Backing out from the weeds to the big picture on a Sunday afternoon...
The issues in politics are not yet being fully priced in... The world, and the U.S., were prepared to move beyond the style of Donald Trump... but not at all wanting to move far from the policy shifts... or from the concern with the practical to the Utopian in focus.
Biden et all are running into limits they perhaps did not expect... in quarters they did not anticipate... but the limits of inertia have not yet come to grips with much more than the potential exposed in "the new pit crew dropping the lug nuts"... rightly causing jitters... including calling into serious question the judgment of "the man behind the screen" imposing this on us now...
But, reality versus wishful thinking being the theme for the day... Today, the world is much like it was last year... with the reality, in spite of much confusion about the need for it, being that the world today is driven by two things, and two things only: dollars and oil.
The new administration hacking on the roots of both of those, right out of the gate... should cause jitters. But, the span of control today is dramatically changed relative to history... as a function of changes in the world, and of changes in policy limits imposed by past choices...
Silver and gold... as real money... continue to be the tail wagged by the dog dollar... which continues to be the alpha dog in a pack of lesser dogs. Bitcoin... is making noise... exposing bits of reality... getting people thinking about money, its role, how it works, how it doesn't, and "wouldn't it be great if"... along with some answers to that question.... but it is not yet a significant enough threat to be taken seriously... Time trades thus means awareness, before others, of when it may join with gold and silver in sharing the same headwinds as everything not fiat. Is Musk "part of team fiat"... or "declaring war on the banks"... and how should the answer to that question condition your market awareness ?
But, I noted recently, I have shifted focus from considering the silver/gold ratio... to the silver/oil ratio... for many reasons. One of which is that technological alternatives to oil... require silver. Another simply being that silver is a commodity in industry... suffering from its monetary associations... while not having the external ability in a counterpoint in control of supply if not demand that is OPEC + Russia...
As bitcoin intrudes into money... silver seeks to sneak out of money into energy...
Its associations are apparent in charts.... as money, it was beat down to a fictional price of $12 in March 2020.. that is a decent proxy for what oil did in April... bottoming at $-37 per barrel in contract settlement...
Suppression of silver prices, just revealed beyond doubt, again, in recent trading... is a parallel with oil, only with it being OPEC et al, really the Saudis, and not "the Fed" or "the banks" or "the globalist elite" setting the agenda, as is true in money and money alternatives.
Did Biden et al misjudge the relationship with the Saudi's while seeking to publicly shame them last month... while working at shutting down U.S. domestic oil production ? What was said behind the scenes... versus what was said in public ? I don't trust Democrats judgment in making practical choices...
So, a bottom line... gold and silver will continue to be manipulated. Reality will likely overcome that interest at some point... as it did last IN SMALL PART ONLY back in 2011... after over a year of sustained resistance led to a reversal in the suppression trade... just like it did in GME stock... with the reversal running it ridiculously higher before resuming its suppression with larger profits enabled from a higher base... But silver instead, as it is manipulated lower in price, now is being controlled that way in spite of the reality in growing demand removing supply from the market... even as the ability to deliver more supply declines over time. It appears the risk tolerated in 2011 by letting it run higher... is now deemed too significant to allow ?
But, oil is almost the opposite case... demand is suppressed by reality in the economy now, rather than by manipulation... as the price is sustained, not suppressed by artifice in the market... with supply restricted artificially, but in fact...
Which is the better bet as an inflation hedge... is answered as a timing issue... depending on the bias in the market... and the timing in which demand growth, supply restrictions, and price do equilibrate... as opposed to when they "should" as a function of the market interference that DOES exist
In the bottom from March 2020 I first chose gold royalties as "buy and hold" candidates at the bottom along with oil shares. Before April I was buying oil related issues only... a few producers... a few midstreamers... but after April, held the oil related the companies... until now...
Gold quit being useful... in August/September... if not before on a percentage basis. "Silver"... from $12 to $28... still not matching oil from -$37 to +$60 and more, certainly not on a risk adjusted basis ? And, prior to the crashes last March and April, leverage in the 3X inverse ETFs as traders... down, then up... also then in PM's and oil... only viable in the short term, given the lower risk in volatility exploitable at market limits.
In February 2021... with oil reaching OPEC targets... I thought there might be a timely pause, giving traders time to switch horses... silver still drifting higher... but that's obviously not panned out in the market... the "timing" is not confirmed, it seems... but that also not being the judgement of the market... rather than of the market gods determining for you what the market price should be... lower... as supply disappears ? It looks like they "lost track" of silver for a bit... let it go for a bit... maybe only as distracted ? Or, had some real limit preventing them sustaining the prior efforts in suppression... for a time... but back at it again now... only a full year after losing in control of silver in March 2020 ?
Timing silver... not about the market as much as "the market versus the whim of price control"... when the price control, unlike OPEC's in oil, is not made as transparent as possible, but deliberately opaque... to skew the trade and deliberately hurt some participants... to advantage others... without being truthful about it at all... while regulators, oddly, tolerate the blatant fraud... just like they did in mortgages before 2008 ?
Is there an AIG comparable... that will emerge in result of silver frauds... versus mortgage frauds ? Or does the "everything bubble" have a requirement imposing a less narrow focus ?
Oil, though ? Back to the chart of the silver ratio...
Looks to be predicting a low, for silver, near $22 to $24... even with the low end "fair value" on an oil basis being $30 to $33 in a rising market for silver, as silver supply is tight "for real"... versus the surplus in oil.
Meanwhile, if the economy does accelerate... oil could move much higher in an inflationary environment. I've been saying $120 to $180 is not irrational... IF we see real recovery in the global economy... which does not fully depend on recovery in the U.S., which is increasingly made less likely by the effort made in hacking at the roots and trying to remove the foundation in favor of a new one... that does not yet exist... and cannot be made to exist... by destroying the old one...
But, oil being helped by Biden's trying to stop it... and failing... means what for oil and for silver ?
The chart, as it looks now... not accounting for recent changes in inflection... says oil at $100 is very reasonable, within demand growth limits a recovery would enable... but for which the changed inflections must be properly accounted ?
In silver it is "failure" in the price wars that defines a limit in timing... not that in growing divergences ?
As oil climbs, and silver falls... the difference is entrained as future upside volatility... which we can see on this chart, back in the 1970's, reached 1.10... but, that, in an ongoing decline... with a large overhang in existing silver supply, and declining demand... versus the transition the chart shows to an uptrend now... with rising demand, no large hidden reserves with supply insufficient to meet current demand... when "the plan' for the future requires vastly more... on top of what is already a critical inability to meet rising demand even without "the plan"... "The plan" could fail entirely... without that altering silvers upside at all...?
With it... the success of the plan... and ongoing price suppression of silver... are wildly incompatible.
Money versus energy... has a new focal point in silver... which aspect it seems the market is ignoring ?
And, as silver remains damaged by the now blatantly overt effort in suppression, this week... oil is up over $7 from the $60 target price OPEC has announced...
Not suggesting that means its timely to jump from a recent high in silver... to a higher high in oil... right now.
But there are oil shares off their highs because of error in expectations in lower oil prices... while silver shares are off their highs because of error in expectations in higher silver prices...
Being right in big pictures... right on the values... right on the directions in the trades... still leaves a need for timing trades well in the shorter term... as buying and selling is always a short term issue... with patience and holding being the long term source of value... only if you are right on the big picture, right on the value, and right on the direction... while timing it right only adds to the value of being right.... if you time it right.
My opinion... is that oil and silver are not competitors... in some winner take all competition... but the noise in the market tied to that perception... is a factor in considering timing.
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