Sunday , February 23 2020
Home / Keith Weiner
Keith Weiner

Keith Weiner

Keith Weiner is president of the Gold Standard Institute USA in Phoenix, Arizona, and CEO of the precious metals fund manager Monetary Metals. He created DiamondWare, a technology company that he sold to Nortel Networks in 2008. He writes about money, credit and gold. In March 2015 he moved his column from Forbes to SNBCHF.com.

Articles by Keith Weiner

Wealth Consumption vs. Growth – Precious Metals Supply and Demand

January 2, 2020

GDP – A Poor Measure of “Growth”
Last week the prices of the metals rose $35 and $0.82. But, then, the price of a basket of the 500 biggest stocks rose 62. The price of a barrel of oil rose $1.63. Even the euro went up a smidgen. One thing that did not go up was bitcoin. Another was the much-hated asset in the longest bull market. We refer to the US Treasury.

BofA Merrill Lynch high yield master II option-adjusted spread: on Dec. 23 it tightened to the  lowest level of 2019, fairly close to its post-crisis low established in 2018. This seemingly signals that risk is very small –  in reality, risk is probably extremely high. [PT]

The spread between Treasury bonds and junk bonds narrowed this week. It is now close to its post-crisis low.

Read More »

Eulogies for a Central Planner Reviewed – Precious Metals Supply and Demand

December 18, 2019

A Critical Appraisal of a Hero of Central Monetary Planning
We apologize for publishing this Report late. We have been very busy developing the business. Last week the price of gold moved up $16, and that of silver $0.39. Almost two groceries leaked out of that store of value par excellence, bitcoin. But hey, stocks are up!

We admit to having a soft spot for the politically incorrect Paul Volcker. He frequently expressed bemusement at the newfangled obsessions of his successors at the Fed (as an example, at a conference in 2006 he remarked on the increasing emphasis on “core” inflation: “A great mantra of central bankers these days is ‘inflation targeting.’ I don’t understand that nomenclature. I didn’t think central bankers were in the

Read More »

Steam Punk Animals – Precious Metals Supply and Demand

December 10, 2019

Re-Purposing of Tractor Parts in South Dakota
 
The price of gold was all but unchanged, but the price of silver dropped another 46 copper pennies last week.
We came across an article showing pictures of something we have previously described: sculptures made from parts taken from farm tractors.
Here is a picture I took:

The good old Predator made of tractor parts – looks almost like the real thing! Here is background information on the artist and more pictures of his work. [PT]

How much of this is capital destruction, and how much is up-cycling parts from tractors that are used up, we will never know.

Fundamental Developments
Let us look at the only true picture of the supply and demand fundamentals of gold and silver. But, first,

Read More »

Gold Moves from Vault A to Vault B – Precious Metals Supply and Demand

December 3, 2019

Poland’s Gold and the Conspiracy Theorists
The price of gold was up enough to buy a bottle of Two Buck Chuck wine, and the price of silver was up enough to buy a wooden nickel (well, not enough to buy a real nickel nickel).

Poland’s gold bars are packaged by employees of G4S International Logistics to be transported from London to Poland. Poland’s gold was originally transferred to London at the beginning of WW II, when Stalin and Hitler invaded and partitioned the country in the late 1930s. For some reason Poland’s post-war communist government left it there – presumably because it was easier to sell in London. [PT]
Photo credit: G4SI

Having just seen (OK participated in) a bit of a Twitter storm about the gold price suppression

Read More »

Eating the Seed Corn – Precious Metals Supply and Demand

November 25, 2019

Misguided Incentives
The price of gold subsided a few bucks, and the price of silver blipped a few pennies. Not much action last week, groceries neither pumped into nor drained out of this asset class. Those who look to exchange capital goods for groceries need to find a different asset.

The best-laid plans… [PT]

Not even the S&P 500 Index provided a gain in groceries this week. It certainly wasn’t the much-vaunted store of groceries, Bitcoin, which leaked 12 of them last week. 10-year treasuries picked up some purchasing power, but not a lot.
Maybe President Trump can order the Fed to fire up its tried and true grocery printing machine. If not, how can the strong economy stay strong? How can GDP keep growing, if the incentive to

Read More »

Gold, Togas and Very Fine Suits – Precious Metals Supply and Demand

November 19, 2019

Yields and the “Everything Bubble”
Last week the price of gold was up $9, and the price of silver was up $0.18.
This week, our thought turns to a cherished old saw. Gold bugs often tell us that the purchasing power of gold is constant. An ounce of gold could have purchased, they say, a fine toga in Roman times. Just as it could buy a fine suit today.

This magnificent toga will set you back an ounce, pilgrim. Just think of the impression you’ll make. [PT]

We don’t know where they do their shopping, but one can buy a fine suit for a lot less than $1,465 (one could also spend multiples of that for a very fine suit). In any case, the purchasing power of gold changed this week. Gold can buy 0.62% more fine suitage than it could last week.

Read More »

Volatility Galore – Precious Metals Supply and Demand

November 12, 2019

Fun and Regret Ex Nihilo
The price of gold dropped last week, but not calamitously. From $1514 to $1459, or -$55. The price of silver dropped. Calamitously. From $18.08 to $16.75, or -$1.33. -3.6% vs -7.4%. Once again, silver proves to be volatile relative to gold.

Silver jumped off a cliff again last week – the chart formation nevertheless continues to look corrective. [PT]

In standard vernacular, the metals lost purchasing power this week. Purchasing power can be thought of as the amount of groceries you could buy, if you liquidated an asset. If you think of an asset as a store of purchasing power, then there is some amount of groceries contained therein. And this week, some of groceries leaked out of gold. An alarming amount poured

Read More »

Targeting nGDP Targeting – Precious Metals Supply and Demand

November 6, 2019

Everybody Has a Plan
Not too long ago, we wrote about the so called Modern Monetary so called Theory (MMT). It is not modern, and it is not a theory. We called it a cargo cult. You’d think that everyone would know that donning fake headphones made of coconut shells, and waving tiki torches will not summon airplanes loaded with cargo. At least the people who believe in this have the excuse of being illiterate.

A few images documenting cargo cults on the island of Vanuatu. Left: a wooden plane made by the John Frum cargo cult, which is going strong to this day and has actually become a political party. In the middle is a ceremonial cross erected by the John Frum cargo cult. According to one of the cult’s leaders, its members consider John

Read More »

Bitcoin Moonshot – Precious Metals Supply and Demand

October 29, 2019

Bitcoin Gets Juiced
The prices of gold and silver were up $19 and $0.48 respectively last week. But that’s not where the massive inpouring of groceries went.

When Friday began (Arizona time), Bitcoin’s purchasing power was under 75 grocery units (assuming a grocery unit is $100). By evening, speculators added 25 more grocery units to the same unit of bitcoin.

Bitcoin, daily – shortly after breaking below an obvious lateral support level, Bitcoin did an about-face on steroids and rallied $3,000 from low to high in the space of a few hours. Interestingly, this rally was presaged by a number of subtle technical signals – bullish divergences with several of the major “alt coins” emerged on occasion of the seeming break-down on October 23,

Read More »

Central Banker Angst – Precious Metals Supply and Demand

October 22, 2019

Ominous Pronouncements
The prices of the metals barely budged last week. It is interesting to note that last week, more than one central banker felt it necessary to say something about a possible next crisis. And at least one of them said something about gold.

Lost as always, and apparently slightly nervous these days… [PT]

We do not place much stock in what these guys say for obvious reasons. Like Elmer Fudd armed with a gun that couldn’t quite hit any target, central bankers are armed with a theory that couldn’t quite explain an economy.
However, there are certain things they can see — sometimes ahead of most others. One is the stress on the banks. The Swiss Bankers Association says that negative rates are costing them $2 billion a

Read More »

Future Object of Speculation? Precious Metals Supply and Demand

October 15, 2019

Spillage
The price of gold dropped $16, but the price of silver was all but unchanged. Whereas last week we said:

“…the consumer goods stockpile stored in Treasury bonds (to extend our half sarcastic, half tongue-in-cheek analogy) increased this week.”

The 10-year note takes another peek at the wide spaces below its 50-day moving average. [PT]

Last week, it was the opposite. Consumer goods spilled out of the storage tank of Treasury bonds. The interest rate on the 10-year note ended the week at a level not seen since September 20. Those pesky apples and orange and gasoline and rent may have poured into crude oil. Or bitcoin.
Not to beat a dead horse, but we hope we have made it clear that assets are not stores of consumer goods, or

Read More »

Zugzwang – Precious Metals Supply and Demand

October 9, 2019

Respectable and Not so Respectable Assets
The price of gold went up 8 bucks, and the price of silver went up a penny last week. These were not among the capital assets that could be liquidated for greater quantities of consumer goods last week. Nor were equities.

A respectable, mother-in-law-proof speculation: the 10-year US treasury note. [PT]

However, the consumer goods stockpile stored in treasury bonds (to extend our half sarcastic, half tongue-in-cheek analogy) increased this week. As the yield on the 10-year note fell from 1.675% to 1.515% — almost 10% of the yield was sucked out of this bond — the price rose. It went from $130.39 to 131.91 (near futures contract).
Speculators this week forked over about 1.2% more capital for

Read More »

The System Scrapes By – Precious Metals Supply and Demand

October 2, 2019

An Accident in Waiting
The price of gold dropped $20, and silver 43 cents. For reference, $20 was once worth just about an ounce of gold. Dollar was a unit of measure, a weight of gold equal to 1/20.67 ounce of fine gold.

A gold certificate from the time when the dollar still represented a fixed weight of gold [PT]

Today, it is an irredeemable currency, defined not as a unit of weight but as a unit of central bank liability which is backed by government debt, which is payable in this unit. The price of this unit is constantly changing, and mostly dropping. It is currently 1/1497 ounce.
It has dropped from 0.048 to .00067, which is a loss of over 98.6%. Gold, not consumer prices, should be used to measure changes in economic value over

Read More »

Curious Events in Risk-Free Collateral-Land – Precious Metals Supply and Demand

September 24, 2019

Liquidity Shortage
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 — a repurchase agreement, to sell and repurchase a treasuries — skyrocketed. Banks were thirsty for liquidity, and only cash can quench it.

Last week’s “oops” 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]

Just another day in the fool’s 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.
This is a curious phenomenon, where the market is

Read More »

Why Are People Now Selling Their Silver? Precious Metals Supply and Demand

September 17, 2019

Big Moves in Silver
Last week, the prices of the metals fell further, with gold -$18 and silver -$0.73. On May 28, the price of silver hit its nadir, of $14.30. From the last three days of May through Sep 4, the price rose to $19.65. This was a gain of $5.35, or +37%. Congratulations to everyone who bought silver on May 28 and who sold it on September 4.

The recent move in silver [PT]

To those who believe gold and silver are money (as we do) the rising price of silver may seem right as rain. Why shouldn’t the dollar go down? It’s a rubbish currency, and any moment everyone else will realize it. And therefore it should go down in anticipation of that, right?
It certainly went down during this period, from 2.17 grams of silver to 1.61, or

Read More »

A Wild Week – Precious Metals Supply and Demand

September 9, 2019

Paying a Premium for a Lack of Default Risk
The price action got pretty intense last week! The prices of the metals were up Monday, Tuesday, and Wednesday. But Thursday and Friday, there was a sharp reversal and the silver price ended the week below its close of the previous week.

The net speculative position in gold futures has become very large recently – the market was more than ripe for a shake-out. [PT]

Silver made a round trip down from $18.35 to $18.16 by way of $19.65. That is it was +$1.35 for a moment on Wednesday, and then ended -$0.19. Gold was a bit more muted, going from $1,520 down to $1,507 by way of $1,557. It was up +$37 to close down -$7.
OK, so how do you explain this? One facile answer is “da boyz in da cartel

Read More »

The Great Debasement – Precious Metals Supply and Demand

September 4, 2019

Fiat Money Woes
Monday was Labor Day holiday in the US. The facts are that the euro lost another 1.4%, the pound another 1.1%, and the yuan another 0.9% last week.

Assorted foreign fiat confetti against the US dollar – we have added the Argentine peso as well, as it demonstrates what can happen when things really get out of hand. [PT]

So, naturally, what is getting play is a story that Bank of England governor Mark Carney said the dollar’s influence could decline. This is somewhat ironic, because in true Keynesian fashion, Carney believes in a “savings glut” which he laments has caused “low inflation”.
Everyone should be bellowing from the rooftops, not about the greatly exaggerated death of the dollar, but that major currencies are

Read More »

A Force Impelling People to Buy – Precious Metals Supply and Demand

August 27, 2019

Intense Price Action
The price action was pretty intense last week, most of it on Friday. The statement by President Trump, not to mention Fed Chairman Powell’s hint of further rate cuts, impelled people to buy gold and silver, whose prices went up $14 and $0.29.

10-year treasury note yield – plumbing new lows for the move… [PT]

Oh, and the interest rate on the 10-year Treasury lost over 5% of its juice on Friday. We said last week:

“…[there is] no magic interest rate, that drives up the gold price. What we need is a spread, or a ratio. We should compare the market interest rate to marginal time preference.”

Did marginal time preference drop this week? We don’t know, but we doubt it. If not, then the drop in interest rates compresses

Read More »

Tumbling Interest Rates – Precious Metals Supply and Demand

August 20, 2019

An Era of Low Time Preference
Last week the price of gold moved up another $16, and the price of silver was up $0.14.

10-year treasury note yield since 1999 – it is almost back at the multi-decade low of 2016. The only other time in history when US treasury yields were this low was in 1944-1945, when the Fed was actively suppressing yields in order to provide cheap financing for the war effort. One year later (from mid 1946 to mid 1947) the CPI jumped to more than 17% per year. By 1951 it had reached 21%. At that point the Fed and the US Treasury finally agreed that the Fed should stop pegging long term treasury yields – which promptly proceeded to rise relentlessly for the next three decades. [PT]

We just want to offer three thoughts

Read More »

Retail Holders Sell Their Gold – Precious Metals Supply and Demand

August 13, 2019

A Myriad of Reasons to Buy Gold – But Small Holders are Selling
Big moves occurred in the prices of the metals last week, with that of gold up $57 and silver $0.77. We have now reached a price of gold (if not silver) not seen since 2013, when it was on the way down. What is causing this sudden spike in price and renewed interest in gold?

A well-known depiction of investor emotions over a complete market cycle. Interestingly, it appears as though many retail gold holders who held on to their gold through the 2011-2015 bear market are now selling, just as the market has reached what is normally considered to be the “hope” stage. Ironically, this is actually good news from a contrarian perspective. [PT]

Well, first the bad news. According

Read More »

Bond Yields in the Netherworld – Precious Metals Supply and Demand

August 5, 2019

A Record Amount of Bonds with Negative Yields to Maturity
Last week the price of gold went up $22, while the price of silver dropped ¢17. The big news last week was that the yield on all German government bond maturities is now negative. They are also all negative in Switzerland. And in Denmark, all maturities out to 20 years are negative. Interest rates are dropping rapidly in the US as well.

More than $14 trillion in bonds now trade at negative yields to maturity – with more than 25% of all “investment grade” bonds afflicted with this policy-induced malady. This is essentially ensuring accelerated capital consumption. As you can probably guess, prosperity is not going to increase as a result. [PT]

Remember the stories about inflation,

Read More »

The Motte and Baley Fallacy – Precious Metals Supply and Demand

July 30, 2019

Spoofers vs. the Underlying Trend
The price of gold fell seven bucks, but the price of silver was up $0.16. In other words, the gold-silver ratio did a little more reverting to that long-forgotten mean.

Launceston Castle in Cornwall, an example of a motte and baley fortification. The castle was built in 1067-1071 AD, either by the Count of Mortain (the half-brother of William the Conqueror) or Brian of Brittany. [PT]
Photo credit: P. Vincent

Some story or other of a bank spoofing orders in the gold market came up this week. Spoofing is when a trader enters a large bid or offer on an exchange, and quickly cancels it. The purpose is to try to manipulate the price.
Of course, market makers must be constantly entering and canceling bids

Read More »

Silver Gets Frisky – Precious Metals Supply and Demand

July 23, 2019

Speculators Finally Wade Into Silver
Well, wasn’t this an interesting week! The price of gold was up a pedestrian $10, mere noise in the long-term signal. But in silver, we see plus one dollar. It was practically inevitable with the gold-silver ratio at an all-time high, after a big run up in the gold price with no corresponding run in silver.

1000 oz. good delivery silver bars – one COMEX futures contract refers to five of these shiny door stops. Recommendation: do not let them fall on your toes. [PT]

When the silver speculators get their game on, they can push the price up far more in percentage terms than in gold (which is a much larger, deeper, more liquid market).

Fundamental Developments
This will be a short Report, due to

Read More »

Resistance Created by Long-Suffering “Hodlers” – Precious Metals Supply and Demand

July 15, 2019

Gold vs Other Assets
The prices of the metals went up +$15 and +$0.23. We will be brief this week, as Keith just got off a 17-hour flight from Perth to London.
Stocks continue their march upwards. And hence the gold price seems stalled—or is it? It may seem like gold goes up, when stocks go down and vice versa. That’s been the recent pattern. Why should people own money without return, when stocks are where the action is?

Gold-SPX ratio: in long-term gold bull markets, this ratio will trend higher. It has recently made a secondary, higher low, but not yet a higher high – which will be required to confirm a new bull market trend. In the short term, gold and stocks can be positively correlated, but in the long term they are antagonists (a

Read More »

Wall of Worry M.I.A. –  Precious Metals Supply and Demand

July 9, 2019

Too Much Excitement?
The prices of the metals fell last week, with that of gold -$9 and silver -$0.32. Of course, it was a week of stock market exuberance. Why would anyone want to own money, or seek safety when the Fed can seemingly push interest down / assets up indefinitely? As the old TV ad for Lotto proclaimed “you gotta be in it, to win it!”

“Stablecoin” Tether is used as a dollar stand-in on cryptocurrency exchanges that offer no fiat currency pairs. There has been a lot of speculation about the extent to which Tether is actually backed by US dollars. Despite these rumors and a recent admission by the company managing Tether that is is actually not fully backed with USD, it continues to be popular. It should be noted that BTC has

Read More »

Gold, the Safe Haven – Precious Metals Supply and Demand

July 3, 2019

Investments vs. Money
Last week the price of gold went up another $11, but the price of silver dropped 4 cents. The gold-silver ratio hit another new high, up another point, though down from Tuesday’s high water mark.
This obviously was not the week that wage-earners increased their money holdings or that institutions expressed a preference for the bargain of silver.

Prosperity is just around the corner… and so is the trade deal. [PT]

This coming week may be a week that brings news of a trade deal between America and China. If so, one would expect the stock market to rally. And therefore the prices of the metals, gold more than silver in this case, to drop a bit. That raises the question why.
Notwithstanding the paper-bug argument that

Read More »

Workers of the World, Unite Around Your Metal!  Precious Metals Supply and Demand

June 25, 2019

Buyers of Gold vs. Buyers of Silver
Wow! What a week for dollar! It dropped a whole milligram from 23.2 to 22.2mg gold. The dollar is now at its lowest level in years, and on the verge of breaking down.

Silver, the precious metal of the common man [PT]

We insist that the dollar cannot be measured in terms of its derivatives, such as the euro or the pound. These currencies depend on the dollar, not the other way around. When all the dollars are sucked out of them (when they are fully de-dollarized), they will be worth exactly zero.
Well, though in a more abstract sense, the dollar is derived from gold. When all the gold is sucked out of the dollar, then the dollar (and any dollar-derivative currencies that may have survived until that

Read More »

Silver Remains a Monetary Metal – Precious Metals Supply and Demand

June 18, 2019

Silver Price Driven by Reservation Demand
The price of gold went up a buck last week, but the price of silver dropped back 13 cents. And the gold-silver ratio marches further upwards.
Keith spoke at a conference this week, about how to analyze the fundamentals of supply and demand in gold and silver. He talked about the basis of course.

Silver coins – silver prices are partly influenced by an industrial demand component, but the fact that they move most of the time with the price of gold indicates that the main price driver remains reservation demand by investors. [PT]

Another speaker spoke later, about the supply and demand fundamentals of silver. He covered all the topics we eschew — solar, increasing use of sensors and electronics

Read More »

The Italian Job – Precious Metals Supply and Demand

June 11, 2019

Lira Comeback?
The price of gold jumped 35 bucks last week, and that of silver 48 cents. The dollar is now down to 23 milligrams of gold.
Keith is on the road this week, so we will just comment on one thing. If Italy is serious about moving back to the lira, that will make the euro less sound (to say nothing of the lira). That will drive people mostly to the dollar, but also to gold.

Italian deputy prime minister Matteo Salvini (as the leader of the Lega party he is actually the most powerful politician in Italy, despite not being prime minister). In the course of an escalating dispute with the European Commission over the country’s budget deficit and debt, he threatened that Italy would consider introducing a parallel currency in the

Read More »

Gold vs. Silver – Precious Metals Supply and Demand

June 4, 2019

Is Silver Still Useful as a Monetary Metal?
The price of gold jumped a whole twenty bucks last week. We imagine that the marginal gold bug is relieved to be rid of his gold, in this opportunity afforded by the highest price since early April. OK, all kidding aside, the price of silver went up a penny.

The gold-silver ratio keeps hitting new highs recently (this is actually a long-term trend, frequently interrupted by strong rallies of silver against gold). Is silver losing its usefulness as a monetary metal? [PT]

We now have a new high in the gold-silver ratio. This can keep going up forever, right? The silver bugs don’t mean to imply that silver is being demonetized. However, when they say that silver has been in deficit for decades,

Read More »