It is another good day....and strong start to 2020...for all metals, not just gold and silver, as the rallies in platinum and palladium continue. And you know what they say about rising tides and boats.
Let's just dive right in. Here's the board as I begin typing:
Obviously, the key standouts are platinum and palladium. Let's start with platinum as it's probably the most important for now. And why? Because platinum has been beaten down for so long that any signs of life are encouraging for the entire sector. Additionally and as we pointed out a few days ago, you can't help but notice the similarities between the charts of platinum and silver...both short and long term.
Let's watch to see where old "Sylvia" finishes the week. For the front-month Apr20 contract, it looks like $1030 or so is a level to watch.
And here's another look at the plat-silv overlay:
Turning to palladium...I've not seen an update from David Jensen yet on today's London lease rates but yesterday they hit 21%! This is undoubtedly a sign of physical stress and this physical stress is driving price. We've written about this on multiple occasions over the past two years with the theme being that perhaps...PERHAPS...palladium could be the "magic bullet" that draws attention to, and maybe even brings down, the entire over-levered, digital derivative pricing scheme.
Here's David Jensen's tweet update from yesterday:
ALERT NOTE:— David Jensen (@RealDavidJensen) January 16, 2020
London #Palladium lease rates big step move up today:
1 Mo. 21.67%
Supply is breaking.#fintwit #oott #market #stocks #finance #Crypto #BTC #gold #palladium #oil #wti #platinum #commodities
A word about those lease rates....That's an annualized rate and the leases are repayable in METAL. So, for the sake of simplicity, a 21% one-month lease rate is roughly 2% for the month. This means that if I have to borrow 1,000 ounces from you for my immediate delivery needs, I have to repay you 1,020 ounces a month from now. Can you see how this can spiral out of control at some point?
However, this does NOT mean that the system is breaking RIGHT NOW. This also does NOT mean that palladium is going straight up to $5000/oz. My sole interest here is the supply drain and run on physical. Can it eventually draw attention to the similarly structured LBMA/Comex precious metals markets. We'll see. For now, this is sure moving fast. UP over 6% today!
In economic news today, US housing starts inexplicable soared to their best levels in years...all while consumer confidence slipped and industrial production continues to collapse. NET/NET...no real impact on the PMs.
OK, I am supposed to be on vacation today so it's time to wrap up. Eric was also supposed to be on vacation today but we still took time to record the usual weekly wrap-up. Here's the link: https://soundcloud.com/sprottmoney/sprott-money-news-weekly-wrap-up-11720
Below is Eric's fish that he mentions in the call. Also below is my view as I recorded the call.
As I close, I've got CDG back to $1555, which places it down $6 on the week. CDS has been washed all the way back to $17.95 after a pre-Comex high of $18.18. That's disgusting. What a frigging scam these "markets" are. I think I'd better take the rest of the day off before my head explodes. Here's the board as I close:
Please be sure to check back later today for another special podcast with an exploration CEO. And then check back tomorrow sometime for a new thread with the weekly charts and CoTs. Have a great day!