• 13 days Could Crypto Overtake Traditional Investment?
  • 18 days Americans Still Quitting Jobs At Record Pace
  • 20 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 23 days Is The Dollar Too Strong?
  • 23 days Big Tech Disappoints Investors on Earnings Calls
  • 24 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 26 days China Is Quietly Trying To Distance Itself From Russia
  • 26 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 30 days Crypto Investors Won Big In 2021
  • 30 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 31 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 33 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 34 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 37 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 38 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 38 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 40 days Are NFTs About To Take Over Gaming?
  • 41 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 44 days What’s Causing Inflation In The United States?
  • 45 days Intel Joins Russian Exodus as Chip Shortage Digs In
Hawkish Fed Sends Gold Prices Crashing

Hawkish Fed Sends Gold Prices Crashing

The gold bulls are facing…

Is It Time To Pay Attention To Gold Miners?

Is It Time To Pay Attention To Gold Miners?

The invasion of Ukraine by…

Keith Weiner

Keith Weiner

Keith is founder of the Gold Standard Institute USA in Phoenix, Arizona, and CEO of precious metals fund manager Monetary Metals. He created DiamondWare, a…

Contact Author

  1. Home
  2. Commodities
  3. Precious Metals

The Silver Plunge Continues

Silver

A few days ago, I wrote about a big silver crash. The price dropped around 7.5%.

And the basis dropped from around 2% to 0.6%. At the end, we said:

“The key question is: what is the follow-through? If the price stays down and the basis goes back up, that will be a bearish signal. If the basis stays down, that means the silver market is markedly tighter at $24.50 than it was at $26.75.”

This brings us to yesterday’s silver dive.  Here’s the graph of the day’s action.

At the start of our graph, 2am (London time) the price is just a bit lower than at the end of the first crash day. $24.25. But we see the basis is up to 2.3%. That’s higher than it was at the beginning of the first crash day when the price was $26.75. 

Clearly, there was some buying of futures in the meantime. Perhaps speculators were betting on a quick spike in price.

Over the course of the day, the price drops to around $22.80. This is a drop of 6%. And the basis ends at around 1.5%. 

So, yes, there is a drop in basis. From a higher level than on the first crash day when the price was much higher. To a higher level than at the end of that day. And not that big a drop.

The selling was driven by futures, yet… yet… there was plenty of selling of metal too.

We are now $4 down in price, and the basis is not down very much. That means the abundance of silver to the market at $22.80 is not much less than it was at $26.75.

A price floor is expected when further selling the price down causes scarcity (and a price ceiling when further bidding the price up brings more and more metal to the market, i.e. abundance). Which hasn't happened yet. But we have some additional thoughts to share, so stay tuned.

By Keith Weiner via Monetary Metals

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment