Silver Carry Wars

[Zamolxx]

Great expo dude keep it at it, you're good at what you do. Happy holidays and best of luck to you ;)

[tesskansas]

This lesson was very helpful. Thank you.

[metaltect]

Hey John, When do you think our (Auz and my NZ) govts are going to panic about the our $ going through the roof? What do you think they will try and do about it???? Lower % rates? Print $ too?

Man there's going to be some noise from our export sector soon. There is one thing though...a huge drop in the markets = goodbye carry trade. Silver will not be sold off again though.. we are now wise, not like 2008. The money will not flow into bonds but the PM's. It's a win win for Ag.

[samsterlok]

USD index is now below 75, yikes!!

[wpiman]

Reasonable; but the derivative insurance you not is calculated based off the carry trade. The assumed 1% is incorrect.

[MyLittleFunk]

Hi there. I think it is interesting to factor in the GBP and Yen into this as they are both being used for carry trades. The GBP rose recently and you can see the effects on the european markets and gold. The carry 'victim' seems to vary in a cyclic manner....first the dollar, then the gbp...now the yen is weakening. Note also that JPM is now accepting gold paper/metal as collateral, which has interesting impications? :) R

[toshibavoodoo]

great

[imigrantpunk]

Isn't silver market way too small to actually affect the dollar? Also, if we have a sell-off in the equities this might strengthen the dollar and force the carry trade to unwind, further strengthening the dollar.  what do you think?

[medini2]

you appear to be telling all us to buy gold & silver...i bought some gold this morning and as soon as i got home ( as usual) i discovered gold is down 10 dollars, and i suppose silver is to follow suit. I bought high on silver recently,, too and it still hasn't gotten up to the point where i could sell and get back the money i have in it. i just recently got into this, but, i can't afford to lose.

[ORGDNR]

Stay in it long. The 1 day changes mean little.

[FuckinGuitarHero]

nothing ventured - nothing gained

[mlndstream]

Sun Tzu says:) The great general positions his army where he can not be defeated, then from there waits for his enemy to make a mistake, and then strikes like lightning to snatch the victory. So, if the enemy makes no mistakes, the great general never lost the battle as the battle probably never took place, but if the patient general wins the battle, it is because victory was certain. Warren Buffett's first two rules of investing are, 1) don't lose money, and 2) don't lose money:)

[aybesee123]

dont invest funds you need to live your day to day life and youll be alright. Nothing happens overnight and everything has ups and downs.

[mlndstream]

well your lucky you got out of that fiat currency position you previously held, because in the long term there's only one way that's going to go....down,down,down,losing,lo­sing,losing as all fiat currencies do in the long term. Precious metals secure your purchasing power against other real goods, which are what you really want anyway, so in real terms you are not losing. Even Robert Prechter(forecasting near term deflation) recommends getting a position in precious metal while you still can

[TheronDragoon]

I just saw something interesting on the perth mint website. All of their minted gold bars are now "Temporarily Unavailable" except for the 5gram. Looks like their "capacity shortage" is spreading.

[mallamoozoo]

what does everyone think about REITs? Particularly in Asia.

[watcher0777]

yeah thanks john it is starting to stick some. the thing with what harry dent says is right on and sobering in it's ltimate implications, i.e the commodity bubble being the last bubble before the real depression, the material your presenting points to silver trade being a possible catylist. heard about dent from visionvictory, pretty sure your aware of his analysis, dent that is. great job and will go back and force myself to try and understand the bonds. where can i find a teacher for that?

[vway2]

Excellent video, thanks.

[watcher0777]

comment pt 2 still trying to get the understanding on this, have been doing better on the dollar trade, jim willie helped some. on the 1st com. just thought you might not have noticed this, think it was very recent. will try to nail it down. take care

[watcher0777]

john, noticed an article the other day on bloomberg, few days back, on treasury bonds, us, selling well, even though there has been a massive increase in the issue of them due to incresed us debt. alot of info on these bonds crammed into this article, still greek to me. so they summed up that like you were saying that the interest rates will not rise, and the debt evidently is attractive to investors, so dollar will float. ? some have been pointing out that it is a type of stimulus for us econ.

[stellaconcepts]

the bonds cant fail - the primary dealers have to bid - its a rigged game. then the fed buys the treasuries from the primary dealers who then helps destroy the dollar via carry trade.

these guys know exactly what they are doing

[watcher0777]

yeah there are those that predict that the bonds will bubble and blow, i read a while back a piece that stated that the reserve currency status plus the bond selling us debt was like twin pillars and with the dollar status in question and the massive debt this equals major jeapordy. wanted to ask you as i'm watching the vid absorbing the info professor stella,lol, what do you think of what dent has said in reference to this silver trade, i.e.commodity bubble,did does he consider this too??

[GuildF40]

I think I follow.

Bank gets $ from Fed @ 1%

Bank Sells (loans out) $ @ (what ever %)

Banks invest extra % into higher profit X Y Z

Fed prints more $

Banks Sell(lend) more $

More $ = Problem with value.

Ya can't print Silver !

Marks out of 10 Sir ?

[Arginine88]

good info but you probably could have simplified that a bit more, however it is explained very well. Any thought on another downward move in the short term, if we get any kind of deflation? (for a short period of time that is, in America)?

[yogiudo]

I didn't know a silver carry trade was present.

Thanks for the info.

[stellaconcepts]

a "carry" trade is just using one instrument to arbitrage a profit in another instrument.

banks leasing the silver at like 1% are not paying that money just to move the silver into their vaults and do silver porn vids ;) they sell that silver into the open market, raise the cash and put that cash into higher yielding assets.

the metals leasing program, like all carry trades, cannot last (but is wildly profitable while it does)

[fezz569]

cheers

[BGBurch]

What about your mineral wealth in Australia, your agriculture, and your proximity to Asia? Isn't it a big plus for the AU$ and your health financially?

[stellaconcepts]

for sure... we have a lot going for us, but a lot of our currency appreciate is due solely to trading via the carry.

[DavidAKZ]

Reference ? (thanks)

[crabbydogtrix]

awesome class- thanks

[slicardy1]

Wow. Thanks for the lesson. I will need to watch it again.

[hiphopsocnroc]

So, what you are saying is that when the carry on the dollar becomes even more of a burden to the dollar, is when we should expect the price of silver to really pick up?

Nice style of presentation. More in the future please.

Peace

[stellaconcepts]

keep an eye on the lease rates

[DavidAKZ]

Reference ?

[mrees999]

Awesome info John this really helped get my head around how the carry trade is related.

[RobMon2012]

Fantastic presentation of hard concepts to grasp!

[slobomotion]

Wonder about Ainslie and us customers in the EU.

[sunyatajack]

Very nice, John. Your clarity consistently comes through. Also, I'm glad to see the whiteboard.

[2509049]

I have some metals, but people keep telling me they will pull the bottom out of it once every one invests in it. just like the stock market I dont know what else to do.  The dollar is going to hell

[2528997]

Yeah, but who ARE those people? I have that underlying feeling too, but what other option is there?

Nice username.

[artdeco101010]

Sometimes I think there is no end to the things I fail to consider - one down thanks to this video...

5 stars for the use of whiteboard !

[joyisaware]

your vids allways cheer me up John, thanks 4 sharing & enjoy your day down under ;)

[bluecat1122]

Thanks for the video, excellent info.

[wegowill]

good video

[odin422]

*listens to teacher*

5 stars.

[tradergee1]

Really good info!

[SamuraiCommando]

SO, for those of us in the US carrying lots of silver. Will there need to be some critical timing involved with dumping your silver and buying up dollars to pay off debts? If silver unwinds too fast we could have an over abundance of sellers in the US and not enough buyers. Especially if it goies to 100+dollars an ounce.

[scutter4christ]

I dont know what it is but I just love whiteboard videos. I am a visual learner so it really helps to see someone explain it out like you did in this one, with the board.

So thank you!

[nepenthean]

ace

[JOHNNYH8STHENWO]

I had to watch it twice, but once you put one plus one then it equals 2000. Thank you John.

[bradleytank666]

Excellent!

[BackBurnerNews]

Great explanation Dude!

[jdl1881]

I'm thankful to be aligned with such a smart person

[InTheSticks1881]

Thanks for explaining. It came accross crystal clear for me. Well executed. I'll hang onto every scrape of silver I can.

[whong819]

john, i think the carry trade on silver only would be feasible for the big players -- banks who have been manipulating the silver price. the million dollar question is... when stocks and bonds have major correction... smart money would go to USD or precious metals.??? I think the X-factor is geopolitical risk.. if that's the case, the smart money would find safe heaven in oil and gold. again... tough to call! we all know how devils those bankers are...

[kricke243]

Thanks.

But what do you say about Antal Feketes article: "What does the negative silver lease rate really mean?"

So quote in the next comment.

[kricke243]

"Whenever the price of silver significantly lags the rising price of gold, there may be panic short covering and the leased silver will be returned to the lessors in a hurry. If the lessors were not prepared for this avalanche of silver (because they expected that the leases would be rolled over), then they may not be able to absorb the silver flowing back to them. In this case the silver lease rate drops dramatically and may even dip into negative territory."

[davincij15]

There is one part you are missing with the silver carry trade. If there is a default in silver, that may not translate into higher prices.

What I mean by that is failure to pay silver can and will result in payment in USD.

[InTheSticks1881]

What happens when payment is only available in dollars? Would there be a reason to buy ETF's if there's little to no PM backing it, or does it send PM higher as physical supplies must be purchased in order to continue the market?

[davincij15]

Lets just assume that the ETF pays out it's the dollars when silver goes up, they physically can because they have access to the printing press.

You will buy something that needs silver or someone else who wants sliver and increase the price because you never had silver to begin with. Also you lose out because you did not participate in the helping the price increase.

[stellaconcepts]

DJ -I am aware of that... Tho Im not 100% sure that is the case... I think BOTH parties have to agree... but in either case... when metals leasings unwinds it means no fake supply of silver is on the market... the selling pressure all but vanishes... thus the price of silver rises... drastically.

[davincij15]

Keep in mind John that if you make a contract where someone owes you a house and has been paid in full. They do not have to buy you a house you are satisfied with they can give you the money back.

A house is bad example but it still applies, if you lease a car hide it and refuse to give them back the car they can sue you not for the car but the value of the car.

That's the only hole in your hypothesis I see, but I sure hope you are right.

[davincij15]

If I am right the only thing that will end the paper ponzi in silver is a physical shortage.

[hermbilliamherm18]

Awesome! I like the white board explanation, easier to understand with visuals!!!!!! thnx

[AtheistThatsATheist]

Where would i go online, or even what books could i buy to learn stuff like this?

[pentel1911]

excellent use of the board

[EOTW2122]

Jon - what are your thought on timing for the unwind of AG carry?

[stellaconcepts]

watch the lease rates... when they start rising - fast - then the carry trade is unwinding.

[AfterTheFox75]

Very nice work John. I think you'd be a great professor. You've got a talent for breaking things down for an audience. -I can't help but think the dollar will unwind first; there's literally next to nothing supporting it.

[stellaconcepts]

when i viewed it again i thought it came across confusing - not too many questions in the comments tho so maybe i pulled it off ;)

[AfterTheFox75]

Well, it was a bit muddy at the beginning but you brought everything around nicely in the middle and everything was crystalline towards the end. Overall very good. The beginning might have been nerves or something since you're usually behind a desk.

[helpendthefed]

Good Job

[GSDebunked]

great to see another vid from you john, and its funny because i was gonna request a vid about carry trades.

Im still a little perplexed though, are you doing a carry at the moment? how can i get in on the action?

[stellaconcepts]

unfortunately the 1% interest rates are for commercial banks - not us minons.

do you own carry trade - buy physical silver ;)

[Annihilate3275]

great vid!

[mallamoozoo]

442 nuke reactors on Earth but just 10 in China. China and India to build about 100 more next 10 years.

silver-indium-cadmium alloy is used as a control material in light-water nuclear reactors. Ive read its of the order of 1 tonne (of silver) per reactor per year gets chewed up.

1 tonne = about 33,000 ounces, so 70 new reactors will use up about 2 million ounces a year.

But 1 billion ounces of silver above ground- so nuclear application is negligible.

Monetary use is what matters.

[Raycheetah]

With an estimated total production of about 640 million oz of silver per year, with all those reactors built and online, that comes to almost 18 million oz used up per year, or 2.8% of total production. Not a HUGE dent, but significant.

I wonder if radioactive silver is even more shiny. =^[.]^=

[CosmicDramaQueen]

Great Lesson and very good points:)

[stellaconcepts]

cheers!

[galikazoid]

well done

thanks for the infos

[Nuanceqwest]

You know me,

Dollar bull.......till 72!!!

I know which carry trade is going to recoil first and it aint Silver.

[stellaconcepts]

good luck with that!

[ramp31]

Stella i just like to say thank you,, for helping me go and have the guts to buy silver and i wish u and ur family the best in this world and the next

salam

[stellaconcepts]

thanks mate

[wizardofounce]

Nice job, professor.

5 stars for Bernanke's helicopter.

[Eraser7622]

Nice to see you out of your chair ;)

Good to see you bringing it jberni-style!

One thing I wonder about is how people will exit silver when the timing is right. I don't want fiat dollars for my little stash, but does that mean I should hold until the black/gray market is working on PMs? If the price goes to 500/toz, for example, what coin store/jeweler, etc. is going to have the cash flow to buy anybody's silver? It won't happen. So, we should really discuss exit strategy more IMO.

5*s

[lokir]

Thanks John.

Very interesting information and well explained.

We 're so close to our silver goal... keep up the great work.

[darryllddflying]

Good point I haven't really thought about carry trade with the low lease rates on silver. I think what will determine if silver or US$ unwinds first is the ability to continue deceiving the public that paper ponzi dollars have value. It will be interesting to see if enough people will "WAKE UP" and see what's going on.

[Airave]

Nice explanation, Jon, good work!

[halfasheep]

got the local bullion co happening stella.

[stellaconcepts]

they are sponsoring me now!

[Raycheetah]

Ainslie makes some lovely products! Too bad I'll never get closer to 'em than seein' 'em in videos.

Have to console myself with domestic (US) products. ='[.]'=

[4rcane]

yea, stella, if they're a sponsor, I like to see a sample of their product

[artdeco101010]

Holy crap !

[airmesh]

thanks, very informative

[fal2grace]

Thanks for explaining this John!