Speaker 1This is the Commodity Culture Podcast, where we interview prominent investors, fund managers, analysts, and company CEOs to give you an edge when it comes to investing in the commodity space. Ed Steer, great to have you on Commodity Culture. We of course have to kick things off with recent price action in the silver market where October 14th, as we're recording this, silver's down over 6% in a day. What do you make of this situation? We were discussing this a little bit before we hit record today. Talk to us about, should we be worried here? Should we expect further downside ahead? What are your thoughts?
Speaker 2Well, there's no question about it. We'd love to, you know, the CPI number came up this morning at 830 and there's no question about it that the bullion banks were all lined up to. To kill everything that wanted to blow higher and to support everything that wanted to crash and burn. You know, this was just a bear raid to cover as many short positions as they possibly could. I noticed that the 10-year yield was up over 5.34% this morning, but they've beaten that back down to, so it's now down on the day. You know, the stock markets are down. You know, this was an ugly CPI number. They say 3.7% increase, but I think you can safely turn those numbers around and say it's more closer to 7.3% increase because you can't believe any of the numbers that are coming out of the BLS with any government these days because they're just going to massage these things to perfection to make things look as good as possible no matter how bad things are and things are pretty bad on the inflation front and aren't going to get it any better any time soon. So, you know, this bear raid this morning, I can tell you right now that if we have another bear raid on the PPI number on Thursday morning at 8.30 when that comes out, I'm going to be a buyer tomorrow because, you know, there's only so much blood out of the stone that these bullion banks can get. And as far as I'm concerned, once we get past the PPI number tomorrow, that's about all the news they've got to be able to beat the prices. So, you know, I'm not happy about it. Nobody's happy about it. But this is just part of the wash, rinse and spin cycle that the bullion banks have put us through since the crash back at the end of January when things almost got away from
Speaker 1them. Gold also down around 1.6%, so obviously not nearly as severe as silver. What are your thoughts there on gold, the price suppression in the gold space? Is it more concentrated in silver than in gold? And if so, why?
Speaker 2Well, if you look at the Commitment of Traders report, which I follow religiously, the problem is that there, as of last Friday, I can't add in whatever's happened since today because it won't be because it happened on a Wednesday. It won't be in this Friday's Commitment of Traders report. It'll be next week's. But as of last Friday's Commitment of Traders report, even though the gold price is down about $1,400 an ounce from the end of January, the short position held by the big eight bank commercial banks is larger now than it was the week before the crash. So they've piled in on the short side like you can't possibly believe. And even though it's been nine months now since the end of January, they still haven't been able to reduce their short position down to where it would normally be. So, you know, they're. Mega, mega short gold right now, even though the price, like I said, is down $1,400. And, you know, the silver situation is even more dire for them. They're not as bad off in silver as they are in gold from a Commitment of Traders report. But, you know, from a perspective of how much physical metal there is out in the world today of silver versus gold to cover a short position, I mean, we've been in this so-called silver deficit now for a long time. For the six plus years, and it still hasn't shown up in the price yet and there's appears to be still silver out there. So, you know, the thing the thing is that there's a very finite amount of silver. Now, there's silver sitting on the comics and there's silver sitting in the LBMA and there's silver sitting wherever. But the fact of the matter is that all that silver sitting there is it's already owned by somebody. It's not sitting on the street, unloved and unwanted as a name tag. And every one of those things and sooner or later, we're going to get to the bottom of the barrel. And the amount of silver being shipped out of the comics and out of the out of Shanghai has been extraordinary over the last two or three weeks. So the situation in gold in both the precious metals and platinum platinum is just as bad as silver is extraordinary. And if you want to bring up that first chart with the days to cover that I sent you, you can see it on your screen very, very easily. I'm just going to go. Go here and take a look at it myself. This is the way this chart is looked for the last twenty five years. If you look at the very left, this is every physically traded commodity on the comics. Okay. On the very left hand side is rough rice, which is almost nothing one day. And on the extreme right is silver. I mean, the green bar is the eight largest traders. And they're short one hundred and one hundred and three days of world silver production and the red Barbie side is the four largest traders. So the four largest traders hold the largest short position in silver. And the difference between the green bar and the red bar is that the short position held by the five through eight traders. And then you go to one step to the left and that's platinum. So you can see the platinum and palladium platinum and silver. You know, there's monstrous short positions on them. Of course, you go next to gold and then after that is palladium. So you can see and this has been the case for twenty five years. This chart hasn't changed at all. In twenty five years silver, except for one or two weeks when palladium was a star back in 2008, I think it was or 2000. I can't remember what year it was, but where palladium was number was in the number one spot for about a week or two weeks, silver has been nailed to the right hand side of that chart for the last quarter of a century. And with a monster short position on it, like there is in silver, platinum and palladium and gold, the four precious metals, which have always been in the top far right hand side of that chart, you know, with those kind of short positions on them, there's a good reason why prices haven't risen as much as they had. Well, people say, well, look, I mean, twenty five years ago, gold was what? Five hundred dollars an ounce of silver was a ten. So we've made enormous strides since. True enough. I'm not arguing that point, but to the fact that what would the price of silver, gold, platinum and palladium be if that short position was only half the size as it was or more downward things like cocoa and copper? There's twenty five days of world silver production held short by the eight largest traders. What would the price of silver, platinum, palladium and gold be if there was twenty five days worth of silver of world world production instead of the over one hundred and silver and the ninety plus in platinum? I mean, these short positions would have to be covered if you're going to cover seventy five days worth of silver production in the Comex futures market. I guarantee that silver would be some fantastic three digit number before before. They had finished covering all their short positions back in January when things really started to take off to the upside where things got parabolic. We were seeing a short covering rally of biblical proportions and rather than have the banks go under and lose just the sell off that we've seen since is the banks attempt to recover to cover the short positions they had to put back on in January. And so far, as of this date in gold in particular, it's been an absolute abject failure. So this chart tells you. Right now, how badly they are suppressing the precious metal prices by the number of days of world production that the eight largest traders are short. And there's if you look at silver and those precious metals, there are thousands of traders that are that are long and short that trade in the Comex futures market. And eight of them are short. I can't see. I think it's in gold. Eight traders are short. Sixty some percent of the total open interest in gold. In the Comex futures market, and they're all bullion banks, OK, in silver, it's about forty five percent. So you've got several thousand traders out there and eight of them are short, more than 50 percent of the gold market. So that's price management at its absolute worst. And this is a situation that's been ongoing for, you know, ever since we went off the gold standard back in nineteen seventy one.
Speaker 1Great summary of the situation there. Now, I've been a buyer of physical silver at these prices. I'm wondering what your thoughts here on this presenting a buying opportunity, because, of course, the equity is also getting absolutely hammered across both the gold and silver space. I know you're already loaded to the gills on on miners and metals, but perhaps for somebody out there who doesn't yet have much of a position. Do you think this is a good entry point or would you be waiting here cautiously for a further potential correction to add?
Speaker 2Personally, I'm going to wait until the PPI number comes out tomorrow, which is Thursday. and I'll see what happens. happens then. Remember, this price correction you're seeing is manufactured. It's not happening by free market forces. The commercial traders came in this morning, pulled their bid, spoofed, tried every dirty trick in the book to get the prices down where they are today. Of course, they were very successful and we'll see how they make out tomorrow. As far as I'm concerned, I'm going to be a buyer tomorrow no matter what happens.
Speaker 1But I'm going to be a buyer. I'm going to be a buyer. Now, this is a bit of an off the cuff question, but do you have you ever spoken to or know anybody who's spoken to any of these traders who are short anybody at these large bullions? Banks? Have you ever heard the perspective that they're coming from or do they stay completely out of out of the scene behind the curtains and never really show themselves?
Speaker 2Well, they never show themselves. You know, there's there's only one or two traders, like one or two traders at each at each bullion bank that sits at a computer at a quiet corner some places and manages the market. It may be managed, you know, off site from the company itself. So, you know, this price management scheme against, you know, not just gold, silver, platinum, platinum, platinum, platinum, platinum, but all commodities in general, OK, is to prevent people from rushing from the paper asset side of the street, whether it be the video or all of these highfalutin A.I. tech stocks that are, you know, selling for thousands of multiples of their earnings. They're trying to prevent people from rushing from the paper asset side of the street to the hard asset side of the street as you know, as inflation takes off. And so this this surreptitious intervention has been going on for, you know, since 1936. 75 in gold when they opened up the comex to paper trading in the futures market. So it's been so it's been 51 years for gold and even longer in silver. So, you know, it's all very surreptitious, surreptitious. But, you know, all you have to do is look at a chart like today and see that, you know, this is the this is the dark end of the of the big eight shorts driving the price lower so they can cover as many short positions as they can. But we've seen this wash, rinse and spin cycle many times over the last twenty five years, and I've been writing about it for twenty five years. So, you know, this is nothing new and it's always darkest before dawn. And as I can't remember who said that came up with a quote, but you should you know, if you should be a buyer when blood is running in the streets and I intend to be tomorrow.
Speaker 1Yeah, especially if you have a long term mindset and are thinking years, not in months or weeks. Now, you noted in a recent edition of your newsletter that, quote, the silver drain at the Comex continued on Friday of last week as over two point two million troy ounces were shipped out, making a total of around thirteen point four million ounces of silver shipped out of the Comex in six business days. How significant is this in the grand scheme of things? Because I know you follow a lot of data here. And what is it telling you about the current demand for physical silver?
Speaker 2You know, that's just popped up like you just pointed out, you know, since the beginning of the month. And there was big in out action, there was big in out activity in September as well. But if you go back to June, July and August, these are very quiet months. There certainly wasn't much going much going on at all. To give you an idea, in in August, there were eight point six six. There were nine million ounces of silver shipped in and only three point seven million ounces shipped out. And then fast forward to September, which is just much bigger than last year. So, you know, that's what we're seeing. Which is just over now, there were nineteen and a half million ounces shipped in and twenty three and a half million ounces shipped out. And then, of course, this month, the out activity has really taken off. And it's also you can see the Comex, you can see it in SLV, you can see it on the Shanghai Gold Exchange in the Shanghai Futures Exchange. And I report these numbers every day in my column. And for the last, what, since the beginning of October, the drain has become quite substantial. So what does it mean? Well, I mean, if you look at, you know, I mean, if you look at the gold exchange and the Shanghai futures exchange, and I report these numbers every day in my column, and for the last, what, since the beginning of October, the drain has become quite substantial. I don't know. I mean, it's impossible to tell because this demand is not being allowed to be reflected in its price, as you can see from what happened this morning when they came in and dropped the hammer on silver prices. So does it mean anything? It should. OK, we're at what, in the sixth, as we discussed before, and everybody knows we're in the sixth year of this supposed structural deficit in silver. And although it's been allowed to manifest itself in its price, we would be looking at three-digit silver price right now if it hadn't been for the fact that the powers that be stepped in at the end of January to make sure that Ted Butler's bonfire of the silver shorts didn't erupt in full, because that was in progress. If you give the market another 48 hours to operate into the first couple of days of February, we would have seen a three-digit silver price quite easily, and there would have been a lot of short-covering people that couldn't cover their short positions because the margin calls were too big. So they had to come in and kill it. And I just don't know how they're going to get themselves out of this mess.
Speaker 1Now, one big player who seems to have bought the dip when it comes to gold, at least, is China. Now, having bought for 23 consecutive months, September being the biggest monthly purchase in three years, it looks like they're taking advantage of these prices to accumulate, and they're going to take advantage of these prices to accumulate, it shocks me that anyone could have a bearish outlook on gold watching what China's doing right now. I'm wondering what your thoughts are and how China's role impacts the overall gold market, in your view.
Speaker 2Well, it's not just China that's buying this dip. All the central banks of the world have been buying this stuff for the last, what, five, six, seven, eight, nine, ten years. I mean, they're not stupid. They know what's happening. They know what's going down. So there's no question about it. When we see China's import numbers for October, October, I think they're going to be shocking, because since the central banks of the world are buying this stuff hand over fist, and China's buying this stuff hand over fist, that's some indication that if they're buying it like that, we should be buying it, too. And like I said, I'm going to be a buyer tomorrow. But China's been buying gold for 25 years now, back since the early 2000s, I remember, when the Shanghai Gold Exchange opened. There's a lot of people out there, including myself, who are buying gold. They're buying gold because they're buying gold. I believe that China has north of 20,000 tons of gold stashed away that they haven't revealed to the world yet, and all they're doing is adding to their stash every month. Like I said, gold was $1,400 more expensive at the end of January. It's $1,500 plus now. That's a bargain. It's absolutely a bargain. I remember back when gold was $500. I wouldn't touch it because I thought it was expensive. Paul Jay And boy, if I'd known that. But of course, I was buying silver at $5 an ounce, and $8 an ounce, and $10 an ounce. So I really can't complain. But the fact of the matter is that prices should be far higher. China knows that. And one of these days, they're going to come along and they're going to surprise everybody, and they're going to announce their gold reserves to the world, and then we're going to see a price that, frankly, we can't believe because the price will be set in China and not in the COVID-19 crisis. Paul Jay Well, it looks like the retail
Speaker 1and public in China also catching on. I want to read a quote from an article by China Daily that says, "Chinese buyers are reprioritizing gold bars and coins over decorative jewelry, with many families now viewing physical gold as an alternative safe haven asset." And meanwhile, in the West now, that's end quote, by the way, this is me. Meanwhile, in the West, most people think piling into Nvidia or the latest crypto coin is the path to financial success. Why does this divide exist? And do you expect people in the West to eventually start behaving like those in China when it comes to the metals?
Speaker 2Paul Jay Well, you know, looking back at China one more time regarding physical, I mean, when you buy jewelry, of course, there's always a markup for the craftsmanship that goes in it. And if you're going to trade this stuff or buy this stuff and hold it for a long time, it makes far more sense to buy the bullion than it does jewelry. And I've seen the pictures of the jewelry they sell in China or in Dubai. Paul Jay Yeah. Paul Jay Or places like that. It's gorgeous. Okay. And the workmanship is second to none. But if you're buying for investment purposes, the best way to buy it is in bars and rounds, and that's what they're doing. And as far as North America goes, I mean, we are already on the way to Just take a look at what was happening this time last year. Silver was up $42 or $50 an ounce already, whatever the heck it was, and everybody was having a gay old time. Like I said, we were about to have true price discovery until the end of January when the powers that be came in. If they hadn't come in, we would have seen a financial meltdown of some kind. As far as the general public, they got in, but now a whole swath of them got in. They've lost a whole bunch of money. They're selling their physical silver. They're selling their shares, et cetera, et cetera. But trust me, one of these days when all of these fancy tech stocks crash and burn, they'll be back in the physical market because then the price is really going to take off. As far as I'm concerned, this sell-off that we're seeing right now is the end of this wash, rinse, and spin cycle to the downside. One of these days, we're going to see fantastically higher prices, but the bullion banks want to cover as many short positions as they can. China's a buyer. Central banks are a buyer, and I'm going to be a buyer tomorrow. If they're buying it, that's a good sign that everybody should be buying it as well.
Speaker 1Yeah, I agree with that. I wonder if you have any thoughts about Judy Shelton joining the Treasury Department. She's been doing the rounds on interviews talking about the potential for the U.S. to launch a gold-backed bond. That's kind of an issue that's being brought up. I mean, it's unclear how that would work. Would the gold actually be there to back the bonds? We're talking about 50 or even 100-year bonds. And now she's at the Treasury Department, and she's doing her first mainstream media interviews, Fox News, I think she was on. And of course, she started parroting that the reason government bond yields are going up in the United States is because the economy is so strong. It's just another example of a long line of so-called. sound money advocates who enter a government position and then immediately get corrupted by the state, in my view. I'm wondering what your thoughts are there and on the possibility of the U.S. issuing a gold-backed bond.
Speaker 2You know, I'll tell you what, to me, it's just background noise. Washington and Wall Street are so corrupted now. They're lying to the people. You know, the amount of money that's being made by, you know, the White House and everybody in Congress and stuff like that through insider trading is completely off the charts. Wall Street is corrupted. All the agencies like the CFTC, the SEC, the Department of Justice, they're all totally corrupted by the, you know, by the empire, the American empire. And, you know, if you look around and everybody does it, and I do too, you know, you compare this to the last decade. The last days of Rome as the American empire slides, we're just living through the final stages of that as the West, which is mostly the United States and not Europe at all, as the United States starts to slide downhill, they're doing everything they can do to maintain and keep the power that they've had. But it's already too late for them, and we're just living through the consequences of it.
Speaker 1Unfortunately. Now, there's currently around 11,000 December gold futures contracts with a strike price of between $10,000 and $20,000. I want you to unpack if this is signal or noise for us, because some are saying these are lottery tickets placed on a potential mania in the gold price, and others saying these could be big players with insider information. What's the level of significance here in your view?
Speaker 2You know, this has been going on since February, and I want to revise that number. It's not $11,000. It's a $20,000 strike price. The last number I got was 38,000 contracts.
Speaker 1Oh, wow. Okay.
Speaker 2It was at $20,000 and at $15,000, I think it's about half that number. And then you go down the price from $9,500, $9,000, $8,500, all the way down to $6,000. The amount of money that's piled into the futures markets, or into the options markets, that's the strike prices of those kind of numbers. I mean, we're talking hundreds of millions. We're talking hundreds of millions of dollars here that people have got bet on this. And this bet's been on now for since the beginning of the year. Does it mean anything? You know, I'll tell you what, I just don't know. You know, we had the strike prices in silver for October for $11,000 contracts at $92,000 and $11,000 contracts at $100. And that all turned out to be absolutely nothing. So those went off the board. Worthless. So it's really impossible to tell, Jesse. I'm betting myself personally that we're going to see something happen between now and December. Now, those call options expire on, I think it's November 24th or November 27th. So we've got to, what, another six weeks between now and the time that those go off the board worthless. If the price doesn't rise. And, you know, you know, I'd like to believe that it's true because this price suppression scheme in the West against all commodity producers in general to prevent people from running to the hard asset side of the street. You know, it's long past its best before you state. I mean, it's been going on for 50 plus years already. And Besant knows it. Everybody in the top of the government knows it. China knows it. Russia knows it. And it has to come to an end at some point. So I have a feeling that this price smash that we're seeing today and we'll probably get again tomorrow is their last swing for the fences to try to cover many short positions. They can before options expire at the end of October. So as far as I'm concerned, you have to play it like it's a real thing because there's so much money involved. We're talking big. Big money here. And, you know, there's so much insider trading going on right now that you look at it and say, you know, somebody's got, you know, 10, 20,000 contracts on in December. 20,000 must know something that we don't because, you know, we're always the last ones to find out. And like I said, this price management scheme has been going on for half a century. You know, I started in 1971. How was I in 1971? I was 23 years old. Now I'm 78. So, you know, the West is in decline and their price management scheme that has kept them, everybody in paper for the last 50 plus years is coming to an end as is the empire that brought it about. When they set this thing up back in 1970 to suppress prices, they had no idea at the end how they would ever get out of this thing. And now here we are at the end and they're scrambling. We saw the first foreshock of that at the end of January. And if we see what, what, if everything in December falls out, unfolds the way these strike prices at $20,000, it's going to make what happened in January look like a little blip on the chart. So is it going to happen? I don't know, but I'll tell you what I'm playing like it's going to happen.
Speaker 1I hope you've been enjoying this interview. And if you're the type of person who likes to dive deep and become a better investor in the commodities sector, I have now created an online classroom, the Commodity Investing Academy. We've got lessons on all sorts of topics from investing in silver to uranium to gold and silver stacking and much more, along with being able to take a live look at my own portfolio, which has handily outperformed the SMP since inception in 2020. Find out what I'm buying, what I'm selling and what I'm holding, as well as being part of a vibrant community of commodity investors and sound money advocates. Join up today. The link is in the description. And I'll see
Speaker 2you next time. Have a great day. public at bay for as long as possible. So I wouldn't invest any money at 5.3% myself. I mean, I'm just not prepared to invest that when inflation is eating it away. I'll take my chances in the gold market. You take a look at the long term. Like I said, I bought gold at $500 an ounce and silver at $5 an ounce. And here I am 25 years later, and I'm very happy with the position. I've been in it for a long time. So inflation, the interest rate doesn't concern me at all because we're seeing the death of all fiat currencies. You know, I know Alistair McLeod is predicting the end of the fiat currency system within the next 18 months. And I don't see anything out there that would dismay me from thinking that he's probably right about that because, you know, the way the dollar index is rising right now. But the fact of the matter, the only reason it's rising is somebody's in there and making sure that it does. So. You know, the death of fiat currencies is inevitable. You know, no, no fiat currencies ever recorded has ever survived through all of recorded history. And we've seen what's happened to multiple currencies in our own lifetime, whether it be the Zimbabwe or in Germany or in Argentina or Chile or Brazil or whatever. They've all ended up the same way, being inflated away and hyperinflated away. And that's the ultimate death, the ultimate end game for all fiat. Currencies incurred in the U.S. dollar. So I'm not interested in investing in the 10 year bond at five point three percent. Thank you very much.
Speaker 1Now, a big part of the problem here is obviously the political class who's most of these people are sociopaths at best, psychopaths at worst. Their goal is to loot the system and extract wealth from the civilians to enrich themselves in their circle of insiders, as well as consolidate their own power. You put a Thomas Jefferson quote in your newsletter recently. I think it's worth discussing. The quote is what country can preserve its liberties if their rulers are not warned from time to time that their people preserve the spirit of resistance? The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. Now, I think this view is dead today because it's largely being killed through mass media propaganda and the new generation of bread and circuses, particularly with everybody on their phone 24 seven swiping to watch these little mini. Videos and clips. I feel like the people are far too sedated and misinformed to rise up against their governments in the West. So how do we as a society ever keep these tyrants in check?
Speaker 2Well, I'll tell you what I read. I read G. Edward Griffin book, The Creature from Jekyll Island, and it's all in there how the education system in the West has been deliberately dumbed down since the Second World War. And I can see it. I mean, you can see it in society today. The. What you learn in school today versus what I learned in school back in the 1950s and 1960s is totally different. And, you know, they just change things and dumb it down and dumb it down and dumb it down. And you take a look at the intellect of the kids coming out of school these days and it's scary. You know, I've got a cartoon here by Peanuts Cartoon and the bubble says no one is going to give you the education you need to overthrow them. You know, and that's very true. OK. And so Thomas Jefferson was assuming based on the education system and what they were teaching and learning back in the 18th century that that would you could apply that today. But, you know, the powers that be in order to preserve themselves have dumbed down the entire civilization, you know, in the West and not just in the U.S. I'm here in Canada and it's exactly the same. It's the same in Britain. It's the same in Europe. And the only countries that aren't prepared to knuckle under that are Russia, China, Iran. India, the rest. OK, the BRICS, you know, they're rising up because they're tired of us. They're tired of the West. They're tired of the U.S. dollar. And everything we see out there today that's played out since the Second World War and especially is accelerating now. You know, as I said before, if I is that, you know, everything that's going on out there has the last days of Rome feel about it.
Speaker 1Yeah. You couldn't have said it better myself. Concerning times, but I believe there'll be a light at the end of the tunnel at some point. Tell us about Ed Steer's Gold and Silver Digest.
Speaker 2OK. I write 260 columns a year. It's about precious, mostly about the precious metals. You know, I have stories in there about other things, but mostly about the precious metals and what's going on deep down in the engine room of the precious metals market. You know, they're writing on the Internet since about this since 2000. I was with Casey Research for a while and then when they went, when they got bought out by Stansbury, I went on my own in 2015, I think. So I've been writing this newsletter for 11 years. It is all about the precious metals, 260 columns a year. And the price is U.S. $100. And if you're interested, I'm sure you put the link in the description box below.
Speaker 1Yes, I will put the link in the description box below. Insane value. Extraordinarily detailed letter. Tons of information. So really well worth the asking price. Ed, once again, thank you so much for coming on the show.
Speaker 2Entirely my pleasure. Talk to you again, Jesse.
Speaker 1Thank you for joining us today on Commodity Culture. Earn up to a 4% annual yield on your physical gold paid in gold ounces through monetary metals. Go to monetary-metals.com slash commodity to find out how to put your gold to work for you. Link is in the show notes below.
PodcastTranscript AI