By Cyrille Jubert
In my June article, “The Great Reset,” I announced that the resistance at $18.50-$19 would be attacked around July 10th. The $18.50 level was effectively broken on July 8th and the $19 level was broken on Monday July 13th.
The following Monday, July 20, we saw a bullish rush causing silver prices to rise by 36% in 8 days. An extremely rare phenomenon due to a massive redemption of short positions from traders taken against the grain.
The big pullback in March took the prices down $7 from the resistance of $19. When this resistance was broken upwards, prices moved up exactly $7 to the resistance of $26.
Note that the final rise took place when the markets opened in Asia and the consolidation was done in flash before 9 a.m and the markets opened in Europe.
If we look at the monthly chart, and compare the crossing of this same resistance of $19 in September 2010, it then took two and a half months to reach the level of $26, which then had no resistance. In 2020, it only took 8 days to reach this level.
In 2010, there was a short-squeeze on the silver market exactly like today. The consolidations after bullish peaks lasted one or two weeks, so they were non-existent if you look at the monthly chart. After crossing the resistance at $18.50, silver prices rose directly to $31.
On this July 31st 2020, I have the impression in UT 4H, that the consolidation could already be completed. The support for the upside seems to be the MM50 in UT 4H. Silver prices crossed the small resistance that connects the two peaks of July 28 and 29.
This daily, weekly and monthly close should end at the day’s high, to keep the market resolutely bullish.
Silver is expected to break through $26 resistance in mid August, before bumping into resistance at $27.50 and hanging off a bit.
The level of $30 could be reached at the end of September, a deadline each year very important for the silver market.
After passing the $21 level of the “Fibonacci sequence“, the next target is $34. July 18, 2019, in the article “Where is going the silver’s price?” I had announced that silver would reach this level around November 2020. It is possible today to think that silver could reach it more quickly, for all the reasons explained below :
In recent months, to avoid the risk of the epidemic spreading, silver mines have been closed for two months in Mexico, the world’s largest producer. Copper mines have also been closed across Latin America, and strikes have prolonged this situation. This severely destabilized all silver mining production in the second quarter of 2020 and hence the supply of markets.
The closure of borders in the United States, as in England, blocked imports and exports of precious metals in March and April. This blew up the usual “three-cards trick” between COMEX, LBMA and ETFs. The Bullion Banks, who served as cronies in an attempt to control precious metal prices, found themselves in default on March 23 and lost astronomical sums. JPM seems to have been the only one to stand out during this March decline by sacrificing its usual partners, who remained in “short” position, thinking of a deeper decline.
In view of these delivery failures, the COMEX is considered bankrupt and the London Metal Exchange (LME) is currently in the restructuring phase. The goal is to transform an over-the-counter market, totally opaque and which seems to have been totally perverted by the shenanigans on derivatives of the 3 dominant banks (JP Morgan, HSBC and Deutsche Bank). It would seem that the leverage effects between physical metal and metal-paper could be greatly reduced in the short term, which would lead to a very sharp increase in physical prices in the months to come.
On Thursday July 16th 2020, the Sprott Physical Silver Trust registered with the US Securities and Exchange Commission (SEC) its intention to invest the sum of $1,500,000,000, i.e. 1.5 billion dollars in physical silver over the next 24 months.
At $21 an ounce, this would represent 71.4 million ounces, or 8.8% of the world’s silver mining production.
James Turk, a leading silver market specialist, on the announcement of the purchase of Sprott Physical Silver Trust, immediately shifted his short-term target from $22 per ounce to $30.
Craig Hemke interviewed Andrew Maguire, who said :
“We are facing supply restrictions and extremely long wait times for wholesale silver. We have refining delays that are several months. In fact, we have been told, they are so busy producing gold bullion at this point that they are pushing all silver processing even further.”
My own sources in the precious metals sector in Switzerland are more precise.
Swiss refiners will only be able to deliver 5 and 15 kilo silver bars in December 2020. Markets will have to wait 5 months! As for the 1 kilo silver bars, there will be no delivery before January 2021, in 6 months.
“Expected Prices for the Upcoming Silver Shortage.
To define what I mean by shortage of Money, I am not interested in the official level of world inventories or in ExCom, nor in the stories of market gurus. Only one thing interests me, the delivery time of silver to customers. When there is a delay in delivery times, I consider it to be a shortage.
1) Pre-shortage: Users wait 3-6 weeks for delivery. If applicable, prices will go up to $20-30
2) Shortage: Users wait 6 weeks to 4 months for delivery. So the prices will go up to $50
3) Super shortage: Users wait more than 4 months for delivery. Prices will start from $100 with no upward limit.
If that happens, and there is no shortage of gold, the price of silver will at least reach that of gold and my crystal ball tells me that silver will exceed that of gold by a lot. To establish these prices, I based myself on the structural deficit between producers and users, which is around 50 Million ounces each year (for more than 60 years), and I weighed the fact that private investors hold around 400 million ounces in the form of bullion or coins, which they will agree to sell at one level or another.
1) Pre-shortage: I think investors will agree to sell 50 million ounces for between $20 and $30.
2) Shortage: Investors will sell 200 million ounces at a price between $30 and $100.
3) Super shortage:The 150 million ounces left in this phase will be sold at really shocking prices.
These prices are very moderate, in my opinion, as they do not take into account “short sales”, derivatives and other financial products like ETFs that do not have real physical silver behind.”
On Tuesday July 28, Bloomberg published an article revealing that the US Mint at West Point will slow production of gold and silver coins for the next 12 or 18 months.
The US Mint is an independent agency of the United States government, which produces and distributes American coins. According to Wikipedia, the US Mint at West Point is called the “Fort Knox of Silver”.
The reason is, of course, to try to protect employees as much as possible from a possible future epidemic.
Anyway, since April 2020, the US Mint website had been offering the Silver Eagle coin for $64.50.
Some could see it as a subliminal message announcing the future price of silver…
On the same page of the US Mint, the one ounce gold coin, the Gold Eagle is at $2,475.
You will notice that for the US Mint, the Gold/Silver ratio should therefore drop very sharply towards 1:38.