an a-ha moment

market vibes

Morristown, September 1…)

One of the hallmarks of the 21st century is the brevity of memory that its inhabitants seem to share. Information comes in and goes out every day like a crowded subway car disembarking for a few hours in the public consciousness and emptying out that evening to make room for the next 24-hour cycle.

Covid, Ukraine, Trump, the stock market, the Federal Reserve. It’s just too much noise to keep in mind. So it gets flushed out to make way for tomorrow’s news and forgotten. But memory is a deep ocean and whatever goes into it, sinking ever down into the depths of knowledge, has a random buoyancy. In that context I had an a-ha moment on Friday while watching gold rally and silver careening atop $40.00… as literally everything else did nothing.

(Comex December gold Friday to Friday last week, hourly data.)

The next chart is Comex December gold in daily data. The extended range has been docile for five months. Why would gold suddenly rally above $3500.00 and silver rally above $40.00/ toz.? The financial background in Q2 and Q3 is constantly improving. Stocks are up. Inflation is down. Peace is elusive but everyone is working on it. Trump is planning a bonfire of growth in crypto, AI, and US manufacturing. Into this pro business environment the FOMC is likely to lower interest rates. And gold rallies…

Why? Because there is less of it for sale. Now unfolding in market vibes is a look at the iceberg beneath the surface of gold and silver. And a tutorial on the supply side, the paper mine as it were, which you cannot see rapidly melting.

first, a bit of history