Silver Crashes Hard over News of No Big Regime Change at the Fed
The amenable Fed change by President Trump lightened concerns that have been driving Fed money into silver and gold money as safe havens.
Just a quick extra on Friday when I don’t usually write a weekday editorial with some headlines, since I had to skip an editorial earlier this week:
I’m sure many are concerned about the huge silver and gold crash today. It appears to be entirely related to Trump picking his replacement for Jerome Powell as head of the Fed. It is actually a surprisingly benign pick from the Fedhead options that Trump was considering. Warsh was a major money printer back during the recovery days of the financial crash in at the end of the Bush days; but he later he criticized the Fed for being too loose with monetary policy for too long. So, his thinking (for a Fedhead) seems flexible.
As a former Fed governor, he’s not likely to shake things up a lot, and so those who had been fleeing to gold and silver backed off and banked some of their huge profits. That MAY be all this is, profit taking at an opportune moment of relief in the news for those with more faith in the Fed than I. The dollar’s death from tariffs continues to be a building fact, regardless, so I will be surprised if gold and silver do not stage a recovery in a few months and maybe a bounce in a few days if they overreacted today, which they probably did.
In essence, some of great worry that was driving people was over the way Trump kept saying he was going change things at the Fed to put it more directly under his political control (a sure banana-republic move if it were to ever happen). Trump surprised people by not making any change that would immediately upset the status quo. So, the only change in precious metals should have been whatever portion of gold and silver’s recent rise as safe haven assets was due to concern about the Fed. I doubt 30% of silver’s hoarding was due to concern about the Fed, so most of that was probably just seizing the moment to seize profits. I’ve read a few gold bucks and silver fish who were feeling anxious to cash in on profits. Many more are not seeking profits; they are seeking stabilization of their funds when the dollar collapses even worse than it already is doing. They’ll keep holding their PMs.
Still, I am not a financial advisor, and you should do all your own head work to see what is best for you. If I’m right, silver will probably stabilize quickly and go back up to any degree that it may have overcorrected over relief from Fed political manipulation concerns. There are several articles below about today’s silver slide if you haven’t come across them already. If I find more on this of merit over the weekend, it may become my weekend Deeper Diver for paying subscribers.
Otherwise, note that inflation took a large leap upward in producer prices, and that is the action that is just upstream from consumer prices, so a strong indication of things to come. Inflation remains high AND GROWING, so I doubt the Fed will be doing more rate cuts in the near future.
Also of note for the weekend is a solitary report of an unnamed military source warning an unnamed Middle East nation that Trump may be attacking Iran this weekend to take out some of the top of the regime. It is not fully supported by other sources, so I’m just keeping an eye on it.
Economania
Stocks fall as silver trade unwinds and Tech remains in funk
Money Matters
Silver marks biggest drop in 46 years, with ‘every man and his dog rushing for the exit’
Trump Picks “Regime-Change” Advocate as New Fed Boss, but he’s a Longtime Fedhead.
Inflation Factors
Producer Price Index Jumps on Disconcerting Spike in Services
Turf Wars and Tariff Wars
Trump Targets Canadian Aircraft With Decertification Threat, 50% Tariff Warning
Wars and Rumors of War
U.S. Military Tells Key Middle East Ally to Prepare for “Regime-Change” Attack on Iran this weekend
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Putin ignores ceasefire announced by Trump as Russia pounds Ukraine’s freezing cities
Political Pandemonium
Final Jeffrey Epstein Files Cache Released by DOJ
Trump mentioned ‘hundreds of times’ in Released Epstein Files
Epstein Files Include CLAIM that Donald Trump and Jeffrey Epstein Raped 13-Year-Old Girl Together. (Case was Voluntarily Dismissed without Prejudice)
Journalist Don Lemon has been arrested after he covered a Minnesota church protest
Trump, two sons, Trump Org sue IRS, Treasury for $10 billion over tax records leak
Partial government shutdown on track for Saturday after Senate vote stalled
DOJ has opened a federal civil rights probe into the death of Alex Pretti, deputy AG says
Climate Calamity
Off-the-Beat or Just Plain Off-Beat News
Doomer Humor
A lot of leveraged players got liquidated today. The big banks, except Deutche Bank, have spent the last month making insane price predictions for gold and silver. Sucking in lots of new money.
Then on a Friday, at the close of the month, on options expiration day, on a day that LME delays their opening, CME has ‘technical’ issues that prevent circuit breakers from triggering, and the FED appt provides some cover, they tank the price. This was a totally coordinated effort and nobody will convince me it hasn’t been planned for weeks.
HSBC was likely the beneficiary they bailed out of 6 billion dollars of short positions. And they crushed the hopes and dreams of millions of new retail metal buyers who will never touch the stuff again. Which is what they want. They can’t have retail competition with the MIC for metal.
And, despite the spread between Shanghai and NY reaching a mind blowing $76 at one point, the banksters let it be known that they can do whatever they want. The physical market won’t stop them. The regulators won’t stop them. Retail buying won’t stop them.
Silver needed to close above $88 to stay inside the upsloping channel. They allowed it to get back to that briefly, and then in the last hour pushed it below, almost as if to say FU. We control the price.
And I don’t think it’s over. I hope I’m wrong. I do think the miners will eventually recover and I loaded up late this afternoon on gold and copper miners that were just too stupid cheap to pass up.
I lost 8% NAV today, between gold, silver and miners. But I know people who lost 50% and a couple who basically got liquidated. All because of leverage. So stupid.
Still, we are up 12% for the year even after the bloodbath. And if the sell off continues Monday I will close out all of my mining positions but two, book the profits, pay the tax, and say thank you very much.
Have a great weekend. We are looking at 6 inches of snow and windchill below zero. In coastal South Carolina. Crazy.