Mr. Market Detecting Bank Runs. Silver on the Move.
What is the opposite of the Federal Reserve Note - SILVER
Secured Overnight Financing Rate jumps to 5.4%, the highest level in history
๐๐ซ๐ฃ๐๐๐ก๐๐ง๐๐ข๐ก:
The Secured Overnight Financing Rate (SOFR) is a key interest rate banks use when lending money to each other overnight.
SOFR jumps when there's increased demand for short-term loans - it seems banks need some cash on hand.
It could indicate that banks are kind of anxious, nervous.
They need more money on hand because they might sense upcoming problems with liquidity,
or even bank runs.
end of section
Silver on the Move.
Letโs Go.
Letโs talk Momentum
A Moving Average Convergence/Divergence (MACD) crossover is when the MACD line and the signal line of the MACD indicator intersect.
The MACD is a technical indicator that uses the difference between two exponential moving averages to determine the direction and momentum of the market.
The MACD line is the difference between the shorter (12 day EMA) and longer (26 day EMA) moving averages, and the signal line is a nine-period exponential moving average of the MACD line.ย
Silver is breaking out of consolidation, confirmed by a bullish MACD cross.
Need to see it close above that trendline.
But this could be the start of the next upleg.
Silver Vs SPX500
We are on the verge of busting through this technical line.
Silver has remained strong despite DXY and yields pushing higher.
Momentum is building
Silver and Gold Now
SG America (Solar Panel producer) just took delivery from Comex (5.1 Million ounces of Silver ) .
The picture shows total production of the worlds biggest silver producers in Q1-2024.
The run on silver has already started.
You are now living inside #silversqueeze 2.0
This morning we reported on one solar project in China
Thought Exercise:
Consider this: One solar company (SG America) 5.1 Million ounces and add one solar project in China 1.75 Million ounces
5.1 Million ounces
+
1.75 Million ounces
Thanks for this article! Got me back digging into FRED. Looked up the SOFR rate, and the chart shows itโs actually been hanging around between 5.3 and 5.4 since about the end of July, 2023. The really worrying time IMO would have been between March 2022 and July 2023, when it rose in almost a straight line from near zero to about the current 5.3. Since then, itโs stayed pretty steady, which is amazing to me. It actually dropped to 5.35 last night.
Relatively speaking, I think holding long term at 5.3- 5.4 speaks of a sustained or structural moderate scarcity of quality collateral, but not a sufficient deficiency to potentially cause the system to lock up. A cause for watchful concern, to be sure, but not panic or imminent bank runs. The banking system seems to be operating relatively smoothly for now. What I see is reduced margin for error, though, in a global banking system thatโs managing but not healthy.
A concerning sign, IMO, is the sudden spike in the 10-year yield. Jeff Snider suggested it may be due to Japanese banks being forced to sell a significant quantity of the bills for the purpose of purchasing dollars to buy Yen to keep theYen from falling further against the USD. The Japanese banks then need to reach all the way down to corporate junk bonds make enough yield to cover their losses on the Treasuries. And what are those bonds partially collateralized by? Commercial real estate! ๐๐ So as the CRE blows, the corporate bonds default, the Japanese banks collapse, the Yen implodes and Maynard Keynes rises from the grave to witness what his monetary ideology hath wrought. At least how I see a realistic possibility playing out. SOFR rates truly shoot through the roof at that moment, and a fat lady can be heard singing. She may still be muffled briefly by emergency bail-ins and true emergency overnight money printing by the Fed, but whether they could actually effect a rescue this time is up for debate.
So the SOFR situation bears keeping an eye on, for sure, IMO, in conjunction with 10-year rates and CRO performance. When 5.something becomes โthe new normalโ, I donโt see how the system can be โsound and resilientโ. That just sounds too much like โsafe and effectiveโ, to me.