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Craig Hemke at Sprott Money: New year will bring rate cuts, debt monetization, rising metals

Section: Daily Dispatches

10:37p ET Tuesday, January 7, 2020

Dear Friend of GATA and Gold:

In his monetary metals forecast for 2020, posted today at Sprott Money, the TF Metals Report's Craig Hemke predicts more interest rate cuts and debt monetization from central banks as well as a decline in the U.S. dollar. Amid all this, Hemke adds, the monetary metals will fly as investors suddenly crowd into a very small sector.

The one big obstacle to this, Hemke writes, is the huge and ever-increasing short positions in metals futures that are attributed to the major investment banks, which, it may be assumed, will continue to fight the rise in the monetary metals.

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But what if that short position does not really belong to the investment banks? What if they are only managing it for the U.S. government and other governments? A few years ago both the chief executive officer of one of those investment banks, JPMorganChase's Jamie Dimon, and the chief of the bank's commodity desk, Blythe Masters, said publicly that the bank had no position of its own in the monetary metals and that the positions it traded were for clients.

Of course no journalists asked the bank if the metals positions it was carrying were government positions. That the open interest in gold and silver futures continues to rise spectacularly even as metals prices keep rising spectacularly suggests that whoever is selling has deep pockets and no fear. Someone like that would seem to have access to computers and keyboards capable of creating as much electronic money as, say, the Federal Reserve Bank of New York lately has been creating with only dubious explanations.

If the government is the big short in the metals futures markets -- as it was the big short during the London Gold Pool -- the pressure on those markets can be maintained until the metal claimed for delivery runs out, or until the government or governments running the short position exhaust the metal they are prepared to lose.

Of course that's just what collapsed the gold pool, leading to a substantial revaluation of the monetary metal as people realized that gold was a lot scarcer than its nominal price suggested. Maybe that realization is behind the recent increasing acquisitions of real metal by central banks and others who pay attention.

Hemke's analysis is headlined "Gold and Silver 2020 Macrocast" and it's posted at Sprott Money here:

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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