As we continue to kickoff trading in early March, many market participants are now bracing for a silver shocker and this may be the catalyst that unleashes it.
Hi-Ho Silver?
A quick note from Jason Goepfert at SentimenTrader about what is happening in the silver market: “They (commercials) also increased their position in silver, now holding their smallest short exposure since August 2015.”
Commercials Now Hold Smallest Silver
Short Position Since August of 2015!
Goepfert continues: “Silver has tended to act well in the weeks following extremes like this, even during the downtrend of the past 7 years.”
Boockvar on accelerating inflation (silver catalyst)…
Problems On The Inflation Front
By Peter Boockvar, author of the Boock Report
March 5 (King World News) – Here is what Peter Boockvar wrote as the world awaits the next round of monetary madness: – The February ISM services index fell a touch to 59.5 from 59.9 but that was .5 pt above the estimate and is off the best level since 2005. New orders (highest since ’05) and backlogs rose m/o/m but employment gave back all of its January 5 pt gain.
…Of the 18 industries surveyed, 16 saw growth vs 15 in January. The ISM said “The majority of respondents’ continue to be positive about business conditions and the economy.”…
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I want to add a few of the included comments on pricing with my continued focus on growing inflation pressures:
“Lumber-related costs continue to increase as supply is also starting to become a problem. The market volatility of construction materials and the short supply of construction labor have added difficulty to long-term planning.” (Construction)
“Slight increase in activity; beginning to see some higher cost for goods and services.” (Finance & Insurance)
“Overall, a very positive outlook. Employment is low, and prices are up.” (Health Care and Social Assistance)
“Class-A driver shortage is causing an escalation in the cost of both inbound and outbound logistics, which is increasing our cost of goods.” (Accommodation & Food Services)
We also saw an improvement in Markit’s measure of US services and they said this about pricing:
“On the prices front, cost burdens faced by service providers continued to rise in February. The rate of input price inflation accelerated to the fastest since June 2015. Where higher input costs were reported, panelists commonly linked this to higher fuel and raw material prices. Meanwhile, amid larger cost burdens and greater client demand, average charges also rose further as firms protected margins. Moreover, the pace of inflation quickened to the sharpest for 5 months.”
Bottom Line
King World News note: During the stagflation of the 1970s, the price of silver skyrocketed a staggering 38-fold in price, rising from $1.29 to $50. If Boockvar is correct that inflation will continue to accelerate, this will set the stage for dramatically higher silver prices. This might also explain why the commercials are the least short silver in nearly 3 years.
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