{"offset":116,"length":4,"style":"BOLD"}],"entityRanges":[],"data":{}},{"key":"dgerr","text":"The fact that the price of silver has been down during the last 5 times when the US trade deficit has been reported seems to support a conclusion that at the very least the folks trading silver (manipulating the price?) don't seem to think the US trade deficit matters. (you have to go all the way back to June '22 to find a month in which the price of silver went up on the day BEA reported the US trade deficit)","type":"unstyled","inlineStyleRanges":[],"entityRanges":[],"data":{}},{"key":"81amq","text":"For reference, the December US trade deficit will be released on February 7, 2023.","type":"unstyled","inlineStyleRanges":[],"entityRanges":[],"data":{}},{"key":"b5h1f","text":"Regardless of whether the US trade deficit matters, the combination of the trade deficit, the US Government deficit, and de-dollarization will likely lead to further debasemnt of the US dollar. ","type":"unstyled","inlineStyleRanges":[],"entityRanges":[],"data":{}},{"key":"7p4nq","text":"It makes it understandable as to why US gold and silver bugs are protecting themselves from dollar debasement by acquiring gold and silver. My guess is that we will see triple digit silver in US dollars in the not too distant future","type":"unstyled","inlineStyleRanges":[],"entityRanges":[],"data":{}}]}"><div data-block="true" data-editor="cfd407" data-offset-key="buomk-0-0"><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="buomk-0-0"><span data-offset-key="buomk-0-0"><span style="font-size: medium;">Here's the current situation according to the <a href="https://www.cfr.org/" target="_blank">Council On Foreign Affairs</a>, "The US dollar’s role as the global reserve currency and primary tool for global transactions means that many other countries rely on holding dollar reserves, creating massive demand for U.S. financial assets. This means that the U.S. pays little for its foreign borrowing, allowing it to finance its high consumption at low cost."</span></span></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="buomk-0-0"><span data-offset-key="buomk-0-0"><span style="font-size: medium;"><br /></span></span></div></div><div data-block="true" data-editor="cfd407" data-offset-key="3hgr5-0-0"><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="3hgr5-0-0"><span data-offset-key="3hgr5-0-0"><span style="font-size: medium;">But since the BRIC countries and even Saudi Arabia have indicated a desire to reduce their dependence on the US dollar, the DXY (US dollar index) has been declining. And since the DXY does not include the currencies of any of the BRIC countries or Saudi Arabia, the actual decline of the US dollar may not be adequately reflected by this index (The U.S. Dollar Index contains six component currencies: the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc**).**</span></span></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="3hgr5-0-0"><span data-offset-key="3hgr5-0-0"><span style="font-size: medium;"><br /></span></span></div></div><div data-block="true" data-editor="cfd407" data-offset-key="5qiun-0-0"><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="5qiun-0-0"><span data-offset-key="5qiun-0-0"><span style="font-size: medium;">So in this enviroment of de-dollarization being bandied about and support for the petroyuan, I suspect that the era of the US trade deficit not mattering may be coming to an end. If China and other export oriented economies lose interest in recycling the dollars they obtain by supplying the US with goods into US treasuries, the trade deficit will matter.</span></span></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="5qiun-0-0"><span data-offset-key="5qiun-0-0"><span style="font-size: medium;"><br /></span></span></div></div><div data-block="true" data-editor="cfd407" data-offset-key="2s737-0-0"><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="2s737-0-0"><span data-offset-key="2s737-0-0"><span style="font-size: medium;">In regard to how little the markets seem to judge that the US trade deficit matters, it may be illuminating to look at what has happened to the Comex price of silver on the days when the US monthly trade deficit has been reported. And given that the price of silver has been driven largely by moves in the DXY index, it would seem logical that if the trade deficit mattered to the markets, then the DXY would be down on days when the massive US trade deficit was in focus and that would lead to the Comex price of silver being up. But as shown below, this has not been the case:</span></span></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="2s737-0-0"><span data-offset-key="2s737-0-0"><span style="font-size: medium;"><br /></span></span></div></div><div data-block="true" data-editor="cfd407" data-offset-key="fp4u2-0-0"><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="fp4u2-0-0"><span style="font-size: medium;"><span data-offset-key="fp4u2-0-0" style="font-weight: bold;">US Trade Deficit Report by U.S. Bureau of Economic Analysis</span><span data-offset-key="fp4u2-0-1"> (Initial Report) </span></span></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="fp4u2-0-0"><span style="font-size: medium;"><span data-offset-key="fp4u2-0-1"><br /></span></span></div></div><div data-block="true" data-editor="cfd407" data-offset-key="63n6a-0-0"><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="63n6a-0-0"><span style="font-size: medium;"><span data-offset-key="63n6a-0-0">Report Date - 1/5/23 - </span><span data-offset-key="63n6a-0-1" style="font-weight: bold;">November deficit</span><span data-offset-key="63n6a-0-2"> - $61.5 billion - Comex price of silver - Open $23.94 - Close $23.37 Change - </span><span data-offset-key="63n6a-0-3" style="font-weight: bold;">Down</span><span data-offset-key="63n6a-0-4"> $0.57, -2.25%</span></span></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="63n6a-0-0"><span style="font-size: medium;"><span data-offset-key="63n6a-0-4"><br /></span></span></div></div><div data-block="true" data-editor="cfd407" data-offset-key="7a1tt-0-0"><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="7a1tt-0-0"><span data-offset-key="7a1tt-0-0" style="font-style: italic;"><span style="font-size: medium;">Notably, this report was spun as being good news as the deficit declined from the previous month. Yikes, but I have trouble wrapping my mind around how a trade deficit of $61.5 can be good news</span></span></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="7a1tt-0-0"><span data-offset-key="7a1tt-0-0" style="font-style: italic;"><span style="font-size: medium;"><br /></span></span></div></div><div data-block="true" data-editor="cfd407" data-offset-key="ajr18-0-0"><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="ajr18-0-0"><span style="font-size: medium;"><span data-offset-key="ajr18-0-0">Report Date - 12/6/22 - </span><span data-offset-key="ajr18-0-1" style="font-weight: bold;">October deficit</span><span data-offset-key="ajr18-0-2"> - $77.8 billion - Comex price of silver - Open $22.43 - Close $22.34 Change - </span><span data-offset-key="ajr18-0-3" style="font-weight: bold;">Down</span><span data-offset-key="ajr18-0-4"> $0.10, 0.37%</span></span></div></div><div data-block="true" data-editor="cfd407" data-offset-key="6lv6r-0-0"><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="6lv6r-0-0"><span style="font-size: medium;"><span data-offset-key="6lv6r-0-0">Report Date - 11/3/22 - </span><span data-offset-key="6lv6r-0-1" style="font-weight: bold;">September deficit</span><span data-offset-key="6lv6r-0-2"> - $73.3 billion - Comex price of silver - Open $19.23 - Close $19.43 Change -</span><span data-offset-key="6lv6r-0-3" style="font-weight: bold;"> Down</span><span data-offset-key="6lv6r-0-4"> $0.20, -0.84%</span></span></div></div><div data-block="true" data-editor="cfd407" data-offset-key="9a5m2-0-0"><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="9a5m2-0-0"><span style="font-size: medium;"><span data-offset-key="9a5m2-0-0">Report Date - 10/5/22 - </span><span data-offset-key="9a5m2-0-1" style="font-weight: bold;">August deficit</span><span data-offset-key="9a5m2-0-2"> - $67.4 billion - Comex price of silver - Open $21.13 - Close $20.68 Change - </span><span data-offset-key="9a5m2-0-3" style="font-weight: bold;">Down</span><span data-offset-key="9a5m2-0-4"> $0.58, -2.63%</span></span></div></div><div data-block="true" data-editor="cfd407" data-offset-key="fmss1-0-0"><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="fmss1-0-0"><span style="font-size: medium;"><span data-offset-key="fmss1-0-0">Report Date - 9/2/22 - </span><span data-offset-key="fmss1-0-1" style="font-weight: bold;">July deficit</span><span data-offset-key="fmss1-0-2"> - $70.6 billion - Comex price of silver - Open $20.34 - Close $20.14 Change - </span><span data-offset-key="fmss1-0-3" style="font-weight: bold;">Down</span><span data-offset-key="fmss1-0-4"> $0.20, -1.1%</span></span></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="fmss1-0-0"><span style="font-size: medium;"><span data-offset-key="fmss1-0-4"><br /></span></span></div></div><div data-block="true" data-editor="cfd407" data-offset-key="1hivc-0-0"><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="1hivc-0-0"><span data-offset-key="1hivc-0-0"><span style="font-size: medium;">The fact that the daily price of silver has been down during the last 5 times when the US trade deficit has been reported seems to support a conclusion that at the very least the folks trading silver don't seem to think the US trade deficit matters. (you have to go all the way back to June '22 to find a month in which the price of silver went up on the day BEA reported the US trade deficit)</span></span></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="1hivc-0-0"><span data-offset-key="1hivc-0-0"><span style="font-size: medium;"><br /></span></span></div></div><div data-block="true" data-editor="cfd407" data-offset-key="cls4h-0-0"><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="cls4h-0-0"><span data-offset-key="cls4h-0-0"><span style="font-size: medium;">For reference, the December US trade deficit will be released on February 7, 2023. <b>(please see update for more recent reports at bottom of post)</b></span></span></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="cls4h-0-0"><span data-offset-key="cls4h-0-0"><span style="font-size: medium;"><br /></span></span></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="cls4h-0-0"><span style="font-size: large;">Regardless of whether the US trade deficit matters, the combination of the trade deficit, the US Government deficit, and de-dollarization will likely lead to further debasement of the US dollar.</span></div></div><div data-block="true" data-editor="cfd407" data-offset-key="9aupj-0-0"><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="9aupj-0-0"><span data-offset-key="9aupj-0-0"><span style="font-size: medium;"><br /></span></span></div></div><div data-block="true" data-editor="cfd407" data-offset-key="51sje-0-0"><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="51sje-0-0"><span data-offset-key="51sje-0-0"><span style="font-size: medium;">It makes it understandable as to why US precious metal investors are protecting themselves from dollar debasement by acquiring gold and silver. My guess is that we will see record high gold and silver prices in the not too distant future.</span></span></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="51sje-0-0"><span data-offset-key="51sje-0-0"><span style="font-size: medium;"><br /></span></span></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="51sje-0-0"><span data-offset-key="51sje-0-0"><span style="font-size: medium;"><b>4/7/23 Update</b></span></span></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="51sje-0-0"><span data-offset-key="51sje-0-0"><span style="font-size: medium;"><b><br /></b></span></span></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="51sje-0-0"><span data-offset-key="fmss1-0-0" style="font-size: large;">Report Date - 4/5/23 - </span><span data-offset-key="fmss1-0-1" style="font-size: large; font-weight: bold;">February deficit</span><span data-offset-key="fmss1-0-2" style="font-size: large;"> - $70.5 billion - Comex price of silver - Open $25.18 - Close $25.04 Change - </span><span data-offset-key="fmss1-0-3" style="font-size: large; font-weight: bold;">Down</span><span data-offset-key="fmss1-0-4" style="font-size: large;"> $0.14</span></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="51sje-0-0"><span data-offset-key="fmss1-0-4" style="font-size: large;"><br /></span></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="51sje-0-0"><span data-offset-key="fmss1-0-0" style="font-size: large;">Report Date - 3/8/23 - </span><span data-offset-key="fmss1-0-1" style="font-size: large; font-weight: bold;">January deficit</span><span data-offset-key="fmss1-0-2" style="font-size: large;"> - $68.3 billion - Comex price of silver - Open $20.165 - Close $20.15 Change - </span><span data-offset-key="fmss1-0-3" style="font-size: large; font-weight: bold;">Down</span><span data-offset-key="fmss1-0-4" style="font-size: large;"> $0.015</span></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="51sje-0-0"><span data-offset-key="51sje-0-0"><span style="font-size: medium;"><br /></span></span></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="51sje-0-0"><span data-offset-key="51sje-0-0"><span style="font-size: medium;"><span data-offset-key="ajr18-0-0">Report Date - 2/7/23 - </span><span data-offset-key="ajr18-0-1" style="font-weight: bold;">December deficit</span><span data-offset-key="ajr18-0-2"> - $67.4 billion - Comex price of silver - Open $22.50 - Close $22.38 Change - </span><span data-offset-key="ajr18-0-3" style="font-weight: bold;">Down</span><span data-offset-key="ajr18-0-4"> $0.12</span></span></span></div><div class="public-DraftStyleDefault-block public-DraftStyleDefault-ltr" data-offset-key="51sje-0-0"><span data-offset-key="51sje-0-0"><span style="font-size: medium;"><br /></span></span></div></div></div>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-91572735816652696792023-01-04T09:25:00.005-08:002023-01-04T09:25:51.117-08:00How Long Until The Massive US Trade Deficit Crushes US Dollar And Becomes A Gold and Silver Tailwind?<p><span style="background-color: white; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-size: 14px;">The monthly US trade deficit will be reported tomorrow (1/5/23). And based on past results, as long as it comes in reasonably close to the forecast, it probably will not have much immediate impact on the price of silver. The median forecast is for it to be US$63 billion, down from the previous trade deficit of $78 billion. And of course this decrease can be spun as great news. But to paraphrase Everett Dirksen, $63 billion here, $63 billion there, and pretty soon you're talking about real money".</span></p><p><span style="background-color: white; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-size: 14px;">As long as the US dollar remains the world's "trusted" reserve currency, the trade deficit does not seem to be a concern of the markets. But if the US dollar starts getting dumped, the massive trade deficit is going to be ever harder to sustain. And the dual deficits of trade and US goverment spending are leading to ever greater dollar debasement</span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-size: 14px; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Thus, while based on recent results, it does not seem like the trade deficit is going to have much of a short term impact on the price of gold and silver, on a long term basis, it seems likely to be supportive of higher prices..</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-size: 14px; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><span class="_12FoOEddL7j_RgMQN0SNeU" style="border: 0px; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: 700; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">Trade Deficit By Year - 2017 thru 2020</span></p><ul class="_33MEMislY0GAlB78wL1_CR" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-size: 14px; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; list-style-image: initial; list-style-position: outside; margin: 4px 0px 4px 8px; padding: 0px; vertical-align: baseline;"><li class="_3gqTEjt4x9UIIpWiro7YXz" style="border: 0px; font: inherit; margin: 0.4em 1em; padding: 0px; vertical-align: baseline;"><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="border: 0px; font: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">U.S. trade balance for 2020 was <span class="_12FoOEddL7j_RgMQN0SNeU" style="border: 0px; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: 700; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">$651B</span>, a <span class="_12FoOEddL7j_RgMQN0SNeU" style="border: 0px; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: 700; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">9.21% increase</span> from 2019.</p></li><li class="_3gqTEjt4x9UIIpWiro7YXz" style="border: 0px; font: inherit; margin: 0.4em 1em; padding: 0px; vertical-align: baseline;"><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="border: 0px; font: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">U.S. trade balance for 2019 was <span class="_12FoOEddL7j_RgMQN0SNeU" style="border: 0px; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: 700; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">$596B</span>, a <span class="_12FoOEddL7j_RgMQN0SNeU" style="border: 0px; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: 700; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">0.01% increase</span> from 2018.</p></li><li class="_3gqTEjt4x9UIIpWiro7YXz" style="border: 0px; font: inherit; margin: 0.4em 1em; padding: 0px; vertical-align: baseline;"><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="border: 0px; font: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">U.S. trade balance for 2018 was <span class="_12FoOEddL7j_RgMQN0SNeU" style="border: 0px; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: 700; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">$596B</span>, a <span class="_12FoOEddL7j_RgMQN0SNeU" style="border: 0px; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: 700; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">10.42% increase</span> from 2017.</p></li><li class="_3gqTEjt4x9UIIpWiro7YXz" style="border: 0px; font: inherit; margin: 0.4em 1em; padding: 0px; vertical-align: baseline;"><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="border: 0px; font: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">U.S. trade balance for 2017 was <span class="_12FoOEddL7j_RgMQN0SNeU" style="border: 0px; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: 700; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">$540B</span>, a <span class="_12FoOEddL7j_RgMQN0SNeU" style="border: 0px; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: 700; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">6.65% increase</span> from 2016.</p></li></ul><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-size: 14px; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0px; vertical-align: baseline;">Source - <a href="https://www.macrotrends.net/countries/USA/united-states/trade-balance-deficit#:~:text=U.S.%20trade%20balance%20for%202020,a%206.65%25%20increase%20from%202016." target="_blank">Macrotrends.net</a></p>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-55309180349890603682022-12-07T11:23:00.003-08:002022-12-07T11:28:49.897-08:00The Long Term Silver Investment Thesis<p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Guest post by Jacked-to-the wits<span style="color: #1f1f1f; font-family: "Google Sans", Roboto, RobotoDraft, Helvetica, Arial, sans-serif; font-size: 22px; font-variant-ligatures: no-contextual;">, </span>a frequent contributor to the <a href="https://www.reddit.com/r/Wallstreetsilver/" target="_blank">WallStreetSilver</a> SubReddit </p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">It’s important to consider that silver is not like other commodities. It sounds kind of silly, but if we were talking about wheat, oil or pork bellies, the supply and demand would have to balance, in the long term and the short term. Gold and silver are mostly valued based on existing stockpiles. They have been mined for thousands of years, and for most of that time, excluding the last 150 or so years, almost everything ever mined was still in some sort of usable form. This is why these metals can act differently than almost any other commodities. If the price of corn spiked higher, farmers would switch crops to farm more, and it would eventually correct the price to the cost of production and a reasonable profit margin, since every year, all the corn in the market is consumed and grown again. Gold or silver could go for a long time being too expensive or too cheap, and it wouldn't immediately correct itself, since the price is based more on the huge stack already mined, rather than just what's going to be mined in the next year. This one frame shift is really key to understanding the current state of the market.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Silver is primarily mined as a byproduct of Copper, Lead, Zinc, and Gold mines. This may seem like a random interesting fact, but it actually effects the market a whole lot. If we were talking about lithium instead of silver, and the lithium price went up 5x, every lithium mine in the world will go into overdrive, try to expand production as fast as possible, build any new mines they could, and that will eventually reverse or slow the price increase. If you have a mine that produces 90% of their revenue from lead and zinc, they aren't likely to do the same expansion if the 10% of production that’s silver goes up 5x.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">I’ve heard some people talk about the market size of silver as being $1.5T. That's the rough value of all silver ever mined in 3000 years, and is pretty irrelevant in this context. The amount of silver in investible bar form is under 3B oz, which is less than $58B. The Comex has about 35M oz, in registered inventory, and 266M oz in eligible inventory. Eligible inventory is bullion in a depository, that could be put up for sale if the owners wanted, so it might not be for sale at any given price. The LBMA has around 850M oz, but around 85% is already owned by ETF’s. There is lot of silver in the world, but very little for sale in an investment grade, at anywhere near current prices. For a market apparently worth $1.5T, it seems like you could buy every bar in available in the world for a little over $4B. That’s obviously not counting the existing demand, so it might not take much new demand to move this market significantly.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Although there has been much more silver mined through history, silver inventories have been chipped away for decades by industrial consumption, while gold inventories have grown. Although gold inventories have grown, so has the human population, and especially the population those with enough wealth to own gold or silver. Silver inventories have shrunk in absolute terms, but far more compared to the number of people who could buy some.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">The whole mining industry has been slumping for a very long time. Discoveries of new significant deposits are not only down, but new additions to PM reserves fail to add as many oz as are produced each year. If you consider that it takes years or decades between prospecting, exploring, drilling, permitting, more drilling, and construction of a new mine, there could be a very big lag between the price going up, and any significant new supply entering the market. I'm no mining expert, but I've heard it could be at least a 5 year lag for new mines (not counting any already in the pipeline). That pipeline isn't exactly flush given the insanely low prices over the last 10 years.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Some people say that if the price goes up any significant amount, a flood of silver will come in from old coins, silverware, jewelry, etc, and correct the problem. In 1980 when silver hit $50, there truly was a giant rush of silverware and old coins, that impacted the supply demand fundamentals significantly, but I don't have the exact numbers. In 2011, when silver hit $50/oz again, the amount of silver recycled, went up about 50%, from around 100M oz to 150M oz, but that increase was only a small fraction of the mine supply (over 800M oz), so the broader supply demand picture didn’t really change much. There’s still a lot of silver in coins, silverware, jewelry, etc, but if it didn’t come back into the market at $50 in 2011, why would it come out of hiding now, for less? Also, although there are still lots of old silver teapots and spoons, they don’t make a lot of new silverware and every year that stockpile shrinks as old spoons get melted down. Much of the silver used in the “silverware” portion of the current demand pie, is used for electroplating, and that silver is never getting recycled.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Over the past few decades, some of the supply demand imbalance in the silver market has been compensated by governments eroding their silver stockpiles. Many countries used to make coinage from silver, so they had to keep stockpiles, both functionally for making coins, but also as a strategic and central bank asset. Today, the US, Canada, UK, and most other developed countries, have sold the effectively all of their silver reserves decades ago. The US government had 350M oz in 1970, and around 50M oz from 2006 to today. All they hold today is working inventory for coin sales.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><br /></p><div class="_2-UiOdhyj4wHBv7Rc2FeDr" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 24px 0px; padding: 0px; vertical-align: baseline;"><div class="_3Oa0THmZ3f5iZXAQ0hBJ0k _2LjgQiHLCZ9LDbCQx5KaOi" style="border: 0px; display: flex; font-family: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; justify-content: center; line-height: inherit; margin: 0px auto; padding: 0px; position: relative; vertical-align: baseline;"><a class="_3m20hIKOhTTeMgPnfMbVNN" href="https://preview.redd.it/000qts5jth4a1.png?width=855&format=png&auto=webp&s=4a6f720004c15d4eb468be54d35f945d677b577b" rel="noopener noreferrer" style="border: 0px; font-family: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; padding: 0px; position: relative; text-decoration: inherit; vertical-align: baseline;" target="_blank"><img alt="r/Wallstreetsilver - My long term silver investment thesis" class="_2_tDEnGMLxpM6uOa2kaDB3 ImageBox-image media-element _1XWObl-3b9tPy64oaG6fax" src="https://preview.redd.it/000qts5jth4a1.png?width=855&format=png&auto=webp&s=4a6f720004c15d4eb468be54d35f945d677b577b" style="background-color: var(--newCommunityTheme-post); border: 0px; display: block; font-family: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px auto; max-height: 700px; max-width: 100%; padding: 0px; position: relative; vertical-align: baseline;" /></a></div></div><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Silver is found in the earths crust at about a 14/1 ratio to gold. Current mine production is about 8/1, and existing stockpiles of investment grade product are not known well enough to compare, but I’ve heard estimates ranging from 3/1 to 1/1. The current price is 78/1. Gold hit it's all time high in 2020, but silver was half it's nominal all time high, or less than a quarter of it's inflation adjusted high.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">If you take a more broad view of value over time, gold and silver have historically been valued along the lines of their production and naturally occurring scarcity, from 10/1 to 15/1. This ratio held for thousands of years. If you look at an inflation adjusted chart of silver prices going back hundreds of years, silver prices were usually many hundreds of todays dollars. From 1720-1900, the silver price never dipped below $100, and was as high as $500, in todays dollars. For most of the last 3000 years, an average skilled labourers days wage was 0.1 oz of silver.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><br /></p><div class="_2-UiOdhyj4wHBv7Rc2FeDr" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 24px 0px; padding: 0px; vertical-align: baseline;"><div class="_3Oa0THmZ3f5iZXAQ0hBJ0k _2LjgQiHLCZ9LDbCQx5KaOi" style="border: 0px; display: flex; font-family: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; justify-content: center; line-height: inherit; margin: 0px auto; padding: 0px; position: relative; vertical-align: baseline;"><a class="_3m20hIKOhTTeMgPnfMbVNN" href="https://preview.redd.it/tprxislnth4a1.png?width=890&format=png&auto=webp&s=f7e20d4a0981734f713ef166565272dba59da4ba" rel="noopener noreferrer" style="border: 0px; font-family: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; padding: 0px; position: relative; text-decoration: inherit; vertical-align: baseline;" target="_blank"><img alt="r/Wallstreetsilver - My long term silver investment thesis" class="_2_tDEnGMLxpM6uOa2kaDB3 ImageBox-image media-element _1XWObl-3b9tPy64oaG6fax" src="https://preview.redd.it/tprxislnth4a1.png?width=890&format=png&auto=webp&s=f7e20d4a0981734f713ef166565272dba59da4ba" style="background-color: var(--newCommunityTheme-post); border: 0px; display: block; font-family: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px auto; max-height: 700px; max-width: 100%; padding: 0px; position: relative; vertical-align: baseline;" /></a></div></div><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Lots of people are talking about a shortage of silver, and it’s so much bigger of a deal than most realize. Mints are admitting they can’t source material, and shortages that were once limited to small bars and coins, have spilled over into 1000 oz bars. Post covid, we have seen shortages in so many things recently, so it’s seems normal, but this shortage is nothing like the others. As I said at the beginning, if most other shortages are self correcting by the functioning of the markets (planting more corn, etc), but this market is valued based on a stockpile built over 3000 years, then a shortage means the market has run out of the stockpiles (at the current price), and the one and only thing that can correct the supply, is higher prices. Given what we saw in 2011, with very little new silver coming back into the market at $50 (or an average though the year in the mid 30’s), it’s safe to conclude that the price it would take to truly balance the market, with no more stack to erode, may have to be dramatically higher than that.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">To be clear, other than what industry used, that formerly stockpiled silver still exists, but it's been distributed. It used to be owned by central banks, bullion banks, and regular banks, and now it's finding it's way into ETF's, and investors hands. Many of those banks left the PM market altogether and others hold leveraged comex contracts instead of bullion.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><span class="_12FoOEddL7j_RgMQN0SNeU" style="border: 0px; font-family: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: 700; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">Demand</span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">The most important thing to understand about the demand side of the silver equation, is how it’s changed over time. For thousands of years, silver was money. Before the industrial and digital age and the silver consumption it introduced, pretty much all the silver ever discovered was still around, and the demand driver was that it became money the moment it was found. That’s a pretty simple demand case. If you were a prospector in the 1700’s, you could walk into a bar and spend silver or gold you found in a creek that day. If you spun some wool, or raised a cow, you’d have to trade that for silver or gold before you could spend it.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Over time, more and more uses for silver started to appear. This is when silver gained its hybrid, monetary and industrial status, and this status is really key to understanding silver in the world today.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Today, around 60% of silver demand comes from industry, and that demand is quite inelastic. If a company makes smartphones, and the average phone uses $0.35 worth of silver, you don’t stop making phones when the price of silver quadruples, and your $800 phone now needs $1.40 worth of silver. Silver is used very broadly, since it’s found in alloys used in most electronics. Because of that broad industrial usage, and the difficulty recovering such small quantities, about 80% of the silver consumed is never recovered. If you have a gold watch, someday that watch will break, and the gold will probably end up in a gold bar. If you make a cell phone, one day it will break, and most will end up in a landfill.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><br /></p><div class="_2-UiOdhyj4wHBv7Rc2FeDr" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 24px 0px; padding: 0px; vertical-align: baseline;"><div class="_3Oa0THmZ3f5iZXAQ0hBJ0k _2LjgQiHLCZ9LDbCQx5KaOi" style="border: 0px; display: flex; font-family: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; justify-content: center; line-height: inherit; margin: 0px auto; padding: 0px; position: relative; vertical-align: baseline;"><a class="_3m20hIKOhTTeMgPnfMbVNN" href="https://preview.redd.it/5dzg3joeuh4a1.jpg?width=683&format=pjpg&auto=webp&s=0e8124a49bd15efe0364d775685d03a9339b5be5" rel="noopener noreferrer" style="border: 0px; font-family: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; padding: 0px; position: relative; text-decoration: inherit; vertical-align: baseline;" target="_blank"><img alt="r/Wallstreetsilver - My long term silver investment thesis" class="_2_tDEnGMLxpM6uOa2kaDB3 ImageBox-image media-element _1XWObl-3b9tPy64oaG6fax" src="https://preview.redd.it/5dzg3joeuh4a1.jpg?width=683&format=pjpg&auto=webp&s=0e8124a49bd15efe0364d775685d03a9339b5be5" style="background-color: var(--newCommunityTheme-post); border: 0px; display: block; font-family: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px auto; max-height: 700px; max-width: 100%; padding: 0px; position: relative; vertical-align: baseline;" /></a></div></div><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Also, industry demand is almost always hard to substitute. Silver is the most conductive element, most reflective element, and has natural anti microbial properties. These properties are elemental and irreplaceable. I’m sure if people could easily use copper instead, they probably already would have. There is a natural trend where a single product, like a solar panel, will use less silver per unit, as manufacturing becomes more and more efficient, but that effect is counteracted by more and more products using silver and higher quantities of production driving that efficiency, and you don't get the per unit drop until you start increasing total volumes.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">It's also important to consider that although silver is only more conductive than copper by a small amount, in electronic applications, performance is measured in billionths of a second, so being a bit better means a lot.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Silver’s industrial demand is highest in fast growing sectors like electric vehicles, solar panels, and electronics. EV’s use significantly more silver that gas cars, and also use lots in their charging infrastructure. The average solar panel uses 0.6 oz of silver, and 5G networks are expected to increase silver demand significantly as they roll out. The trend is clear, the future needs silver, and things that haven’t been invented yet, will probably need the irreplaceable properties only silver can offer.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">The other side of silver demand is its monetary or investment demand. At the core of this demand is silver’s historical role as a store of value, as well as people like me thinking it's undervalued. Silver’s monetary history revolves around it having the key properties of money: durability, portability, divisibility, fungibility, uniformity, limited supply, and acceptability. It’s worth noting that every element on the periodic table that meets these characteristics is already considered money. If you eliminate all gasses, all the elements that are reactive and non durable, all the elements that are too abundant to be portable (lead, iron, etc), the elements that aren’t easily divisible (fungible), at the end of all that, you are left with only the precious metals. You can make the case for copper and nickel, but those have been used for money as well.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">So, we’ve established that silver is a store of value based on inherent qualities. That makes it a safe haven investment, since people look to stores of value when the future becomes uncertain. For decades now, the world has been lulled into a false sense of security by the US dollar global standard, coinciding with a period of particularly low inflation. A key driver of that period of low inflation, is deflation in prices of consumer goods, due to globalization. To oversimplify, the west keeps printing more and more money, but China keeps cheaply producing more and more products. This has kept inflation contained in localized asset bubbles (stocks, real estate, art), and most people haven’t seen it effect their lives much (until recently). That could change quickly. The low prices we’ve grown accustomed to, probably won’t keep dropping as we keep printing more money. To oversimplify, once China already produces everything, there’s no prices left to bring down to offset the printer, and if production moves back onshore, you get the reverse effect, huge inflation regardless of QE/QT.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Another way to look at the inflation question is to ignore money printing, as modern economists often do, and just look at price inflation. More people with more money means higher prices. Well, most people don't have more money, but a small minority has a vast amount. So, we basically only see inflation in what those people want (stocks, real estate, art). Those people can't really go buy all the tomatoes in the world, unless they just plan to sell them again, but precious metals by their nature are concentrated wealth, so my theory is that we'll eventually see that 0.1% group piling into anything they can, and they definitely can with silver and gold. They just aren't paying attention just yet. Silver is barely on the radar of the 1%, let alone the 0.01%,.... but that could change quickly.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">For years, pretty much every country in the world has been printing money like crazy, and the only thing that makes it not look crazy, is the fact that everyone else is doing it, and currencies are only valued relative to other currencies. People call this the race to debase, and ends when the value of all currencies end up going down through the floor (into de basement lol). Inflation has gone from a non issue in the minds of the world, to the issue of the day, and that’s unlikely to change any time soon.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><br /></p><div class="_2-UiOdhyj4wHBv7Rc2FeDr" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 24px 0px; padding: 0px; vertical-align: baseline;"><div class="_3Oa0THmZ3f5iZXAQ0hBJ0k _2LjgQiHLCZ9LDbCQx5KaOi" style="border: 0px; display: flex; font-family: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; justify-content: center; line-height: inherit; margin: 0px auto; padding: 0px; position: relative; vertical-align: baseline;"><a class="_3m20hIKOhTTeMgPnfMbVNN" href="https://preview.redd.it/u413tbrrvh4a1.png?width=831&format=png&auto=webp&s=22a80b999ddeb97a32739de3797b3211be572ba5" rel="noopener noreferrer" style="border: 0px; font-family: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; padding: 0px; position: relative; text-decoration: inherit; vertical-align: baseline;" target="_blank"><img alt="r/Wallstreetsilver - My long term silver investment thesis" class="_2_tDEnGMLxpM6uOa2kaDB3 ImageBox-image media-element _1XWObl-3b9tPy64oaG6fax" src="https://preview.redd.it/u413tbrrvh4a1.png?width=831&format=png&auto=webp&s=22a80b999ddeb97a32739de3797b3211be572ba5" style="background-color: var(--newCommunityTheme-post); border: 0px; display: block; font-family: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px auto; max-height: 700px; max-width: 100%; padding: 0px; position: relative; vertical-align: baseline;" /></a></div></div><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Much of the developed world has forgotten about gold and silver, with academics referring to it as a barbarous relic or a pet rock, and the biggest pools of money, hedge funds, pension funds, endowment funds, and the uber rich, collectively own less than 0.5% of their portfolios in gold, and around 0.015% in silver. Over the last few decades, the fund average allocation to gold was 1.5% to 2%, so just a return to the average would be a massive inflow of money into the space. For the masses, the percentages are probably a bit higher than for funds, but as a share of all wealth in the west, precious metals are a microscopic rounding error, even today and even with all the attention we give to the space. It’s just not on most people’s radar yet. This sounds discouraging as people here are trying hard to grow this sub's numbers, but it should actually be really encouraging.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Basically, we have a good case that demand should be higher, but it’s actually at multi generational lows in the grand scheme of things, with most individuals owning none and even the biggest funds not bothering to hold any. Despite this, let’s consider how the market is holding up to this (actually very low) investment demand.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">I can remember a couple times when interest among retail investors spiked up, and premiums on coins and small bars went up dramatically. Every time this happened before 2020, the market would stabilize in months and premiums would fall back down. Producers of small bars and coins got a bigger incentive to make more, so they did, and the market calmed. In 2009, my local dealer would sell me high premium coins, but he could also get me 1000 oz bars at $0.60 over spot.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">When covid hit, premiums rose again, but this time they stayed high. The reason is that this time the shortage is across the entire market. My local dealer passes on the prices he pays with a small markup, and his prices have stayed high on coins and bars, but also now his premiums on 1000 oz bars are up to 4-5x what they were in 2009, and have been that high since covid started.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">The thing to keep in mind with premiums, is that it's actually pretty simple to make silver bars. I've made a simple foundry and melted and poured aluminum bars in my back yard, just for kicks. It cost a couple hundred bucks in materials and took hours, not even days, to learn and set up. If silver was readily available in large quantities, any period of high premiums would become self correcting. New entrants can easily set up operations to pour bars, and any existing player could easily ramp up production by buying more cheap equipment. The only thing that could keep premiums high for years is scarce supply of raw materials. Also, these days there are two raw materials to consider, silver (which seems to be getting scarce) and fuel to melt it with. A lot of that melting happens in Switzerland and England, and Europe is not exactly having a fun time in the fuel department these days. Even still, if silver were plentiful, it could be loaded on ships and planes, flown to the US, where they have lots of fuel and easily and cheaply melted to capture those premiums. That's simply not happening at scale, and I can't think of any reasons why other than real scarcity.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Scarcity is an incredible driver of behaviour. There are a lot of companies who really rely on silver, and who currently use just in time inventory, so they keep ordering constantly, and they can’t keep their operations going for long without new inventory. If I recall the toilet paper aisle in March 2020, when people start to sense a shortage, they tend to stock up. Unlike toilet paper, this won’t just be driven by fear and need. This would be driven by fear, need, want and greed. Imagine if toilet paper were a target of huge speculators that could easily and cheaply, house many years of global production, and suppliers couldn’t easily ramp up production, to respond to the shortage. It probably would have left a whole lot more desperate people, willing to pay a whole lot more.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Silver is a market that probably deserves more demand than it’s getting, but in reality has so little demand that the biggest funds and investors barely notice that it exists. Even this tiny demand has been enough to clean out existing stockpiles and create a shortage. The sleeping dragon in this situation is that industrial users need to buy, regardless of price or market conditions. Prices may rise, shortages may grow, and then industrial users would have to compete with a larger and larger group of investors for scarce supply. At some point, some large investors will understand this and try to front run those industrial users. As this starts to unfold, it will bring silver more and more attention from more and more investors.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><span class="_12FoOEddL7j_RgMQN0SNeU" style="border: 0px; font-family: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: 700; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">Paper and Leverage</span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Comex open interest (OI) is the amount of contracts trading at any one time. It's the best measure of size of that market. LBMA is a more opaque market, so we just have to assume it's relatively similar in structure, even if the scale is different. Every month, contracts expire and most close their contracts in cash or roll to the next month, but some take delivery, shrinking OI and inventory. Lately, there has been a trend, where the Comex silver inventory is shrinking quickly.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Right now comex open interest is about 121,000 contracts for 5000 oz. That means that OI is 605M oz, and registered inventory is around 33M oz and eligible is around 266M oz, so there's roughly 50% the silver in vaults as there are contracts.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">The more contracts get delivered, the lower OI gets and the lower inventory gets, but the ratio also shifts. If you think of it as 600M to 300M, it's around 2/1. If another 200M oz gets delivered that number drops to 400M to 100M or 4/1. One way to think about it is this, for every contract that takes delivery, at least one other contract will never be able to take delivery, or the seller will have to scramble to find any bullion it can at any price.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Here's where it gets really interesting, Registered is around 33M oz and eligible is 266M oz. Registered can be drawn for delivery, but eligible only meets the requirements, so it could be delivered in theory, but only if the owner wants it to be. If registered is draining aggressively, who is going to want to put up their eligible silver? If you think of those numbers without the eligible, its 600M to 33M or 18/1, and if just 20M gets drained, now it's 580M to 13M or 44/1. If 30M gets drained, it's 570M to 3M or 190/1. As soon as the math become clear to everyone, it all just disappears and people try to figure out the next way to get inventory.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">The reaction will be predictable, comex will try to change the rules on the fly to cap the price and keep inventory, but that will draw massive attention, and may drive people to question if the paper contract really is the same as the bullion. Maybe a few folks get red pilled into losing trust for markets and market makers and want some wealth they can hold in their hands. Physical demand increasing creates this problem for the exchanges, but then uncovers a new one. The leverage means that there's a whole lot of people who think that they own silver that they really don't. As more move to physical, less and less is left behind.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><span class="_12FoOEddL7j_RgMQN0SNeU" style="border: 0px; font-family: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: 700; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">Summary</span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">This is a small market, with growing and inelastic demand, and an existing supply demand imbalance, that has been eroding available inventories for years. It’s currently in short supply (in an investable, deliverable form), and that shortage is getting worse by the day. The silver market is historically prone to wild spikes, and this time, a large spike up in price would actually be reverting to a more normal historical price (over the very long term), in terms of the ratio with gold, and in absolute inflation adjusted price. The physical price diverging from the paper price may force the Comex and LBMA to make more deliveries than they are basically built for, dry up any available inventory, and may cause a large number of leveraged paper contracts to owe physical metal they have no way of obtaining at anywhere near current prices.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Industrial users need hundreds of millions of oz per year to operate their businesses, and historically rely on just in time inventory. If they are forced to wait to get inventory, they may start to see a shortage ahead. Some may decide that the risk of not getting product or having to pay much higher prices is too great, so they need to take some of the dwindling inventory for themselves. The more scarce it becomes, the more industry will want to stock up. Speculators will get wind of this, and further compete for the last scraps of bullion.</p><p><span face=""Noto Sans", Arial, sans-serif" style="background-color: white; color: #1c1c1c;">This situation looks to me like a big bonfire, soaking in the gasoline of paper leverage, that may ignite anytime. I’ll be sitting by with my marshmallows, waiting to sell into a market that might look much different than when I bought.</span> </p><p><b>Related Posts</b></p><p><a href="https://calamitycountdown.blogspot.com/2022/09/investin-in-gold-and-silver-long-game.html">I<span style="font-family: arial;">nvesting In Gold and Silver - The Long Game?</span></a></p><h3 class="post-title entry-title" itemprop="name" style="background-color: white; color: #222222; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-weight: normal; line-height: normal; margin: 0.75em 0px 0px; position: relative;"><a href="https://calamitycountdown.blogspot.com/2022/05/fed-rate-hikes-are-short-term-headwind.html"><span style="font-family: arial; font-size: small;">Fed Rate Hikes Are A Short Term Headwind For Silver and Gold, But Ultimately Will Speed Up US Dollar Debasement and Higher Precious Metals Prices</span></a></h3><div><h3 class="post-title entry-title" itemprop="name" style="background-color: white; color: #222222; font-stretch: normal; font-variant-east-asian: normal; font-variant-numeric: normal; font-weight: normal; line-height: normal; margin: 0.75em 0px 0px; position: relative;"><a href="https://calamitycountdown.blogspot.com/2021/09/focus-on-core-inflation-is-misguided.html"><span style="font-family: arial; font-size: small;">Focus on Core Inflation Is Misguided. Increased Food And Energy Costs Will Drive Ongoing Inflation</span></a></h3></div><div><br /></div><div><br /></div>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-58818686562364683862022-09-04T09:39:00.003-07:002022-09-04T09:40:00.388-07:00Investing in Gold and Silver - The Long Game?<p><span face=""Noto Sans", Arial, sans-serif" style="background-color: white; color: #1c1c1c; font-family: arial; font-size: 14px;">The Biden administration is bragging that this year will have the largest annual deficit decrease in US history. It's hard not to agree that this is brilliant spin given the annual deficit for fiscal 2021-22 will be around a trillion dollars. The market's acceptance of the spin that an annual deficit of "only" a trillion US dollars is positive news is a factor in the decline in price of gold and silver.</span></p><p><span style="font-family: arial;"><em class="_7s4syPYtk5hfUIjySXcRE" style="border: 0px; color: #1c1c1c; font-size: inherit; font-stretch: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">Fiscal-year-to-date the deficit is $726 billion, a record year-over-year decrease of $1.814 trillion (71%), for the first ten months of the fiscal year. Fiscal-year-to-date Receipts were $787 billion (24%) higher, while Outlays were lower by $1.027 trillion (18%).</em><span face=""Noto Sans", Arial, sans-serif" style="background-color: white; color: #1c1c1c; font-size: 14px;"> </span><span face=""Noto Sans", Arial, sans-serif" style="background-color: white; color: #1c1c1c; font-size: 14px;">Source:</span><span face=""Noto Sans", Arial, sans-serif" style="background-color: white; color: #1c1c1c; font-size: 14px;"> </span><a class="_3t5uN8xUmg0TOwRCOGQEcU" href="https://www.fiscal.treasury.gov/files/reports-statements/mts/mts0722.pdf" rel="noopener nofollow ugc" style="border: 0px; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;" target="_blank">https://www.fiscal.treasury.gov/files/reports-statements/mts/mts0722.pdf</a></span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-size: 14px; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><span style="font-family: arial;">Given that Japan has demonstrated that a government that controls their own currency can run up an enormous debt that has yet to cause their currency to collapse, it becomes challenging to predict when the US debt will become so overwhelming that it leads to debasement of the US dolar with a result of the price of silver exploding higher. But with an annual deficit run rate of a trillion dollars or more, US dollar debasement is only a matter of time. But this result may be a matter of years not months. (and the value of the yen is down 18% versus the US dollar year to-date, so the long predicted collapase of the Japanese Yen may already have started).</span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-size: 14px; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><span style="font-family: arial;">As of July 2022 the annual US borrowing costs was $589.5 billion to fund the debt, which is 12.20% of total federal spending. Given the increases in interest rates this year, that percentage is going to go higher. And as the debt increases, the cost funding the debt will eat up an unsustainable ever increasing percentage of US revenue.</span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1c1c1c; font-size: 14px; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0px; vertical-align: baseline;"><span style="font-family: arial;">While there are numerous factors that could lead to a massive increase in the price of gold and silver in the short term, I'm not counting on this happening in in the next few months. But it is inevitable that the price of gold and silver will be substantially higher at some point in the future.</span></p>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-64955206434552184702022-06-07T10:16:00.001-07:002022-06-07T14:24:44.066-07:00Will The Stock Price of Tesla Get Cut In Half If The Company Is An Also Ran In The Robotaxi Business?<p><span style="font-family: arial;">According to Cathie Wood, the price of Tesla stock will hit $2,600 per share in 2026. It's currently a little over $700 per share. <span style="color: #001e20;">“Tesla’s prospective robotaxi business line is a key driver, contributing 60% of expected value and more than half of expected Ebitda in 2026,” wrote ARK analyst Tasha Keeney in a post on ARK’s website.</span></span></p><p><span style="font-family: arial;"><span style="color: #001e20;">However, given the current state of the robotaxi business, assuming that Tesla will be a leading player by 2026 seems like an optimistic viewpoint. Waymo and Cruise both have a huge lead in developing a robotaxis. </span></span></p><p><span style="color: #333335; font-size: 18px;"><span style="font-family: arial;">General Motors-backed Cruise received approval from California regulators last week to operate a commercial robotaxi service in San Francisco, marking a watershed moment in the autonomous vehicle rollout.</span></span></p><p><span style="color: #333335; font-size: 18px;"><span style="font-family: arial;">Alphabet's Waymo has been running a robotaxi service in suburban neighborhoods outside Phoenix for a year and a half. It is also pursuing a robotaxi license in San Francisco.</span></span></p><p><span style="font-family: arial;"><span style="color: #333335;"><span style="font-size: 18px;">Tesla's robotaxi venture may or may not be vaporware. </span></span><span style="background-color: white; font-size: 18px;">During the Q1 2022 earnings call, Elon Musk talked about the timeline for Tesla's Robotaxi. Tesla plans to announce the vehicle in 2023 and begin mass production in 2024. But given Tesla's track record of missing Musk's target dates, it would not be surprising if this launch projection turns out to be optimistic. And given the huge lead Cruise and Waymo hold, there is certainly no guarantee that Tesla's robotaxi's service will be nationally competitive with these well funded competitors. Building out a national or international robotaxi is likely a multi year project. </span></span></p><p><span style="background-color: white; font-size: 18px;"><span style="font-family: arial;">The announcement today that Uber is teaming up with Wayno on autonomous tracking may be another challenge for Tesla. In addition to Cruise and Waymo (and Zoox), Tesla will be competing against Uber and Lyft and possible combinations among these 5 firms.</span></span></p><p><span style="background-color: white; font-size: 18px;"><span style="font-family: arial;">Tesla currently sports a very rich P/E of 97. Given the challenges the company faces in launching a robotaxi business, it may be more likely that the 2026 stock price is $350 rather that $2,600.</span></span></p><p><span style="font-family: arial;">Full discloure - I am short Tesla bearish call spreads and short SARK puts (the inverse ARKK ETF). Thus, I profit if the price of Tesla and ARKK stays flat or declines. </span></p><p><span style="font-family: arial;"><span style="color: #001e20;"><br /></span></span></p>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-82206792758840969632022-05-26T06:10:00.003-07:002022-05-26T06:13:19.085-07:00Fed Rate Hikes Are A Short Term Headwind For Silver and Gold, But Ultimately Will Speed Up US Dollar Debasement and Higher Precious Metals Prices<p><span style="background-color: white; color: #1a1a1b; font-family: "Noto Sans", Arial, sans-serif; font-size: 14px;">I think it likely that investors may be continue to be able purchase gold and silver at prices near current levels for the next few months. As the Fed rate increases push interest rates up, as well as the DXY (dollar index versus a basket of foreign currencies), this will put pressure on the price of precious metals. But the increase in interest rates also leads to higher cost to the US Treasury to fund the debt. The ever growing US debt is debasing the value of the US dollar.</span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1a1a1b; font-family: "Noto Sans", Arial, sans-serif; font-size: 14px; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">Due to interest rates rising by more than projected, the US Treausury had interest costs in 2021 that were around $20 billion higher than the Congressional Budgt Office (CBO) estimated. And that was before the Fed had even started raising rates.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1a1a1b; font-family: "Noto Sans", Arial, sans-serif; font-size: 14px; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">The increasing US debt will be funded by an ever increasing percentage of US federal revenues. The value of the US dollar is going to plunge and the price of gold and silver will rocket higher. And as you read the following, please keep in mind that the CBO projections are often optimistic</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1a1a1b; font-family: "Noto Sans", Arial, sans-serif; font-size: 14px; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">As the Peter G. Petrsen Institute reported</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1a1a1b; font-family: "Noto Sans", Arial, sans-serif; font-size: 14px; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">"The growth in interest costs presents a significant challenge in the long-term as well. According to CBO’s latest projections, interest payments would total around $60 trillion over the next 30 years and would take up nearly one-half of all federal revenues by 2050. Interest costs would also become the largest “program” over the next few decades — surpassing all discretionary spending in 2043, Medicare in 2043, and Social Security in 2045."</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1a1a1b; font-family: "Noto Sans", Arial, sans-serif; font-size: 14px; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><a class="_3t5uN8xUmg0TOwRCOGQEcU" href="https://www.pgpf.org/analysis/2022/05/higher-interest-rates-will-raise-interest-costs-on-the-national-debt" rel="noopener nofollow ugc" style="border: 0px; font: inherit; margin: 0px; padding: 0px; vertical-align: baseline;" target="_blank">https://www.pgpf.org/analysis/2022/05/higher-interest-rates-will-raise-interest-costs-on-the-national-debt</a></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1a1a1b; font-family: "Noto Sans", Arial, sans-serif; font-size: 14px; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0px; vertical-align: baseline;">Thus, while record high gold prices and triple digit silver may not be in the cards in the short term, it will most likely arrive many years (decades?) before 2050.</p>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-60589542112867485452022-03-05T08:12:00.002-08:002022-03-08T08:05:04.369-08:00Is Silver Price About To Provide Us With A Real World Example of the Veblen Effect?<p><span style="font-family: arial;"> <span style="background-color: white; color: #1a1a1b;">A</span><span style="background-color: white; color: #1a1a1b;"> </span><span class="_12FoOEddL7j_RgMQN0SNeU" style="border: 0px; color: #1a1a1b; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: 700; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">Veblen effect</span><span style="background-color: white; color: #1a1a1b;"> </span><span style="background-color: white; color: #1a1a1b;">is when the demand for a good increases as the price increases, in apparent (but not actual) contradiction of the law of demand, resulting in an upward-sloping demand curve.</span></span></p><p><span style="background-color: white; color: #1a1a1b; font-family: arial;">My guess is the we are about to witness the Veblen effect impact the price of silver. The price is rising and an increase in demand seems likely. And given that some sources indicate that the silver market is expected to record a supply shortfall of 20 million ounces in 2022. (source - <a href="https://www.silverinstitute.org/global-silver-demand-forecast-reach-record-1-112-billion-ounces-2022/#:~:text=Global%20Silver%20Demand%20Forecast%20To%20Reach%20A%20Record%201.112%20Billion%20Ounces%20In%202022,-Posted%20on%2002&text=(Washington%20D.C.%20%E2%80%93%20February%209%2C,ounces%20(Boz)%20in%202022." target="_blank">The Silver Institute</a>), it would not require too many whales to drain silver from the market by adding to their portfolios for the supply to go into a significant deficit. Thus, a short squeeze could be in the offing. (Further, the abysmal failure of crypto to move higher in response to the Ukraine invasion crisis theoretically should lead to a reallocation from crypto to precious metals)</span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1a1a1b; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><span style="font-family: arial;">Investment demand for silver has been in the doldrums the past few months as the paper price has been sinking. The <a href="https://www.cmegroup.com/clearing/operations-and-deliveries/nymex-delivery-notices.html" target="_blank">Comex warehouse inventory</a> of registered silver is marginally higher than it was at the close of 2021. The <a href="https://sprott.com/investment-strategies/physical-bullion-trusts/silver/" target="_blank">Sprott PSLV inventory</a> of physical ounces of silver is only up be 100,000 troy oz since the close of 2021. </span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1a1a1b; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><span style="font-family: arial;"><b>Conclusion</b></span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1a1a1b; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><span style="font-family: arial;">Time will tell whether investment demand and/or the price of silver moves higher. But my guess is that we are about to experience a real world example of the Veblen effect. </span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1a1a1b; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><br /></p>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-32759681694423200212022-02-20T10:29:00.008-08:002022-02-20T15:22:57.230-08:00Will The Fed Crush The Housing Market Again? Will 2022 Rhyme With 2007 Due To Interest Rate Increases<p><span style="font-family: arial;">One of the dumbest things I've heard is the statement that "no one saw the 2008 financial crisis coming". Typical is Paul Krugman's comment that <span style="background-color: white;"><a href="https://www.worldfinance.com/banking/why-we-missed-the-storm" target="_blank">the crisis “came as a shock to me as to almost everyone”</a>. Well, if you've seen the movie "The Big Short", it's obvious that a coterie of smart investors forecast the crisis and profitted off it. Further, lots of folks in the real estate, housing, and mortgage businesses saw it coming. Personally, during the 12 consecutive times in 2005 and 2006 that <a href="https://www.thebalance.com/fed-funds-rate-history-highs-lows-3306135" target="_blank">Greenspan and Bernake's Federal Reserve raised the Fed Funds rate</a>, I cursed them for their stupidity. It should not have been a surprise that they crashed the housing market.</span></span></p><p><span style="background-color: white;"><span style="font-family: arial;">There are certainly some significant differences between 2007 and 2022. </span></span></p><p><span style="background-color: white; color: #202124;"><span style="font-family: arial;">1) Currently, the Fed Funds rate is only 0.25%. During 2005-2006, the Federal Reserve raised the Fed Funds rate from 2.5% to 5.25%. </span></span></p><p><span style="font-family: arial;"><span style="background-color: white;">2) In 2007, if someone could fog up a mirror, they could get a mortgage. Lending standards have tightened up since then. A decline in housing prices will be unlikely to generate as many loan defaults. D</span><span style="background-color: white;">uring the financial crisis</span><span style="background-color: white;">, loan default foreclosures became a vicious cycle in exacerbating housing price declines </span></span></p><p><span style="font-family: arial;"><span style="background-color: white;">3) The speculative buying of homes has moved from individuals to corporations. </span></span><span style="background-color: white; color: #202124; font-family: arial;">Hopefully, the corporations buying up homes in today's market will be better able to manage a drop in housing prices and won't be forced to sell into a declining market. </span></p><p><span style="background-color: white; font-family: arial;">In 2006, home builders realized that too high a percentage of the homes in their housing developments were being bought by individual investors as rental properties. In addition to the financial risk of mortgage defaults, t</span><span style="background-color: white; color: #202124; font-family: arial;">oo many rental properties in a neighborhood of single-family homes </span><span style="background-color: white; color: #202124; font-family: arial;">can cause property prices to stagnate or drop</span><span style="background-color: white; color: #202124; font-family: arial;">. That's because tenants don't maintain homes to the level that owners who actually live in the property do. Unfortunately for home builders, most were a bit late to realize the risks of selling too many homes to retail investors utilizing mortgages to borrow money.</span></p><p><span style="background-color: white; color: #202124;"><span style="font-family: arial;">Thus, there are too many differences in today's conditions for history to repeat itself (but it may rhyme, to paraphrase Mark Twain). And if we get another Fed driven steep increase in interest rates, it will bleed into the cost of new mortgages. At the nosebleed level of the residential housing market, it won't take too significant an increase to mortgage rates to crush the housing market.</span></span></p><p><span style="font-family: arial;"><span style="background-color: white; color: #202124;">According to this <a href="https://www.cnbc.com/2022/01/10/mortgage-rates-just-jumped-again-what-that-means-for-homebuyers.html">January 10th CNBC article</a> "</span>The current jump in rates will cost potential homebuyers dearly. For a median-priced home, currently about $350,000, buyers putting down 20% will now see a monthly payment $125 higher than they would have just three weeks ago. For those using low down payment loans, the monthly increase will be even larger. Higher interest rates could throw some cold water on high home prices, as buyers hit an affordability wall." And the $125 figure is already badly out of date as mortgate rates have gone up about half a percent since then.</span></p><p><span style="font-family: arial;">The Federal Reserve hasn't even started the upcoming series of interest rate hikes, and the 30 mortgage rate has already increased from under 3% to over 4%. If the Federal Reserve actually does increase the Fed Funds rate 7 times, as some are predicting, it was crush the housing market again.</span></p><p><span style="font-family: arial;"><span style="background-color: white;">If we do get a Fed Funds induced </span><span style="background-color: white;">sharp drop in housing prices, beware of the impact upon the economy and the stock market. Dropping housing pricing adversely affects consumer confidence and perception of personal wealth. It also leads to a decrease in construction employment. Thus, lower economic growth becomes likely and a declining housing market can be a major contributor to an economic recession. </span></span></p><p><span style="font-size: 18px;"><span style="font-family: arial;"><br /></span></span></p><p><span style="background-color: white; font-family: "Crimson Text", "Times New Roman", Times, Georgia, serif;"><br /></span></p>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-66931883363418056942022-02-12T09:53:00.003-08:002022-03-08T08:07:09.542-08:00Does Bitcoin's Price Decline on a Day When The Drums of War Were Beating Invalidate The Bull Case for Crypto <p><span style="font-family: arial;">Up until recently, I've been a Bitcoin bull. And in the long term, my guess is that it remains a good hedge against debasement of the U.S. dollar. But on a near term basis, I'm having trouble finding justification for owning Bitcoin. </span></p><div style="background-color: white; color: #222222;"><span style="font-family: arial;">On a day when the drums of war were beating loudly, and most commodities increased in value, Bitcoin fell in price. The price of Bitcoin dropped from $US43,571 to $US42,355 (-2.8 %) on 2/11/22 according to CoinMarketCap.</span></div><div style="background-color: white; color: #222222;"><span style="font-family: arial;"><br /></span></div><div style="background-color: white; color: #222222;"><span style="font-family: arial;">Given the following, at the moment it seems easier to make the case that Bitcoin is a Ponzi scheme than a good investment vehicle.</span></div><div style="background-color: white; color: #222222;"><span style="font-family: arial;"><br /></span></div><div style="background-color: white; color: #222222;"><span style="font-family: arial;">1) Bitcoin was not a crisis hedge when a Russian invasion of Ukraine was announced as being immenent</span></div><div style="background-color: white; color: #222222;"><span style="font-family: arial;">2) Bitcoin has not been an inflation hedge during the past few months</span></div><div style="background-color: white; color: #222222;"><span style="font-family: arial;">3) Over the short term, Bitcoin's price has been correlated with the Nasdaq, thus it is not currently acting as a stock market hedge</span></div><div style="background-color: white; color: #222222;"><span style="font-family: arial;">4) It is not a very practical transaction vehicle</span></div><div style="background-color: white; color: #222222;"><span style="font-family: arial;">5) There is significant regulatory risk</span></div><div style="background-color: white; color: #222222;"><span style="font-family: arial;"><br /></span></div><div style="background-color: white; color: #222222;"><span style="font-family: arial;">However, given the long term upward price momentum of Bitcoin and the crypto's Phoenix like rise from past dips, I not ready to give up on it. But unlike past dips, I'm not buying this one.</span></div>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-27070949969527755692021-09-14T10:01:00.004-07:002021-09-14T10:09:08.926-07:00Focus on Core Inflation Is Misguided. Increased Food And Energy Costs Will Drive Ongoing Inflation<p><span style="font-family: arial;">Is the current rate of "core inflation" transitory? Maybe. But not including food and energy in inflation calculations is misguided. Food and energy are excluded from core inflation because they are volatile. But excluding food and energy due to volatility only makes sense if the prices are bouncing up and down. Both food and energy costs are on a long term upward trend. So even if Jerome Powell hits his target of two percent core inflation, the cost of living coming out of consumers pockets is going to be greater than two percent. </span></p><p><span style="font-family: arial;">It seems ridiculous that after today's Consumer Price Index (CPI) report (9/14/2021), so much attention was given to that fact the <span style="color: #222222;">Core CPI was only up 0.1% and below consensus expectations. Headline CPI rose 0.3% month-over-month, boosted by a 2.0% surge in energy prices and a 0.4% rise in food. While the headline CPI percentage year-over-year edged down to 5.3% from 5.4% it's hard to see how anyone can continue to claim inflation is transitory.</span></span></p><div style="text-align: left;"><span style="font-family: arial;">Climate change (or more accurately "global weather weirdness") is going to continue to play havoc with food production. Food shortages are a real threat in the near term, and highly likely in the future. As decribed in this article, "<span style="background-color: white;"><a href="https://news.mongabay.com/2021/08/a-world-of-hurt-2021-climate-disasters-raise-alarm-over-food-security/" target="_blank">A world of hurt: 2021 climate disasters raise alarm over food securit</a>y, h</span><span style="-webkit-font-smoothing: antialiased; background-color: white; box-sizing: inherit; color: #292b2c; text-rendering: optimizelegibility;">uman-driven climate change is fueling weather extremes — from record drought to massive floods — that are hammering key agricultural regions around the world. And has Jerome Powell been grocery store shopping lately? Grocery product prices are increasing and package sizes are shrinking. (Google shows 189,000 results for "shrinkflation")</span></span></div><div style="text-align: left;"><span style="font-family: arial;"><span style="-webkit-font-smoothing: antialiased; background-color: white; box-sizing: inherit; color: #292b2c; text-rendering: optimizelegibility;"><br /></span></span></div><div style="text-align: left;"><span style="font-family: arial;"><span style="-webkit-font-smoothing: antialiased; background-color: white; box-sizing: inherit; color: #292b2c; text-rendering: optimizelegibility;">Energy costs are also going to continue rising. The combination of reduced exploration spending and environmental regulations are curtailing oil and gas production much faster than clean energy is able to serve as a replacement. While oil is up to over $70 a barrel, natural gas prices are spiking even faster, particularly in Europe. According to the Wall Street Journal, "a</span><span style="color: #333333;">t their peak, U.K. electricity prices had more than doubled in September and were almost <a href="https://www.wsj.com/articles/energy-prices-in-europe-hit-records-after-wind-stops-blowing-11631528258" target="_blank">seven times as high as at the same point in 2020</a>. Power markets also jumped in France, the Netherlands and Germany."</span></span></div><div style="text-align: left;"><span style="font-family: arial;"><span style="-webkit-font-smoothing: antialiased; background-color: white; box-sizing: inherit; color: #292b2c; text-rendering: optimizelegibility;"><br /></span></span></div><div style="text-align: left;"><span style="font-family: arial;"><span style="-webkit-font-smoothing: antialiased; background-color: white; box-sizing: inherit; color: #292b2c; text-rendering: optimizelegibility;">And as far as consumers perception of inflation goes: 1) prices at the grocery store, 2) the cost of filling a tank with gasoline, and 3) heating bills, are all extremely high visibility items. Consumers may not notice a 2% increase in core inflation, but they sure as hell notice increases in food and energy cost.</span></span></div><div style="text-align: left;"><span style="font-family: arial;"><span style="-webkit-font-smoothing: antialiased; background-color: white; box-sizing: inherit; color: #292b2c; text-rendering: optimizelegibility;"><br /></span></span></div><div style="text-align: left;"><span style="font-family: arial;"><span style="-webkit-font-smoothing: antialiased; background-color: white; box-sizing: inherit; color: #292b2c; text-rendering: optimizelegibility;">Thus, anyone that pretends that inflation is transitory based on "core inflation" is either wrong or knowingly attempting to put a spin the data. Keep your focus on the rise in headline inflation.</span></span></div><div style="text-align: left;"><span style="background-color: white; color: #292b2c; font-family: arial; font-size: 16px;"><br /></span></div><div style="text-align: left;"><span style="background-color: white; color: #292b2c; font-family: arial; font-size: 16px;"> </span></div><div style="text-align: left;"><span style="font-family: arial;"><span style="-webkit-font-smoothing: antialiased; background-color: white; box-sizing: inherit; color: #292b2c; font-size: 16px; text-rendering: optimizelegibility;"><br /></span></span></div><div style="text-align: left;"><span style="font-family: arial;"><span style="-webkit-font-smoothing: antialiased; background-color: white; box-sizing: inherit; color: #292b2c; font-size: 16px; text-rendering: optimizelegibility;"><br /></span></span></div><p><br /></p><p><br /></p><p><br /></p>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-19076424050222042912021-08-03T09:40:00.003-07:002021-08-03T09:45:43.265-07:00Transitory Inflation? Green Regulations, Global Weather Weirdness Crop Failures, Higher Wages, Will Lead to Persistent Inflation <p><span face=""Noto Sans", Arial, sans-serif" style="background-color: white; color: #1a1a1b; font-size: 14px;">There is no question that the 5.4% rate of inflation in the U.S. may come down as some of the factors leading this rate will drop. The semiconductor chip shortage is unlikely to last forever, and used car and rental car prices are almost certain to fall, as are other inputs leading the to current rate of inflation.</span></p><p><span face=""Noto Sans", Arial, sans-serif" style="background-color: white; color: #1a1a1b; font-size: 14px;">But in addition to the</span><span face=""Noto Sans", Arial, sans-serif" style="background-color: white; color: #1a1a1b; font-size: 14px;"> </span><span class="_12FoOEddL7j_RgMQN0SNeU" style="border: 0px; color: #1a1a1b; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: 700; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">Fed's money printing</span><span face=""Noto Sans", Arial, sans-serif" style="background-color: white; color: #1a1a1b; font-size: 14px;">, the following are all factors that will lead to persistent inflation, well above the Fed's 2.0% target</span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1a1a1b; font-family: "Noto Sans", Arial, sans-serif; font-size: 14px; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><span class="_12FoOEddL7j_RgMQN0SNeU" style="border: 0px; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: 700; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">Green regulations</span> will lead to suppy squeezes in oil, natural gas and key raw materials, including silver, and increase the costs of production for many manufacturers. Inflationary carbon taxes may also be coming down the road.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1a1a1b; font-family: "Noto Sans", Arial, sans-serif; font-size: 14px; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><span class="_12FoOEddL7j_RgMQN0SNeU" style="border: 0px; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: 700; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">Global Weather Weirdness</span> is leading to crop failures around the world. Drought and wildfires in California, frost in Brazil, and flooding in Europe and Asia are on the verge of creating food shortages. Global weather weirdness is not going away. The cost of food is going to continue increasing at a significant rate.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1a1a1b; font-family: "Noto Sans", Arial, sans-serif; font-size: 14px; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><span class="_12FoOEddL7j_RgMQN0SNeU" style="border: 0px; font-family: inherit; font-size: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: 700; line-height: inherit; margin: 0px; padding: 0px; vertical-align: baseline;">Wages in the U.S. are rising</span>. The current labor shortages may or may not be transitory, but ongoing increases in the minimum wage are persitent and sticky.</p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="background-color: white; border: 0px; color: #1a1a1b; font-family: "Noto Sans", Arial, sans-serif; font-size: 14px; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;">The widely accepted myth that inflation is transitory will be proven to be wrong over the next 12 months. It may be elevated, but it is not transitory.</p>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-71021254303727513902021-04-28T08:59:00.006-07:002021-04-28T15:38:08.296-07:00Will Silver Supply Deficit Lead To Biggest Short Squeeze Since Gamestop?<p><span style="font-family: arial; font-size: medium;">Did you miss the Gamestop short squeeze? For most investors, a rational fear of getting in too late and being the greater fool that paid the higher price for an overvalued stock and being stuck with a money loser with no buyers left at the purchase price saved them from over paying for Gamestock during the $400 per share height of the squeeze.. .</span></p><p><span style="font-family: arial; font-size: medium;">Well, there is another short squeeze in play. This one is moving at a slow pace, and is focused on a deeply undervalued asset. The asset is silver. Silver is in a supply deficit and there is a huge short position in silver. At some point, the supply deficit will lead to an increase in price, and short covering may rocket the price higher.</span></p><p><b><span style="font-family: arial; font-size: medium;">The Supply Deficit</span></b></p><p><span style="font-family: arial; font-size: medium;">My forecast is that demand for silver in 2021 will exceed supply by at least 20%. </span></p><p><span style="font-family: arial; font-size: medium;">The deficit in silver in 2021 will be due to three sources:1) an increase in commercial demand for silver due to growth in the new energy era products, including <a href="https://www.visualcapitalist.com/silver-series-new-energy-in-solar-and-ev/#:~:text=Among%20all%20metals%2C%20silver%20has,electronic%20components%20of%20electric%20vehicles." target="_blank">use in EV's, solar panels</a>, and electronics, 2) investment demand as an inflation hedge; and 3) a short squeeze from purchases being fueled by the Reddit crowd.</span></p><p><b><span style="font-family: arial; font-size: medium;">Supply</span></b></p><p><span style="font-family: arial; font-size: medium;">1.0187 billion - Mining and recycling will produce slightly over <a href="https://www.marketwatch.com/press-release/global-pandemic-fueled-renewed-investor-interest-in-silver-in-2020-2021-04-22?siteid=bigcharts&dist=bigcharts&tesla=y" target="_blank">1 billion ounces of silver</a> in 2021. </span></p><p><b><span style="font-family: arial; font-size: medium;">Demand</span></b></p><p><span style="font-family: arial; font-size: medium;">1.237 billion - Demand for silver will exceed supply in 2021 by at least 218 million ounces</span></p><p><span style="font-family: arial; font-size: medium;"><b>Components of demand</b></span></p><p><span style="font-family: arial; font-size: medium;">- 600 million - Commercial users will <a href="https://www.reuters.com/article/precious-silver/silver-will-outshine-gold-as-demand-hits-8-year-high-in-2021-silver-institute-idUSL1N2KG0XF">consume about 600 million ounces in 2021</a></span></p><p><span style="color: #313132;"><span style="font-family: arial; font-size: medium;">- 174 million - Demand for silver for jewellery will consume 174 million ounces</span></span></p><p><span style="font-family: arial; font-size: medium;"><span style="color: #313132;">- 257 million - Purchases of bars and coins were forecast to take 186 - 257 million ounces off the market. But this was p</span>rior to the Reddit launch of a silver squeeze movement. The silver squueeze movement has vastly increased consumer demand for silver. </span></p><p><span style="font-size: medium;"><span style="font-family: arial;">- 200 million - The launch on Reddit of the silver squeeze in late Januuary has expanded the number of silver buyers and significantly increased demand. This new horde of buyers is buying both physical (coins and bars) and paper investments </span><span style="font-family: arial;">(Silver ETF's and futures)</span><span style="font-family: arial;">. And the flood of new buyers has energized long time silver bugs, who are inc</span><span style="font-family: arial;">reasing their purchases of silver..The subreddit, <a href="https://www.reddit.com/r/Wallstreetsilver/" target="_blank">WallStreetSilver</a>, has grown to 64,000 members since it's creation just four months ago and is adding 100's of new members every day.. A leading <a href="https://www.etftrends.com/gold-silver-investing-channel/amid-silver-mania-investors-turning-to-pslv/" target="_blank">ETF/Trust, PSLV</a>, has had to add almost 40 million ounces of silver to their inventory already in 2021 in order to have sufficient supply to meet potential redemptions . At this pace, PSLV will take over 100 million ounces off the market in 2021. . </span></span></p><p><span style="font-family: arial; font-size: medium;">The impact of the increase in demand for this precious metal with a limited supply is evident in the retail market. Local coin shops and online dealers are short on supply and are adding huge premiums to the price for coins and bars. The price for silver coins and bars is 20% above the futures market price of silver, currently in the $25-27 oz. range. (The futures market is based on 1000 oz bars) This divergance in the price of coins and bars versus the price of 1000 oz bars and futures is unsustainable. The arbitrage opportunity is simply too large to remain is place. And not surprisingly, the inventory of 1000 oz bars is being drained from the vaults of the Comex and the LBMA in London. The Comex (silver futures exchange) inventory of silver available for delivery has declined from 151 million ounces in mid Febuary to 117 million ounces as of April 26.</span></p><p><span style="font-family: arial; font-size: medium;"><b>Potential Short Squeeze</b></span></p><p><span style="font-size: medium;"><span style="font-family: arial;">Silver is the most shorted commodity. As shown in the chart below, the 8 largest traders of silver on the Comex are short 170 days of production. Currently, sellers of Comex futures are short 860,000,000 ounces of silver (172,000 SI contracts @ 5000 troy ounces per contract). And this is just the transparent shorts on the Comex. The total numbr of ounces sold short worldwide is an opaque number but could be a significant multiple of the shorts on the Comex.</span><span style="font-family: arial;"> </span></span></p><p></p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhjUE8iJs6HSU8DUb_NQp2gKr3wOx9FktZKI7r4HTKmfBs5ghsnIPIkrnxdWkJ8xh2pCkrzP3KJ0SdKA9igHvBgBX4Rq9wC5tnAeIr8YiUOKmZQ7ooGtXHheH6vdVU4b-uivxqOl-S_L-Q/s867/COT.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="636" data-original-width="867" height="470" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhjUE8iJs6HSU8DUb_NQp2gKr3wOx9FktZKI7r4HTKmfBs5ghsnIPIkrnxdWkJ8xh2pCkrzP3KJ0SdKA9igHvBgBX4Rq9wC5tnAeIr8YiUOKmZQ7ooGtXHheH6vdVU4b-uivxqOl-S_L-Q/w640-h470/COT.png" width="640" /></a></div><br /><span style="font-family: arial; font-size: medium;">There are many commentators that are skeptical that the silver shorts can be squeezed. However, even if the skeptics are correct, silver remains a good investment opportunity. Pandemic fueled fiscal deficit spending and monetary injections by central banks are debasing fiat currency. The Fed is actively working to increase inflation into an environment where prices are already rising. The Fed's assumption that inflation will be transitory seems short sighted. Further, the Biden administration announces a new spending plan every week. And don't even get me started on how absurd and dangerous MMT (modern monetary theory) is. Has MMT promoter Stepanie Kelton ever heard of the Weimar Republic? </span><p></p><p><span style="font-family: arial; font-size: medium;"><b>Conclusion</b></span></p><p><span style="font-family: arial; font-size: medium;">There is a strong likelihood that the price of silver is headed higher. There is a supply deficit and an increase in demand. The question is not whether the price will increase, but whether it will A) rocket higher due to a short squeeze, or B) slowly grind higher due to increased demand. </span></p><p><br /></p><p><br /></p><p><br /></p><p><br /></p><p><br /></p>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-75342629313099218152021-03-24T11:32:00.002-07:002021-03-24T11:52:39.374-07:00Which Is More Insane: Powell's "Inflation Will Be Transitory" or Kelton's MMT?<p><span style="background-color: white; color: #1a1a1b; font-style: inherit; font-variant-caps: inherit; font-variant-ligatures: inherit; font-weight: inherit;"><span style="font-family: arial; font-size: medium;">U.S. fiscal and monetary policy is being run by fools that seem oblivious to the dangers of hyper-inflation. I would suggest that the physical gold and silver buyers that want lower prices so that they can add more to their collections will soon be disappointed. Inflation is coming, and with it, even the price of gold and silver should rocket upward.</span></span></p><p><span style="background-color: white; color: #1a1a1b; font-style: inherit; font-variant-caps: inherit; font-variant-ligatures: inherit; font-weight: inherit;"><span style="font-family: arial; font-size: medium;">Jerome Powell and the Fed are actively working to increase inflation. The Fed's monthly purchases of $120 billion of bonds during a time when the price of everything is going up, the US govt. is disbursing helicopter money, and vaccinations may release a tidal wave of consumer spending, is almost certain to get the job done. However, Powell claims that the upcoming inflation will be "transitory". Maybe he is correct, but my guess is that once the inflation genie has been released, it will be impossible to put back in the bottle. And the Fed does not have the tools that Paul Volcker utilized to tame inflation. A taper in bond buying would lead to a stock market crash, and a significant increase in interest rates would lead to the US deficit exploding.</span></span></p><div class="_3xX726aBn29LDbsDtzr_6E _1Ap4F5maDtT1E1YuCiaO0r D3IL3FD0RFy_mkKLPwL4" data-click-id="text" style="background-color: white; border: 0px; color: #878a8c; font-family: IBMPlexSans, Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; line-height: inherit; margin: 12px 0px 0px 8px; max-width: 800px; padding: 5px 16px 5px 0px; vertical-align: baseline;"><div class="_292iotee39Lmt0MkQZ2hPV RichTextJSON-root" style="border: 0px; color: #1a1a1b; font-family: "Noto Sans", Arial, sans-serif; font-stretch: inherit; font-style: inherit; font-variant: inherit; line-height: 21px; margin: 0px 0px -1px; overflow: auto; padding: 0px 0px 1px; vertical-align: baseline; word-break: break-word;"><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="border: 0px; font-family: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><span style="font-size: medium;">But I judge that Modern Monetary Theory (MMT) is even more insane than unbottling the inflation genie. At least Powell has a chance or being correct that an increase in inflation to greater than 2% per year may be transitory. Stephanie Kelton's theory that the Federal defict doesn't matter is truly insane.</span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="border: 0px; font-family: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><span style="font-size: medium;">My crystal ball on when US inflation will start exploding and what impact it will have on the price of gold and silver is cloudy. But I'm all in and judge that $2,500 gold and triple digit silver is coming in the fairly near future.</span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="border: 0px; font-family: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0.25em; vertical-align: baseline;"><span style="font-size: medium;">On a short term basis, I would not be surprised if the spot price of gold and silver fell even more. The dollar debasement by the US is being matched by other central banks around the world, particulary the EU and Japan. This is allowing a widely followed dollar index, the DXY to rise, and precious metal traders typically sell spot when the DXY is going up. It seems to be a race to the bottom, but only a matter of time before the US pulls ahead in this fiat currency race to the bottom and the dollar resumes its decline.</span></p><p class="_1qeIAgB0cPwnLhDF9XSiJM" style="border: 0px; font-family: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: inherit; line-height: inherit; margin: 0px; padding: 0.8em 0px 0px; vertical-align: baseline;"><span style="font-size: medium;">If the price of gold and silver continues its short term decline, this offers the benefit of allowing precious metal investors to dollar cost average down. Gold and silver investors will come out on top in the medium and long run.</span></p></div></div><div class="_1hwEKkB_38tIoal6fcdrt9" style="align-items: center; background-color: white; border: 0px; color: #878a8c; display: flex; flex-wrap: wrap-reverse; font-family: IBMPlexSans, Arial, sans-serif; font-stretch: inherit; font-variant-east-asian: inherit; font-variant-numeric: inherit; justify-content: space-between; line-height: inherit; margin: 0px; padding: 4px 16px 0px 0px; vertical-align: baseline;"><div class="_3-miAEojrCvx_4FQ8x3P-s" style="align-items: stretch; border: 0px; display: flex; flex-direction: row; flex-grow: 1; font-family: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; font-weight: 700; line-height: 16px; margin: 0px; overflow: hidden; padding: 0px 8px 0px 4px; vertical-align: baseline;"><div class="_1UoeAeSRhOKSNdY_h3iS1O _3m17ICJgx45k_z-t82iVuO _3U_7i38RDPV5eBv7m4M-9J _2qww3J5KKzsD7e5DO0BvvU" style="align-items: center; border: 0px; box-sizing: border-box; cursor: default; display: flex; font-family: inherit; font-stretch: inherit; font-style: inherit; font-variant: inherit; line-height: 16px; margin: 0px 4px 0px 0px; padding: 8px; vertical-align: baseline; word-break: normal;"></div></div></div>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-26640534684325418252020-02-09T12:24:00.000-08:002020-02-09T12:33:39.691-08:00Are UBS, Goldman Sachs, and Morgan Stanley Analysts Forecasting China 1st Quarter Economic Growth Kowtowing to China?<span style="font-family: inherit;">How any economic analyst can possibly still be forecasting China's economy will expand during the first quarter of 2020 is almost incomprehensible. Are the analysts doing so incompetent or are they kowtowing to China? The kindest thing I can say about it is that it offers an example of how cautious Wall Street analysts are about going out on a limb and upending the group think consensus.</span><br />
<span style="font-family: inherit;"><br /></span>
<span style="font-family: inherit;">Here are some examples of these ridiculous forecasts:</span><br />
<br />
According to <a href="https://www.forbes.com/sites/sergeiklebnikov/2020/02/07/over-400-companies-have-warned-of-the-impact-coronavirus-could-have-on-first-quarter-earnings/#1c41dda72bb8" target="_blank">Forbes</a>, <span style="font-family: inherit;">"<span style="background-color: #fcfcfc; color: #333333; font-size: 18px;">The UBS China Economics team expects that GDP growth will slow to 3.8% year-over-year in the first quarter"</span></span><br />
<span style="font-family: inherit;"><span style="background-color: #fcfcfc; color: #333333; font-size: 18px;"><br /></span></span>
<span style="background-color: white; color: #313132;"><span style="font-family: inherit;">"Morgan Stanley <a href="https://www.reuters.com/article/us-china-health-economy-morgan-stanley/morgan-stanley-warns-coronavirus-could-drag-on-global-chinese-gdp-growth-idUSKBN1ZS27P" target="_blank">said on Wednesday</a> the corona virus outbreak in China ... could shave up to 1 percentage point off Chinese growth in the first quarter."</span></span><br />
<span style="background-color: white; color: #313132;"><span style="font-family: inherit;"><br /></span></span>
<span style="background-color: white; color: #222222;"><span style="font-family: inherit;">"China's economy will face the brunt of the virus' near-term fallout, with <a href="https://markets.businessinsider.com/news/stocks/coronavirus-impact-gdp-growth-global-economy-limited-goldman-sachs-2020-2-1028873077" target="_blank">Goldman estimating a 1.6 percentage-point reduction</a> to first-quarter growth."</span></span><br />
<span style="background-color: white; color: #313132;"><span style="font-family: inherit;"><br /></span></span>
<span style="background-color: white; color: #313132;"><span style="font-family: inherit;">And this <a href="https://www.bloomberg.com/news/articles/2020-02-04/economists-cut-china-s-growth-forecast-on-coronavirus-impact" target="_blank">summary from Bloomberg</a> provides more of these insanely optimistic forecasts for only mild drops in China 1st quarter economic growth.</span></span><br />
<span style="background-color: white; color: #313132;"><span style="font-family: inherit;"><br /></span></span>
<span style="color: #313132;"><span style="background-color: white;">How can a country's economy grow on a year over year basis when the much of it was shut down for over a week due to the extended Lunar New Year holiday. And given the annual Lunar New Year holiday already resulted in a week's shutdown, it reduced the productive weeks in the 1st quarter 2020 to 11 of 13, versus 12 productive weeks last year. So with much of the economy shut down for an extra 8% of the quarter, growing the economy would be unlikely even without the corona virus epidemic. </span></span><br />
<span style="color: #313132;"><span style="background-color: white;"><br /></span></span><span style="color: #313132;"><span style="background-color: white;">Due to the extension of the Lunar New Year holiday, <a href="https://www.wsj.com/articles/chinas-factories-struggle-to-resume-operations-after-virus-shutdown-11581157800" target="_blank">production will be significantly reduced at many factories </a>for at least the rest of this month, and possibly into March. Further, the cancellations of airline travel to China by some <a href="https://www.cnn.com/2020/02/05/business/china-flights-travel-coronavirus-outbreak/index.html" target="_blank">airlines until late March</a> and other travel restrictions on buyers, engineers, designers, and quality inspectors will have a negative impact on the production of Fall 2020 and Spring 2021 merchandise.</span></span><br />
<span style="color: #313132;"><span style="background-color: white;"><br /></span></span>
<span style="color: #313132;"><span style="background-color: white;"><b><u>Conclusion</u></b></span></span><br />
<span style="color: #313132;"><span style="background-color: white;"><br /></span></span>
<span style="color: #313132;"><span style="background-color: white;">China has taken extraordinary measures to slow down the spread of the novel corona virus. And based on the slowdown in reported cases in both China and the world, they are having a positive impact and have greatly reduced the likelihood of this becoming a pandemic. But it is incredible that any reasonable analyst would think that China's economy could expand during the 1st quarter 2020. The question is how much of a decline will result. These overly optimistic forecasts bring into question the credibility of any and all Wall Street economic forecasts.</span></span><br />
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<br />Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-90566182324667615312019-07-28T15:58:00.000-07:002019-07-28T16:30:07.572-07:00Global Sea Level Rise Has Doubled in the Past Year<span style="background-color: white;"><span style="font-family: "verdana" , "arial" , "helvetica" , sans-serif; font-size: 12.48px;">Global sea level rise has more than doubled in the past year according to NASA. Sea level rose 7.3 mm in the past year, versus the 3.3 mm average during the satellite era. (From a little over a 1/10 inch per year to over a 1/4 inch in the past year). Between 3/16/18 and 3/28/19 sea level rose from 85.3 mm to 92.6 mm above the baseline in the record tracked since January 1, 1993. However, given how erratic the rise of global sea level in on an annual basis (and some years the decline), a one year period is too short a time frame to definitively say that sea level rise is accelerating. But the trend sure looks ugly.</span></span><br />
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<span style="background-color: white;"><span style="font-family: "verdana" , "arial" , "helvetica" , sans-serif; font-size: 12.48px;">While a 1/4 inch of sea level rise may not seem like a disaster in the making, if extrapolated over 10, 30, 50, or 100 years it is indeed going to be catastrophic. And the outcome gets far worse if sea level rise continues to accelerate, as many researchers have projected.<a href="https://www.sciencenews.org/article/sunny-day-high-tide-floods-are-rise-along-us-coasts" target="_blank"> Sunny day flooding</a> is already a significant problem. Further, t</span></span><span style="font-family: "verdana" , "arial" , "helvetica" , sans-serif; font-size: 12.48px;">he <a href="https://thinkprogress.org/rising-seas-hit-u-s-coastal-property-values-a-pricing-signal-from-climate-change-848bf4e7443b/" target="_blank">crash in coastal real estate prices</a> predicted by Joe Romm and others seems ever closer</span><span style="font-family: "verdana" , "arial" , "helvetica" , sans-serif; font-size: 12.48px;">.</span><br />
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<span style="background-color: white;"><span style="font-family: "verdana" , "arial" , "helvetica" , sans-serif; font-size: 12.48px;">Source:<a href="https://www.blogger.com/goog_1480544961"> </a></span><span style="color: #171b21; font-family: "verdana" , "arial" , "helvetica" , sans-serif;"><span style="border-bottom: 1px solid rgb(137, 151, 167); font-size: 12.48px;"><a href="https://climate.nasa.gov/vital-signs/sea-level/">https://climate.nasa.gov/vital-signs/sea-level/</a></span></span></span><br />
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<a href="https://climate.nasa.gov/vital-signs/sea-level/" target="_blank"><img border="0" data-original-height="391" data-original-width="629" height="395" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifFWFfg4VDHo7Ghif4DcXQAHqa0qlmxUA4cT3pcLP19QlBKge9Ske8G5MN_xS7yZPp4r0C4GoOtWQCOZeYg4RX4xGbxMKcacnYvFls07fRZACMFRAJkDRJ33TEBtgmnNFzN7i7_ZsJrGs/s640/sea-level-rise-double.png" width="640" /></a></div>
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<span style="background-color: white;"><span style="color: #171b21; font-family: "verdana" , "arial" , "helvetica" , sans-serif;"><br /></span></span>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0tag:blogger.com,1999:blog-6336889634373515074.post-62001933407220345862019-04-02T08:43:00.000-07:002019-04-02T09:12:31.818-07:00Another Idiotic Global Warming Post on Townhall Authored by Matt Vespa<span style="font-family: "arial" , "helvetica" , sans-serif;">Here is a news flash: the impacts of climate change are not linear on an annual basis. New records are not being set for every impact of climate change every year. While the impacts of climate change are close to being linear on a decade long time frame, they are variable on an annual basis.</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Yet it is easily predictable that any time there is a slight bounce back in results, some statistically illiterate climate science denier will claim that this shows that climate scientists predictions are "straight trash". As a specific example, Matt Vespa uses the fact that there was a slight bounce back in Arctic sea ice last month as <a href="https://townhall.com/tipsheet/mattvespa/2019/03/27/dont-tell-ocasio-cortez-but-global-warming-is-such-a-threat-that-it-caused-a-n2543745" target="_blank">support for his climate science denial claims</a>. Somehow, he managed to meld the fact that Arctic sea ice area was up versus the previous year, the Jakobshavn is growing, and 2013 was a calm hurricane year into a case for denying climate science. And as incredibly thin as this support for his denialism is, it becomes completely ludicrous when taking into account that since the post was published, Arctic sea ice has declined so rapidly that it is now in record low territory for this time of year.</span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Arctic sea Ice extent and global sea level both provide results that are variable on an annual basis. But, as the charts below show, the downward trend in Arctic sea Ice and the upward trend in global sea level are in long term patterns. </span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Arctic sea Ice has declined every decade during the satellite era. It is currently the lowest in recorded history for this time of year.(the red line)</span><br />
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<b><span style="font-size: large;">Arctic Sea Ice Extent By Decade</span></b></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">The rise in global sea level has been erratic, but over time frames of multiple years has been consistently moving upward by a rate of 3.3 mm per year. The 2011 decline in sea level certainly did not indicate that "global warming has been cancelled" (the absurd title of Mr. Vespa's post). And as sea level rises, <a href="https://www.businessinsider.com/sea-level-rise-high-tides-sunny-day-flooding-coastal-cities-2018-4" target="_blank">sunny day flooding</a> is becoming an increasingly severe problem.</span><br />
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<b><span style="font-size: large;">Global Sea Level Rise</span></b></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Climate science deniers post frequently to their echo chamber of like minded folks. With the need to come up with new content, the authors grasp at any piece of evidence that provides support for their case, They make their case by cherry picking dates, using the variability of climate change effects, and endlessly repeating false claims. Mr. Vespa trots out the hoary claim that "<span style="color: #333333;">In the 1970s, the Earth was supposed to be undergoing a cooling period that could see periods of glaciation breakout across the Northern Hemisphere.</span><span style="color: #222222;"><span style="background-color: white;">" This claim has been as <a href="https://skepticalscience.com/ice-age-predictions-in-1970s-intermediate.htm" target="_blank">thoroughly debunked</a> as the claims made promoting the health benefits of menthol filtered cigarettes.</span></span></span><br />
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><span style="color: #222222;"><span style="background-color: white;"><span style="font-family: "arial" , "helvetica" , sans-serif;">With all the clear cut evidence of the impacts of climate change, including 500 year floods on every inhabited continent, drought/flood whiplash, coral bleaching, disappearing arctic sea ice, and a wavy jet stream due to a warming arctic, it makes one wonder how much longer it will take before climate science deniers finally lose all vestiges of credibility. Sadly, the link between cigarette smoking and </span><a href="https://tobaccocontrol.bmj.com/content/21/2/87" style="font-family: arial, helvetica, sans-serif;" target="_blank">lung cancer was established in 1939</a>.<span style="font-family: "arial" , "helvetica" , sans-serif;"> However, the turning point in the recognition of health harms from smoking did not occur until 1964, 25 years later. It's taking even longer for climate science to be widely accepted by the public </span></span></span></span>Randy Pickardhttp://www.blogger.com/profile/12471195605540421938noreply@blogger.com0