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Thursday Conversation - David Jensen

Information about palladium that you need to hear.

37

There's been a lot of talk recently about palladium and, frankly, a lot of misinformation and guesswork from generalists and traders. What's going on in palladium is NOT a speculative bubble...far from it...and David Jensen joins us today to explain why.

David Jensen is a precious metals market analyst and the CEO of a private mining company. I've known David for several years and, back in 2017, he was the first person to alert us regarding the potential Bank-breaking qualities of the palladium market.

As you likely know by now, those Bank-breaking qualities have only been exacerbated in recent months. The global palladium market is experiencing a serious physical supply squeeze. How can we state this with certainty? Check the exorbitant lease rates for physical palladium in London as well as the backwardation of the futures board in New York.

Some have stated that the rise in palladium is simply a "speculative bubble". If that was the case, we'd be seeing a sharp rise in open interest and trading volume on Comex in New York. However, Comex palladium open interest was 29,000 contracts last November when price was $1100 and it remains near 29,000 contracts today with price near $1500. While average daily volume has grown to near 10,000 contracts, that's not an unprecedented level, either. See below:

What IS unprecedented is the threat that palladium now poses to The Banks' fractional reserve and digital derivative pricing scheme. The LBMA/Comex palladium market relies upon the same structure of leases, promissory notes, unallocated accounts and forward contracts that serve as the foundation of the LBMA/Comex gold and silver markets. Thus, should the LBMA/Comex palladium market be exposed for the fraud and sham that it is, could recognition of the scam in the LBMA/Comex precious metals markets be far behind?

We've written about this on several occasions, most recently here: https://www.sprottmoney.com/Blog/mr-palladium-punches-back-craig-hemke-0...

So, please take some time to give this podcast a thorough listen. The point is NOT to convince you to buy some palladium. However, what you DO need to consider are the potential long-term implications of a palladium market force majeure and collapse...and what this could mean for the identically-structured LBMA/Comex gold and silver markets.

TF

  37 Comments

Maestro
Feb 28, 2019 - 12:55pm

Basell III.....peace of mind.

several events have accelerated and confirmed gold’s role in banking viability and its strategic place in portfolio design. Canada’s top financial regulator, the Office of the Superintendent of Financial Institutions (OSFI), confirmed early last year that 2019 will be the first full calendar year that the Basel III rules will be enforced. Gold held in an institution’s vault(s), or held in trust (i.e., monetary gold) now qualifies as “a 0% risk weighting for risk-based capital purposes.” The Bank for International Settlements has posted these reforms on its website. Canadian banks are now free to add monetary gold to their increased reserve positions, and to treat it in the same as they would cash or AAA-rated government bonds. On January 31 of this year, the World Gold Council revealed that global central banks, in response to the Basel III rule changes and growing political and market uncertainty, added 651 metric tonnes of gold to their reserves in 2018. This is a 50-year record, and represents a 74% year-over-year increase in net purchases. It is also probable that current institutional demand is reflective of the harsh reality facing the gold mining sector. The trifecta of declining resources, compounding regulatory and environmental burdens increasing the time to production, and few to no new major discoveries will lead to supply shortages. The explosive growth in monetary demand for gold and the dramatic decline in gold production will certainly buoy the price well into the future – independent of broader market conditions. However, when the next financial crisis arrives and capital is forced to seek an alternative to more traditional assets for banking viability and liquidity, both institutional and retail demand will seek this asset class for the same reasons that they have for millennia – peace of mind.

matt_
Feb 28, 2019 - 1:59pm

Purple People

Micheal Cohen showed up to testify in front of congress with his lawyer. Anyone notice that his lawyer was wearing a ridiculous purple scarf? These people are insane.

streber
Feb 28, 2019 - 3:07pm

BBG headline,

"Surge in municipal bonds issued in 2018 still not enough to meet demand in 2019."

paraphrasing

lakedweller2matt_
Feb 28, 2019 - 3:11pm

Insane People

Where did Cohen work for 10 years as a personal attorney and what floor of Trump Tower was his office. Not insanity but criminality.

goldcom
Feb 28, 2019 - 3:18pm

Great podcast

Few if any analysts have the depth of knowledge about what is actually happening with the palladium markets right now.

So why not buy the PALL ETF and ride it here for a while? Though I do hate ETF's what could go wrong?

I agree with David that before the bottleneck of production is cleared there is much that needs to happen and a much higher price is required to satisfy demand or trash the auto market which I don't think they want to but the tapped out consumer loaded with debt will put some pressure on auto sales going forward but that won't be enough relief for palladium and switching to platinum if it is viable as a replacement will take time.

RickshawETF
Feb 28, 2019 - 4:01pm

Kirkland Lake Watch

KL came through again -- closing at a new all-time high!

In the words of Alicia Keys:

"This stock is on fy-er!"

Ronnie 666
Feb 28, 2019 - 4:47pm

Great podcast

Thank you one of the great A to A’s.

Boggs
Feb 28, 2019 - 6:20pm

Cohen

Liberals/democrats/progressives/socialists are rarely held accountable, Cohen is now in the club. They are like the rays of the sun shining on a turd , they remain untainted and pure. When anyone else touches a turd there is an unending chorus of: “look! look!, that guys got shit on his fingers”.

canary
Feb 28, 2019 - 7:02pm

I read the article about bonds selloff on ZH...

https://www.zerohedge.com/news/2019-02-28/what-behind-fixed-income-sello...

Too much of a technical language for my. Can somebody explain me the last sentence:

"Therefore, fund a cheap “Gold” put by selling an expensive “Red” put. In the new regime, you will like the extra duration of Golds."

canary
Feb 28, 2019 - 7:13pm

Not sure if my interpretaion of that sentence is correct

Buy cheap gold, sell expensive ???...Keep gold for longer in 2019.

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Key Economic Events Week of 11/11

11/12 Three Fed Goon speeches
11/13 8:30 ET CPI
11/13 11:00 ET CGP on Capitol Hill
11/14 8:30 ET PPI
11/14 Four Fed Goon speeches
11/14 10:00 ET CGP on Capitol Hill
11/15 8:30 ET Retail Sales
11/15 8:30 ET Empire State Manu Index
11/15 9:15 ET Cap Ute and Ind Prod
11/15 10:00 ET Business Inventories

Key Economic Events Week of 11/4

11/4 10:00 ET Factory Orders
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Key Economic Events Week of 10/21

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Key Economic Events Week of 9/16

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9/19 8:30 ET Philly Fed
9/19 10:00 ET Existing Home Sales

Key Economic Events Week of 9/9

9/10 10:00 ET Job openings
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