Many investors are asking, why is silver so weak? Well, here is the answer…
Why Is Silver So Weak?
October 14 (King World News) – Alasdair Macleod: Why is silver so weak?
The answer has nothing to do with supply and demand, being a phenomenon of paper markets. Bullion banks can create contracts out of thin air to dump onto a quiet market, triggering stops and driving prices lower. It allows the bullion banks to pray on investors who just wanted to make a quick buck and not take delivery.
We see this time and time again. Always, it presents an opportunity for stackers to buy cheap bullion. “Investors” driven by sentiment always chicken out if they have positions. Meanwhile, bullion banks acquire paper longs and are positioned for the next bull run!
Moral: always a stacker be!
Endless Fake New Regarding Oil
Lukas Ekwueme: Oil prices are rising as Iran attacks ships at the highest reported pace since the start of the war.
Meanwhile, we’re being flooded with reports claiming Hormuz flows have returned to pre-war levels.
This is just part of the endless fake-news cycle trying to contain oil prices…
Iran is still in control of Hormuz and has vowed to push oil prices higher ahead of the midterms.
Europe And US Have Massive Trade Deficits With China
Gerald Celente: For every loaded cargo container Europe exports to China, it imports six in return, according to the European Chamber of Commerce in China (ECCC).
That ratio has more than doubled since 2021 as Beijing has placed an urgent priority on producing more goods domestically as well as exporting advanced technology to grow its GDP.
In other words, “China makes everything,” ECCC president Jens Eskelund told The Wall Street Journal.
As a result, Europe’s trade deficit with China has risen to about $1 billion a day.
While Europe both wants and needs what China makes, China has little interest in what Europe produces.
“The Chinese are basically succeeding at self-reliance,” Joerg Wuttke, former ECCC president and now with consulting firm DGA-Albright Stoneridge Group, said to the WSJ. “What else do they want from us? They are producing everything in excess – and they are competitive left, right, and center because of scale.”
Making matters worse, China has been in a deflationary cycle for years, meaning the cost of its goods has been falling…
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Trade balances are measured in currency values, which fail to capture the sheer volume of Chinese goods washing over Europe, the WSJ noted.
When China joined the World Trade Organization in 2001, it was still making everyday consumer goods, which it sent to Europe in exchange for industrial machinery and luxury items such as BMW, Mercedes, and other cars to satisfy an upwardly mobile middle class.
Many auto companies built plants in China to avoid import fees and shipping costs.
As China’s manufacturing sophistication grew, its own production of everything from solar panels to steel and aluminum surged. That wave of supply drove down global prices, which took market share from several sectors of Europe’s crucial industrial base. However, China was still prime territory for several of Europe’s industries.
That changed in 2015 when Beijing announced its “Made in China 2025” plan. The initiative called for China to dominate the globe in advanced technologies such as computers, clean energy, and electric vehicles, among others.
The rush to self-sufficiency was inspired in part by fears that China could have economic weaknesses that could be exploited by adversaries.
The government poured state funds into building a supply chain for those industries ranging from educating a technical workforce to building factories to opening foreign markets.
“Little Giants,” a parallel program, tasked small and medium-sized companies to make consumer goods and other items to supply the domestic market.
Now China “is out-Germanying Germany,” said Andrew Small, director for Asia at the European Council on Foreign Relations.
That is most evident in the auto industry, which for decades was a bedrock of Germany’s economy. From 2009 through 2023, Beijing flooded its auto industry with at least $231 billion, the Center for Strategic and International Studies calculated, calling that “a conservative estimate.”
At the same time, the government carefully cultivated a campaign that made it a matter of patriotism and national pride to buy Chinese brands instead of traditional European luxury cars.
More than 200 automakers blossomed, leading to overproduction, a domestic price war, and a new focus on massively exporting excess vehicles.
In 2023, European automakers began issuing profit warnings at the same time China’s auto industry was deepening and expanding its roots in Europe.
Earlier in this century, “China made the pie bigger for everyone,” Eskelund noted. “Now it’s taking market share in Europe at a time when European companies in China face a slower economy and fierce domestic competition.”
Europe’s 500 million consumers still give it leverage in its trade relations with China. That gives the world’s second largest economy reason to tread lightly on the continent and not let trade between the two deteriorate the way China-U.S. relations have, Rafael Mazarredo, Spain’s former ambassador in China told the WSJ.
“It is not in [China’s] interest to have two open [trade wars] at the same time,” he pointed out.
TREND FORECAST:
China’s drive for self-sufficiency is old news to Trends Journal subscribers.
The move inspired the long-term trend of other nations to work to become less dependent on China and “reshore” or “friend-shore” production. Those efforts have had middling success but will continue, re-energized by the Iran War.
The war has reminded the world of the dangers of depending on one location for the bulk of a critical resource – oil and related products, in this case.
The self-sufficiency trend has been aided to a degree by Donald Trump’s tariff war.
Nations are either relying more on themselves for products they used to get from the U.S., doing without them, or forming new trading relationships with friendlier, more stable partners. Europe and Latin American countries recently forged a new favorable trade deal.
The self-sufficiency trend that we forecasted as a long-term Top Trend 2022 will continue.
Historic Opportunity In Silver Stocks
To listen to Tavi Costa discuss the huge opportunity in silver and gold mining stocks, energy, gold, silver and much more CLICK HERE OR ON THE IMAGE BELOW.
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