{"id":48643,"date":"2019-09-25T07:33:50","date_gmt":"2019-09-25T12:33:50","guid":{"rendered":"https:\/\/olduvai.ca\/?p=48643"},"modified":"2019-09-25T07:33:52","modified_gmt":"2019-09-25T12:33:52","slug":"curious-events-in-risk-free-collateral-land-precious-metals-supply-and-demand","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=48643","title":{"rendered":"Curious Events in Risk-Free Collateral-Land \u2013 Precious Metals Supply and Demand"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/acting-man.com\/?p=54806\">Curious Events in Risk-Free Collateral-Land \u2013 Precious Metals Supply and Demand<\/a><a href=\"https:\/\/acting-man.com\/?p=54806\"><\/a><\/h3>\n\n\n\n<p><strong>Liquidity Shortage&nbsp;<\/strong><\/p>\n\n\n\n<p>Last week the price of gold rose $28, and silver $0.53. But the prices of the metals was not the big news last week. The price of repo \u2014 a repurchase agreement, to sell and repurchase a treasuries \u2014 skyrocketed. Banks were thirsty for liquidity, and only cash can quench it.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><a href=\"https:\/\/acting-man.com\/blog\/media\/2019\/09\/1-overnight-GC-rate.jpg\" target=\"_blank\" rel=\"noreferrer noopener\"><img decoding=\"async\" src=\"https:\/\/acting-man.com\/blog\/media\/2019\/09\/1-overnight-GC-rate.jpg\" alt=\"\" class=\"wp-image-54807\"\/><\/a><\/figure><\/div>\n\n\n\n<p>Last week\u2019s \u201coops\u201d moment in repo land as the overnight general collateral rate briefly soared to 10% (we will soon publish a detailed summary of the sequence of events that has led to this hicc-up). [PT]<\/p>\n\n\n\n<p>Just another day in the fool\u2019s paradise of centrally planning an irredeemable currency and its interest rate. Just another crisis, to be tamped down by the central planner. Keep Calm and Carry On.<\/p>\n\n\n\n<p>This is a curious phenomenon, where the market is offering a risk-free trade to give up one\u2019s dollars and get them back tomorrow plus a return. Yet no bank or other trader is taking the bait. The problem was not a shortage of trust, but of liquidity.<\/p>\n\n\n\n<p>When trust in the system collapses, then gold will withdraw its bid on the dollar (which most people will wrongly perceive as the disappearance of offers to sell gold). This will be permanent gold backwardation.<\/p>\n\n\n\n<p>So the question that should be on everyone\u2019s mind is: did gold drop into&nbsp; backwardation this week? Or silver? Read on to see graphs of the gold and silver co-basis (backwardation is strictly when the co-basis &gt; 0).<\/p>\n\n\n\n<p><strong>Fundamental Developments<\/strong><\/p>\n\n\n\n<p>Let us look at the only true picture of the supply and demand fundamentals. But, first, here is the chart of the prices of gold and silver.<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><a href=\"https:\/\/acting-man.com\/blog\/media\/2019\/09\/2-prices-1.png\" target=\"_blank\" rel=\"noreferrer noopener\"><img decoding=\"async\" src=\"https:\/\/acting-man.com\/blog\/media\/2019\/09\/2-prices-1.png\" alt=\"\" class=\"wp-image-54808\"\/><\/a><\/figure><\/div>\n\n\n\n<p>Gold and silver priced in USD<\/p>\n\n\n\n<p>&nbsp;\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Curious Events in Risk-Free Collateral-Land \u2013 Precious Metals Supply and Demand Liquidity Shortage&nbsp; Last week the price of gold rose $28, and silver $0.53. But the prices of the metals was not the big news last week. The price of repo \u2014 a repurchase agreement, to sell and repurchase a treasuries \u2014 skyrocketed. Banks were [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[5728,7957,487],"class_list":["post-48643","post","type-post","status-publish","format-standard","hentry","category-economics","tag-acting-man","tag-keith-weiner","tag-liquidity"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/48643","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=48643"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/48643\/revisions"}],"predecessor-version":[{"id":48644,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/48643\/revisions\/48644"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=48643"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=48643"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=48643"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}