What Silver Market Needs To Begin Next Leg Higher (Uncut) 01-27-2025
What Silver Market Needs To Begin Next Leg Higher
There’s the whole explanation of what the hell’s going on right now. The other reason I’m smiling is because Silver is supposed to be down when stocks are down, right? But it’s not so Silver is acting of its own accord right now as we’re looking at the market and that tells me if gold turns around Silver kicks a lot higher Welcome to the morning markets and metals with Vince Lancey For each morning Vince brings you the financial and precious metals news to get you ready for your day. And now here’s Vince Good morning, everyone.
I’m Vince Lancey And this is the gold fix market rundown. The title tentatively is is Microstrategy a Ponzi scheme we will be discussing that as well as Gold’s path is getting more certain at least for the next 72 hours Possibly for the next 72 days Okay Plenty to talk about let’s start with the markets themselves Ten-year yields are down nine almost ten. The dollar is down 34 The S&P 500 is 59 68 down 130 The VIX is 2088 up six percentage points gold is Six percentage points in volatility means the index is up 41% Gold is 2763 down seven and change almost on its lows I’m laughing Silver is 3053 up two cents Copper is 426 down almost two cents WTI is down 50 at 7505 natural gas is 367 down 19 Bitcoin is 99 596 97 95 94 whatever a down 2,900 palladium 973 down 7 and change Platinum 946 down about a half a buck gold silver ratio stable at 90 Soybeans down 7 at 1044 corn down almost 5 at 473 90 and wheat is 549 down 4. Okay So why so animated the markets today? are discounting Everyone’s greatest fear which coincidentally This is a little bit extemporaneous.
So bear with me, which is coincidentally Everything that heart that’s been saying for the last month or two, right? I’m a fanboy of heart net this month. Here we go Bonds are up. That’s a flight to safety.
This is not a war thing All right, like to safety the dollar is down because the market is saying holy shit If we were worried about the Fed not easing before we’re not worried about it Now stocks are down because of various reasons the catalyst or trigger is the China AI Platform that has been released into the West Another propaganda thing, but it’s a good one Which is basically saying we did this with your throwaway chips while you guys are spending billions on bullshit that you don’t need or or the flip side is this is where I am is They’re spending money because it’s it’s cool and the product whatever I’ll talk about some other time So stocks are down because of that that’s your catalyst the second thing is Pal may hike right? So stocks have been soft to begin with the third thing is The data isn’t giving them last week’s data was bullish for stocks yet Insiders sold that we covered this in our in our weekly report over the weekend Anyway, all this is weighing on stocks and you know Nvidia’s Called down a billion micro strategies called down. I’m laughing. I’m not sure at them, but you’ll see where I’m coming in on this.
So We’re we’re on we’re on Hartnett’s timeline and that is Stocks or a sale stocks are overvalued for whatever reason stocks are going to drop and when stocks drop the dollar will weaken in anticipation of The Fed having to ease. Oh, I remember the other one was the other the other driver was American exceptional exceptionalism Trump under Trump. No, I’m not saying it won’t be exceptional but I’m saying the concept of Higher stocks and a higher dollar and tires and everyone else in the world suffering and us not feeling an effect of it No, it’s not gonna happen.
Okay, maybe Columbia we can do without their coffee. We’ll just buy more tea from India but We’ve gone into this with three four posts over the last week that you know Trump can’t get tariffs as his leading edge. It’s got to be his you know It’s got to be his gun in his pocket and plan B is really plan a and plan B is We need oil cheaper, which he talked about all week last week And we need a weaker dollar and he’s already fired shots across the bow of pal ship.
So This weakens a dollar and it weakened stocks period end of story Okay, so there’s the whole explanation of what the hell’s going on right now. The other reason I’m smiling is because Silver is supposed to be down when stocks are down, right? But it’s not so silver is acting of its own accord right now as we’re looking at the market and That tells me if gold turns around Silver kicks a lot higher. It also tells me in general looking at the metals complex that gold and silver are Muted by stock selling off, but they’re also attracting some inflows now.
We’ll see how the day goes But frankly, I think this is just more and more of this stuff that heart that’s been saying, you know Sell some oil buy some gold. He was right about that. You know, it’s time to buy bonds.
He was right I think people were listening to him. All right, so moving on. That’s the long version You now know why I think things are going on.
There’s the front page gold. Something has changed gold’s path gets more certain We’re going to discuss that that’s a weekly report. It’s a very large report.
We used to do in the beginning We’re doing it again because well, frankly, we have to get it all in one place somehow China has taken gold public. That’s a riff. That’s a report on something that we’ve been talking about for two years China is taking gold public.
China is taking gold public. China has taken gold public. So There you go.
They’re encouraging their citizens to own gold even more there’s some China news to that effect Spring Festival begun in China and for the Year of the Snake and People can actually take delivery of gold through their phone apps It’s like Amazon gold now. Okay, so let’s get to the discussion is micro strategy a Ponzi scheme Micro strategy owns a small software business, but primarily focuses on buying Bitcoin in effect It operates as an investment company holding Bitcoin The stock trades at a significant premium to the value of its Bitcoin holdings The strategy that they run involves raising funds from new investors at a premium and using those proceeds To buy more Bitcoin the setup results in dilution for new investors But is a creative for existing ones MSTRs promoters have branded the return created for existing investors through this model as the quote Bitcoin yield the question that is Is micro strategy a Ponzi scheme? This is not a comment on Bitcoin But is micro strategy a Ponzi scheme now, that’s a question that we asked as we began reading the Greenlight capital founder David Einhorn’s letter to shareholders and well We’re gonna find out what his conclusion is and you can go from there Here’s Greenlight capital’s David Einhorn in a letter to his investors The idea is to raise money from new investors at a premium and use the proceeds to buy more Bitcoin since the Bitcoin that MSTR buys Costs less than the Bitcoin implied value of MSTR stock The new investment is dilutive to investors, but a creative to existing investors I stopped reading right there when I read this and I went oh, it’s a Ponzi and then He goes on to actually say that Anyway that if it is correct is the definition of a Ponzi scheme while this seems crazy Paraphrasing The newsletter their shareholder letter while that is crazy while that seems crazy there is more leveraged single-stock ETFs such as those with tickers MSTU and MSTX aim to generate double the daily return of MSTR The key word is daily, but levered ETFs. This is again.
I’m staying with the Letter to shareholders Paraphrasing and quoting here and there but levered ETFs face a key drawback To achieve double the daily return the portfolio requires Daily adjustments that is correct by the way this typically involves buying at the end of days when the underlying stock rises and Selling when it falls while this strategy works if the stock moves consistently upward or downward Mixed up-and-down days a road returns due to the repeated buying high and selling low. All right In English if you have an asset that promises two times the performance of the asset next door to it well when the market closes on The highs they have to buy more because when they buy more they’ve they’ve rebalanced the portfolio That’s what they have to do. And if the market sells off they have to sell more so they’re constantly Buying the highs and selling the lows now, that’s no that’s not a scam These assets if you’re gonna trade them you’re gonna trade them for one day anything more than one day And what you’re doing is you’re creating a risk for you over the long run Your your returns will be incredibly diluted now.
There’s something else he unveils in here, which we’re very familiar with Now paraphrasing them again they do this By literally buying from OTC swap dealers, which is what I just mentioned and by constantly buying calls Which I did not mention Essentially the whole fund represents itself as a two-time leverage ETF fund But it is in reality a call option with negative gamma our phrasing so You represent a fund. Let’s go to the call option concept and you own MSTR and you say I want to have twice the performance of MSTR. So what do you do? Let’s say we’re not doing the whole swap end of day beginning of day thing you buy calls You buy a shit ton of calls, right? So you own leverage by buying calls So you buy MSTR and you buy calls on top of it.
You Texas hedge your portfolio Now it’s a leveraged play by using options The thing is the thing is this is like I’m an options person So this is this is near and dear to my heart. You are long Calls, but when the market drops you are still selling stock and when the market rallies you still need to buy stock you have for the option people out there you have Theta meaning every day your options are worth less and less Right, they just lose time over they lose money over time And you have negative gamma meaning instead of selling when the market rallies and booking profits You have to buy when the market rallies and when the market sells off Instead of having to be able to buy because the market dropped you have to sell. It’s a Disaster waiting to happen not an overnight disaster.
It’s a cancer, right? So Back to David again over time They are likely to bleed out their capital bleed is the key word there during the quarter the partnerships Greenland Capital established a new arbitrage position by shorting these ETFs Which we partially offset by owning MST are the position was a material winner in the quarter now a quick Comment about that statement. The partnership believes is running itself on the premise that Microstrategy operates like a Ponzi scheme not calling it a Ponzi scheme, but that’s how a Ponzi scheme operates but they’re not going to like any good risk manager, they’re not going to get in front of Something that’s on fire and simply just short it like all these tough guys are doing No, they’re gonna wait for an arbitrage and the MST are arbitrage is you actually literally buy MST are and You sell the two times Performer and so over time your P&L should be the same But the calls go to zero because they’re constantly buying calls. They don’t buy calls once anyway, I recognize this approach we actually I Had the acquaintance of sharing office space with David Hein or iron horn For about a year and a half and it was a brilliant guy He was very he was just starting so we were passing, you know, I was here and he was there he was on his way to a start a great great guy great analyst and When I knew him back then I knew his wife as well from from From journalism.
Okay, so the complete analysis on on David Ida horns work in addition to a deeper explanation as well as some really good insights that cover gold and other markets Are in a post for the founders, it’s we consider it a must read MST are Ponzi like scheme explained and more Okay, so that’s that. Oh and what did we do here for you? We did it for us, but we did it for you, too This chart is hard to see here, but you can see in the post. It’s it’s MST are right.
It’s Bitcoin It’s MST X and it’s MST you now the ones that have the bigger spikes Those are the two-time ETFs, right? the Is brown purple the purple one the purple one is MST are you can see that it goes up and the blue one? Which actually looks like it’s going nowhere That’s that’s Bitcoin. So you basically have Bitcoin you have MST are which is trading at a premium to Bitcoin And then you have these two time leverage ETFs, which are Their their cancer on your portfolio Okay, they’re worse than buying calls if you own them for more than a week That’s my opinion. All right.
So Next moving on to the other topic today gold’s path gets more certain last week We saw Trump’s campaign ambitions tariff and a stronger US dollar run into the reality of a weaker dollar with much cheaper oil That’s the plan as an easier path for him to launch his MAGA agenda Tariffs remain on the table for sure, especially for China That’s gonna happen and that is why China will keep buying gold But tariffs are not the first weapon of choice percent said as much in percent to MAGA a weak dollar powers a boom Quoting Scott percent in January of 24 before he was nominated We find it unlikely that across-the-board tariffs as currently reported by the media would be enacted at the same time As he Trump moves to fix the immigration status The tariff gun will always be loaded and on the table, but rarely discharged Of course strategic and national security’s issue around China will remain in combination Western players last week finally got a clear signal that Trump was going to back off on tariffs for now Columbia is a different story It’s the universal tariff we’re talking about while pursuing cheap energy and Simultaneously leaning on Powell for lower rates We explained this in four different posts and the reason we were able to put those posts out So could lose because it was in our was an arrow in our quiver waiting for this to happen And our position being of all gold was part of that. Okay in some Western buying stepped up gold Collectively after collectively believing the US dollar path will be lower as was described in those stories last week Yeah, yeah. Yeah.
All right. So there’s our weekly report there’s a lot in there, but we go into that in a little bit more detail, but I think I think the The proof right the proof in the pudding the chart proof is in the title, right? so that is a picture you’re looking at a picture of The chart is a picture of Gold and the dollar gold is the gold line. The dollar is the red line and they’re moving in tandem This is about for about Since the election since January 1st, we’ll say They’re moving in tandem.
So as the dollar is going up gold is going up as the dollar is going down gold’s going down So they’re kind of moving in tandem, which is not usual. Usually they move opposite But now they’re moving opposite as of last week as of two weeks ago Accelerating last week because as the dollar weakens gold is going up because now we’re back to the good old-fashioned dollar gold correlation and that happens Nowadays that happens when we think the Fed is going to ease or in this case. We think Trump’s Policy will be to hope for a weaker dollar now If you’re asking yourself Well, how will pal screw this up that’s a fair question to ask so let’s read on that and I’ll give you Pals, not the only part of the weaker dollar right expect similar behavior meaning a strong gold market until the FOMC on Wednesday Then if pal does not push back on Trump or the stock market Typo precludes his desire to push back expect that correlation to the upside Increase meaning this acceleration here Okay.
So today the dollar is weaker the folds down. It’s noise. You don’t care about that today Here’s the other thing I want to add in that I didn’t mention but I should mention now If pal doesn’t ease you’re gonna see gold if pal talks tough or hawkish Gold’s gonna pull back and the dollar is gonna strengthen again, and that’s fine.
But there are other ways to weaken the dollar Outside of the Fed and you know Trump will do that anyway That’s those are the two stories. Okay news analysis a gold’s path gets more certain China news Bring festival buying and gold has begun. We mentioned that heartnet part to the ten biggest themes for the next five years.
That’s We feel strongly. That’s that’s a piece to be read for investors not for traders per se And if you’re a free subscriber We have like a seven minute intro to it Explaining why that you can hear It’s a little voice note just giving you an idea of why we think it’s support Heartnet sideline cash next up might be gold and bonds. Well, yeah, it’s Going into bonds.
He’s saying that there’s a lot of cash on the sidelines and Historically that goes into stocks He’s saying that a little bit less may go into stocks Then we believe so watch we can do is the easy way the hard way. That’s a write-up by Robbo on On Trump’s tariff behavior and then we have an editorial and it’s a lot a lot of there’s a video of Trump in there talking before the WF and and we Call it horse trading. So that’s what he’s doing.
It’s very dangerous when Trump horse trade Market news a Chinese artificial intelligence company has Silicon Valley Marveling at how its programmers nearly matched American rivals despite using inferior chips. Okay, that’s the Wall Street Journal Marveling no panicking. Okay, this is this, you know, this is a my goodness No, people are using this product in The little world that I navigate and they’re very smart people and they’re saying yeah, this is better it’s better now from What it’s sharing is better, but ask it something about China and I’m sure it’ll you know Come and arrest you or blow you up or something like that.
Anyway Keeping in mind not anti China. I’m just saying that you know, every government has their own thing all right, the other story that I think is important is because America’s biggest gambling companies are making a killing on multi-leg bets called parlays Personal comment on parlays my first foray into trading and gambling was a parlay bet my uncle Tony literally that was his name uncle Tony at the cello May he rest in peace Took me to the local taxi stand which had a bookie in the back behind a curtain and I made my first bet on Ohio State and then I bet the over because I think they’re gonna score a lot of points uncle Tony and We won money and he bought me a chocolate egg cream, but that’s that’s the Bronx, right? So I had family and lived in the Bronx for some time data on deck FOMC. Oh the reason that was important of it in my little story is because we’re a nation of gamblers now This is not good for us.
We have a post on that as well. It’s like, you know Gambling is a tax on poor people data on deck big week FOMC GDP PCE. We’ve got You can breathe until Wednesday then it’s FOMC on Wednesday GDP on Thursday and PCE on Friday big week and Whatever pal says on Wednesday the stock market current moves notwithstanding Probably because he knows he’s gonna come out Thursday and Friday just saying Tomorrow we break down the world Gold councils 2025 gold report we have that Luckily and we’re gonna share that and then we have a little bit more at bottom for everyone and checking back with the markets Oh, there’s the four stocks there’s MicroStrategy at one o’clock MST you at 11 o’clock MST X lower left-hand corner and Bitcoin low right-hand corner.
Let’s take a look at gold. I’ll give you some levels there To think about well, here’s the most important level. I Had an alert on the dollar at 107 that went off This morning and that’s what we’re trading and that’s an important level for me.
I believe I’m pretty sure Michael Oliver has the level right around there. Maybe a little bit higher and that’s a sign that the dollar is going to weaken and Historically a weaker dollar is bullish for stocks But what if the dollar is weakening because it needs to get weaker to stop the stocks from dropping? So the dollar is reacting To stocks or vice versa who knows? But there you go. That’s that’s the that’s the level that mattered to me In fact, if you’re a technician, you’re like, oh, here’s a shoulder.
This could be a head, you know We could go down to here and then bounce back up and anyway It’s becoming an apparent formation. Although I don’t know what the formation is Alright, so there’s gold Let me put up the they put up the moving average to say you can get an idea of how far How far we’ve come all right, there’s the gold daily There is a hundred a moving average China buys a China buys a China buys it and the world says okay We’ll buy it too. And now America is buying it.
That’s what’s going on silver by the way If it wasn’t Fed week, I’d say gold’s gonna have a new all-time high Definitely but How about this? I think gold’s gonna have a new all-time high very soon. The question is what will happen then if I’m wrong Then we won’t get above this So here’s the trade. You should be short gold right now.
And if it gets above this high Right there you reverse you cover your shorts and you buy the crap out of it and you see how it acts that all-time highs So that’s the trade silver They love to shit on silver when they’re buying gold, but it’s getting harder to keep it down They sort of hammer there on the daily. This is nice. So I think That they’re that the buying between 28.
This is this is like where the UBS level was to buy. I think the buying between 28 Between 27 and 20 has moved up to between 20 and 29 and the physical situation is not Helping shorts much at all Okay, remember by the way with regards to tariffs. You don’t tariff the silver you tariff the nation and So silver could be a carve-out What have you but the risk is there and the risk will be there I believe the risk has gone from acute to chronic and it will be there and anytime there’s a news item You’ll have a reaction to it one way or the other and so therefore little by little if the EFP Reflects the concerns about tariffs for the next say 12 months Then little by little the rest of the world silver and gold will make its way into the COMEX Make its way into GLD will make its way into SLV.
The u.s. Is buying gold and silver. It’s not just Americans it’s America so London has two straws in its milkshake. What is going to China pulling all the gold out stops in Switzerland Goes to China.
The other is just going right across the transatlantic straw right into the u.s. It’s happening. It’s happening now Europe is just getting looted. All right enough with that Have a great day Let’s see what happens.
Well, thanks for watching this morning’s markets and metals with Vince Lancey. Sure. Hope you enjoyed the show Thanks for being here.
Although before we wrap up there was one thing I had to let you know and here is the Silver chopper Ben Bernanke Can you even see his his tie flying in the wind while he throws out $100 bills? We’re gonna get ready to throw that money out there. I see that because that’s what it looks like Sorry, yeah, look at the size of the bald silvery head Yeah, it’s enormous back propeller spin to how many ounces just out? That’s 26 ounces of three nines fine silver homie as you can see here some of the key features with your silver chopper Ben figurine nearly get the control panel. Look there’s a whole dashboard for Ben to fly He wants to fly onto your desk Look at the precision.
I see that He’s got two sets of spinnable propellers. This is great. Dude.
You could fly that thing. Whoa, I Could look how happy is I think he’s actually gonna get out there and throw the hundred dollar bills There’ll be thousand dollar bills by then. I got this.
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