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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

lakedweller2 matt_
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.

mrcic Maestro
Feb 28, 2019 - 8:06pm

Dear Maestro

The irony of what you posted is amazing. Canada CB sold all their gold!!! Brilliantly timed by the CB. Now everyone is buying except them.

https://www.bankofcanada.ca/rates/related/international-reserves/

They've also made it illegal to deliver it via mail. Gotta love living here.

scoremore
Feb 28, 2019 - 8:47pm

Thanks David & Craig!

Great interview!

Ozymandias
Feb 28, 2019 - 9:02pm

RE: Canary's ZH article above

I read this article and realize how little I know. If it had been written in ancient Greek I would probably have understood it as well. Something I can get a little closer to understanding is the new Basel rules allowing gold reserves to be carried on the books at 100%. Does this mean the banks reserves will fluctuate with the "price" of gold? ...as determined by what or who? ...and won't the banks want the price of gold to rise with a resulting increase in their reserves? Makes my head hurt.

scoremore
Feb 28, 2019 - 9:23pm
matt_
Feb 28, 2019 - 9:49pm
AngryCitizen Ozymandias
Feb 28, 2019 - 10:11pm

Bank Reserves To Fluctuate With Gold?

Ozzy,

For a guy who says he has a tough time understanding, you sure know how to see thru the brinks wall and size up the situation. One would think that AG was about to rise somewhat dramatically.

Just sayin'

Montross515
Feb 28, 2019 - 10:31pm

PALL

HAVING TROUBLE UNDERSTANDING THE COMMENT FROM CRAIG ABOUT NOT RECOMMENDING ANYONE To Buy PALLADIUM. DAVID JENSEN GIVES AN ARGUMENT FOR WHY ANY RATIONAL INVESTOR WOULD LOAD UP ON PALLADIUM,AND CRAIG SAYS HE IS NOT RECOMMENDING IT?..

EVEN IF YOU ONLY LOVE SILVER, THIS IS THE LEVERAGE TO USE AGAINST THE BANKS. LETS ALL GO FOR THE PALL ( an ETF) and crush the banking cartel.

Does Craig feel they deserve sone extra time to get their act together?

cyclemadman
Feb 28, 2019 - 11:04pm

PALL Comment

I think Palladium doesn't have thousands of years of history as a monetary metal like gold and silver have. Yes, it is rare, but it's main use is as a commodity in catalytic converters.

OOOBuck
Feb 28, 2019 - 11:33pm

Palladium has no history as a store of wealth

As I understand it, primary use for palladium is in auto catalytic converters. I've read where 90% of palladium used in these mechanisms is recoverable (on average, about 3 grams). Apparently, it's also cheaper to suck it out of these old converters and re-refine it than it is to mine it. Add to that an increasing interest in electric cars (which do not have catalytic converters) and we could be looking at the current deficit in the market as being fairly short lived. In the meantime however, it appears the sky's the limit.

Long term, gold and silver continue as a better store of wealth.

matt_
Mar 1, 2019 - 12:30am

PGM markets

Platinum demand in 2018:

  • 39% autocatalyst
  • 30% jewellrey
  • 30% industrial
  • 1% investment

Palladium demand in 2018:

  • 86% autocatalyst
  • 2% jewellrey
  • 18% industrial
  • -6% investment

There has been a negative investment demand for palladium for several years due to "profit taking from ETF holders". In other words, ETF holdings have been raided to try and fill the supply deficit. In 2014, palladium ETFs held almost 3 million ounces. At the end of 2018, ETFs held 730 thousand ounces of palladium. The ETF well has almost run dry.

Oddly, it was reported that a lot of "profit taking" came from palladium ETF investors in South Africa. It was attributed to the favorable exchange rate between the South African Rand and the U.S. Dollar. Isn't it also an odd coincidence that South Africa holds huge palladium mining reserves? There wouldn't be some sort of connection, would there be?

Source:

February 2019 PGM Market Report

matt_
Mar 1, 2019 - 12:42am

10 year monthly platinum chart

The platinum price is bumping up against this channel right now:

I hope David Jensen is correct in predicting platinum will follow palladium higher, but I wouldn't mind if prices stayed low for a year or two so I can buy more.

hindsight101
Mar 1, 2019 - 1:54am

John Rubino - the bullish scenario

Authored by John Rubino via DollarCollapse.com,

https://www.zerohedge.com/news/2019-02-28/remember-fed-hasnt-actually-do...

The PM bull case, the last paragraph is the point....

"A simple way to gauge our place on this path is the price of gold. When Act Two (gradually falling interest rates, modest QE) is implemented, gold should bounce back up to around $2,000/oz. Once Act Three (massive, permanent QE, NIRP, bailouts for bankrupt states and cities) is in full swing, gold should pass $5,000 on its way to infinity."

Currently we have slightly rising long term interest rates, still QT and falling gold and silver.....breaking down gold and silver....One needs patience and deep pockets.

canary
Mar 1, 2019 - 2:16am

Last look at the charts...

When I wake up and see gold still above $1300...it will be a miracle.

Good night.

J Siefert
Mar 1, 2019 - 4:42am

Great talk with David Jenson, thanks.

This YouTube from the Nefarium about Catholics and other elites 'dilly dallying' with children may interest some of you.

NEWS AND VIEWS FROM THE NEFARIUM FEB 28 2019

PS Regarding palladium what is not being mentioned much is that palladium is an inferior metal to platinum. Both are cabalist metals so if the price of palladium rises significantly one can expect that eventually some vehicle manufacturers will make design changes and move to platinum...with resultant price changes to that metal.

J Siefert canary
Mar 1, 2019 - 4:44am

@ Canary

"When I wake up and see gold still above $1300...it will be a miracle."

Better pinch yourself first, you may just be dreaming. LOL


Mar 1, 2019 - 8:44am

A deliberate effort being made to pump yields higher?

How many times have you heard me state that The Fed CANNOT hike the ff rate again if it means that doing so would invert the yield curve?

Well, check this curious recent action in the bond market. Yields spike every day at the same time regardless of the economic news...which was terrible again today.

lakedweller2
Mar 1, 2019 - 9:04am

Yields

It is just revised criminal alternatives to inject methods of transfer of wealth and preclude an equal playing field and free markets. The Greatest Thefts of all time continue with the blessing of politicians and regulators...just another day with another face.

Angry Chef
Mar 1, 2019 - 9:08am

J. Siefert

That podcast by Joseph Farrell brings up some very good points. Just exactly how are the dots connected ? And when one considers the EO President Trump signed on December 21, 2017 allowing for asset forfeiture of anyones assets that is convicted of child sex trafficking and human sex trafficking. And then during his State of the Union address where he mentions the number of children that have been rescued under his watch from human sex trafficking. It does make one wonder why Trump has been so vehemently attacked during his Presidency. From both sides of the aisle and almost the entire MSM. In my lifetime I've never witnessed a President that has been so viciously and consistently attacked. There are many things the Trump Administration have done I don't agree with. But if his Administration gets to the bottom of this. I'll consider him to be one of if not the greatest President of all time.

canary
Mar 1, 2019 - 9:15am

Miracle...

Gold still above $1300....Stronger USD and weaker bonds make me worry.

Edit...and the jump in S&P Futures....Who is pumping money to the markets now?...Must be Chinas's turn.


Mar 1, 2019 - 9:21am

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