David Kranzler: Are You Ready for the Next Big Move in Metals?
Tom welcomes David Kranzler of Investment Research Dynamics back to the show. David discusses what to look for in the coming rally and why it’s challenging to pick tops and bottoms. Any experts that claim to be able to do so accurately are questionable.
The Comex and banks have been unloading many positions over the last year. As a result, it seems likely that the bottom may be in for gold. They are having trouble pushing gold down under 1800, and this week is a good example.
The real physical gold market is primarily driven by buyers in the East, mainly through the Shanghai Gold exchange. India has been dormant for the past three months due to the virus but has begun to reopen. China is also showing more imports, and we are now entering the high season for gold in that region.
David questions the overall usefulness of the COT reports. Much of what is reported is questionable, but the prevailing trends and reversals at peak open interest may be a helpful indicator.
Dave is also skeptical of the impact of the Basel III regulations. These changes depend heavily on local government enforcement. Moreover, the banks created these regulations, so they are unlikely to have done anything that would damage their business.
There are government declassified documents between Henry Kissinger after the closing of the gold window. These discuss finding ways to deflect investor money from gold into paper markets. Arguably, that is why the futures markets were created shortly after that.
The best comparisons to today’s equity markets are the dot.com bubble and the roaring 1920s. Both ended with massive crashes, and the only difference today is likely in the overall magnitude of the markets. Many investors today are getting maxed out on margins, and some are even taking personal loans. Eventually, something will break that will trigger an avalanche of selling, and the Fed will be unable to stop it.
David explains the true definition of inflation as money printing and why that money printing has only begun to affect prices. The Fed funneled much of the money into financial markets, which include the overleveraged housing markets.
The Fed’s constant rolling forward of the Repo markets is likely an indication that something is very rotten behind the financial curtains.
Lastly, he argues that central bank digital currencies will only increase their control over money. There is a growing movement by the BIS to encourage the creation of these new monetary systems. He expects a massive attempt at suppressing cryptocurrencies like Bitcoin at some point.
Time Stamp References:
0:00 – Introduction
0:38 – Silver/Gold Factors
8:30 – Gold Chart
10:08 – COT Reports Significance
14:20 – LBMA Basel Exemption
21:30 – Equity Markets
24:39 – Deflation?
29:09 – Fed & Reverse Repo
33:20 – Money Velocity
35:29 – CB Digital Currencies
38:15 – Concluding Thoughts
Talking Points From This Episode
- Predicting market tops and bottoms and the outlook for gold.
- Usefulness of COT Reports and the LBMA Basel Exemption
- Equity market risks and the inflation/deflation debate.
- FED Charts, Money Velocity, and Central Bank plans.
David Kranzler spent many years working in various analytic jobs and trading on Wall Street. For nine of those years, he traded junk bonds for Bankers Trust. Dave earned a master’s degree in business administration from the University of Chicago, concentrating on accounting and finance. He writes a blog to help people understand and analyze what is going on in our financial system and economy.