Crumbling Narratives?

At year end I was asked for predictions of what 2022 might see?  My #1 prediction was that 2022 would see several narratives collapse.  It did not take long to begin!  Yesterday, Boris Johnson ended ALL Covid protocols in Britain and was followed by WHO backing off boosters for youngsters.  While still trying to discern what prompted BJ to do a 180 (other than trying to retain power?), we will wait to see if others follow suit?  We will also wait to see further actuary numbers of deaths from the insurance industry.  Raw numbers will be hard to spin ...

Another area to keep close watch are financial markets.  Bluntly, the stock market is also a "narrative".  I have said before and will reiterate now, the ONLY thing holding the social fabric together are stock markets still close to all-time highs... but now seriously wobbling.  If markets had not been juiced and goosed to ridiculous levels, I believe we would have already had extensive riots and violence.  Only "401K" rosy statements have acted as salve on our wounded (mortally?) society.

 It remains to be seen what happens from here, but it is safe to say, any Fed or central bank tightening will be met with equities severely puking.  At close on Thursday we have had another downside equity reversal with option expiration coming tomorrow.  Friday will be interesting to watch, a bad OpEx episode could bring Monday and next week into position to break the equity narrative's back?

 As for metals, we saw over 100 tons of Dec. COMEX gold contracts stand for delivery, I believe an all- time monthly record.  2/3rds of the way through Jan., 18 tons are standing which is also a record for any full January.  Actually, 18 tons was about normal for one of the 4 major delivery months just a few years back.  It really does look like a stampede for delivery in the making!

 Silver is even more interesting, and I should say "fraudulent".  Over the last 8 months alone, COMEX claims to have shipped contracts representing over 800 million ounces to London for delivery.  The problem is "size".  The entire world only produces slightly less than 800 million silver ounces, are we to believe there were really 800 million ounces laying around London to be delivered?  Especially after 2 full years of ridiculously outsized delivery claims?  Below are the EFP amounts over the last 8 months courtesy of Harvey Organ.

LAST 8 MONTHS TOTAL EFP CONTRACTS ISSUED IN MILLIONS OF OZs:

MAY 137.83 MILLION

JUNE 149.91 MILLION OZ

JULY 129.445 MILLION OZ

AUGUST: MILLION OZ 140.120 

SEPT. 28.230 MILLION OZ//

OCT:  94.595 MILLION OZ

NOV: 131.925 MILLION OZ

DEC: 100.615 MILLION OZ 

 And speaking of this magic number of 800 million ounces, this is also the amount that Ted Butler claims that Bank of America is now short.  I really cannot wrap my head around the reasoning for any bank to be short ANY amount of silver.  Especially since we heard from CFTC head Rostin Behnam back last February that "they" had to "tamp" down silver, otherwise there would have been big problems.  Yes, they kicked the can down the road about one year, is that can now filled with close to 1 billion short ounces of silver and too heavy to kick any further?

To wrap this up, I believe we are at a serious crossroads here and now!  We should get many answers to many different markets and narratives in short order.  Unfortunately, if the answers include narratives failing left and right as I believe, life as we have known it will be drastically altered by horrid realities.  Be careful what you wish for as crumbling equity and real estate pricing, along with higher (drastically?) interest rates and inflation will make for an exploding misery index.  Couple this with precious metals and commodity indexes finally trading at true market clearing pricing, and you have almost the perfect storm.  Of course, perfection will only arrive with the full breakdown of supply chains, that should about do it for anyone with their heads in the sands of denial!

Standing watch,
Bill Holter
Holter-Sinclair collaboration   www.jsmineset.com

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