The Triangle of Truth
Despite all of the noise, the Federal Reserve has a choice to make. Pivot or allow calamity. What the Triangle of Truth might be saying.
Remember “The Wedge of Jerome” post from back in March? To this day it’s one of my favorite posts. Power rangers gifs, a guy playing ping pong with his crotch, Federal Reserve disrespect, market prognostications, and Zcash charts 200% higher than current prices; it had it all. The good old days right?
The Triangle of Truth is different. Yes, different. The Triangle of Truth isn’t about equities. It’s about these charts:
Just a TWENTY year trendline and a ten year triangle getting challenged in spot silver. That chart is a bit difficult to see so lets zoom in a bit and look at the weekly:
When Silver gave up $21.50, sub-19 was almost a certainty. Well, here we are. We are testing the bottom of this long term trend. With the exception of the COVID liquidity crisis when Silver went down to $12, Silver has spent 19 of the last 20 years above this trend line. There was about a year between late summer 2018 and late summer 2019 when Silver was below that trendline. A big part of what was likely driving that was that the Fed was reducing its balance sheet at the time.
Have I said this is all one trade yet? There’s just one problem with all of the metal price theatrics. Want to know what it is? There isn’t a single dealer in the country that will actually sell you physical Silver for $19. If you can find someone who will, BUY IT.
This is just one example from SD Bullion. But it’s the same story at Goldsilver.com ($25.23 for one bar) and JM Bullion ($25.91 for one bar). And those prices are all if you pay by check or wire. It’s more if you pay with a credit card because of the processing fee. This is also before shipping. Even vault stored Silver is still above $20 per ounce:
This is probably a better reflection of the real price in the real world. Still, none of this means Silver’s declines are done.
The Fed is “Tightening,” Right?
If history from 2018-2019 is any indication, Silver could struggle if the Fed actually starts rolling off its balance sheet. So far, all it has really done is stop buying assets. Very little has actually rolled off.
The peak in the Fed’s balance sheet was April of this year. That figure was $8.965 trillion. Human beings can not comprehend a number of this magnitude. It’s total insanity. The figure is currently $8.892 trillion. 0.82% of the sheet has been allowed to roll off. We’ve been hearing about tightening and fighting inflation for months. Yet, almost nothing has come off the sheet and real yields are still deeply negative.
We’ll see what the Fed is actually capable of doing. It is entirely possible that spot (paper) silver could see some time below “The Triangle of Truth.” If that does indeed play out, just remember; the Fed will almost certainly pivot because it has to pivot. If it doesn’t, America will eventually start experiencing some of the “fourth turning” mayhem that the rest of the world is currently dealing with. Like bank runs, uprisings, and assassinations of leaders. Your move, Jerome.
Disclosure: I’m not an investment advisor. I merely share what I do and why I do it. You shouldn’t take anything I say as investment advice and always do your own research when making investment decisions. Cryptocurrencies, tokens, STONKs, and digital trinkets could all go to zero.