print-icon
print-icon

Gold and Silver: There Are No Sellers Left

VBL's Photo
by VBL
Monday, Feb 28, 2022 - 14:00

Housekeeping: Anyone who signs up today gets a free premium week for a test drive. It just makes sense. If you get something out of it, support it. Thank you.


Market Rundown: It's like Lehman, with one Huge Exception-They Need Gold

Good Morning: Markets have reacted violently and decidedly to the Russian sanction escalation. Behavior is almost the same as in previous liquidity events like Lehman in 2008 and Covid in March 2020. The Venn diagram of why things are doing what they are doing is an intersection of these things:

  1. If an asset is backed by Lehman Russian money, you are unable to sell it
  2. If your asset is exposed to, or even perceived as exposed to Lehman Russian counterparty risk, that asset will drop in value
  3. If an asset is physical in nature and consumed, it will (EDIT: not) be sold cheaply to raise dollars, especially if it is Gold and Silver which will be punished by US Banks for US dollars
Russia has more gold than Dollars Now

ITS ALL  ABOUT COUNTERPARTY RISK NOW

In liquidity events like Lehman etc, Gold is initially sold as a source of dollars. Today it was not.

In liquidity events like Lehman where economies will crater, Silver is sold. Today it was not.

Therefore one must perceive this event as not a liquidity crisis that is short term in duration, but a harbinger of a much bigger chronic liquidity issue that will remain for a long time.

There are no more natural sellers. There are only buyers who buy or buyers who wait to buy

Russia will not be selling its gold globally now

Yes Gold will succumb to selling pressure again. But if you own it, know that Banks are no longer going to sell it to finance their need for dollars. Yes Silver will be sold again, but know that it is a losing trade to be short physical in a market like this.  If you want to read more read this excellent commentary on Zoltan's most recent research post. This is a market that has lost its trust of people.

More specifics are in these 3 reports put out on the topic in the last 48 hours:

Cheers

Podcast

If you are looking for an explanation of what is going on with Swift, Russia, and how this is already affecting Gold, and Bitcoin please listen.


Free Posts To Your Mailbox

 

 

 

Contributor posts published on Zero Hedge do not necessarily represent the views and opinions of Zero Hedge, and are not selected, edited or screened by Zero Hedge editors.
0