A Bit More on Silver
On Friday, January 30, silver prices plummeted. Silver’s decline did not come as a surprise, as I had suggested in this publication that the silver rally had gotten ahead of itself, was extremely overbought, and was due for a correction. However, the one-day, monster decline in silver prices of more than 30% was reminiscent of the flash crash in stocks in 1987. Let’s just say that a one-day correction of that magnitude is not ‘normal’ when one studies the price action of financial markets.
 

Matthew Piepenburg, writing for von Greyerz Gold, offers an explanation for the sudden collapse in prices by citing what he calls “Coincidences Galore”.
I would encourage you to read the entire piece for yourself, but here is a summary of some of the points Matthew makes in his article.

• While there was no change in the supply and demand dynamics in the silver market, silver prices fell from about $120 per ounce to $78 per ounce in less than one trading day. That was the largest single-day crash in silver in 44 years.
• Many big banks were short silver. The rapidly rising silver price was causing a great deal of financial pain to these banks.

Then Piepenburg lists the ‘coincidences’. At least one big bank with large silver shorts was able to exit its short position in silver at the bottom of the price decline on Friday at nearly the perfect time due to these conditions that all emerged simultaneously:

• The London Metals Exchange went completely dark on Friday, January 30.
  Bloomberg” reported that the London Metals Exchange “suffered a one-hour delay to the start of trading on Friday”. 
• HSBC, a bank with large silver short positions, went completely offline on
  January 30, the same day that the London Metals Exchange went dark.
• The same day, January 30, Comex raised margin requirements for gold and
  silver futures contracts. Raising margin requirements forces traders using
  maximum margin to sell positions to maintain required account equity.
• The announcement of the new Fed Chair nominee happened on the same day, but after Asian metals markets had closed.

For perspective, Comex raised margin requirements in 1980 as silver prices rose to nearly $50 per ounce, and did so again in 2011 as silver once again approached $50 per ounce.
This time around is different, though: there is increasing demand for the physical metals. After a possible period of consolidation, which may require some patience, I expect more upside for precious metals.

Seems the “Warmth of Collectivism” Has Its Price

Well, that didn’t take long.

Seems the newly elected socialist mayor of New York City, Zohran Mamdani, who in his inaugural address stated that he would ‘replace the frigidity of rugged individualism with the warmth of collectivism, has now done some math and has determined that he’ll need to raise property taxes to attempt to accomplish his collectivist goals.

Mamdani announced that the city’s operating budget would be $127 billion for fiscal year 2027, a $5 billion increase from the prior year.
Mamdani has publicly called for New York State Governor Kathy Hochul to raise income taxes on the ‘ultra-wealthy’ and give New York City the tax revenues to fund the city’s spending. Short of the governor doing that, Mamdani said, he will be
forced to raise property taxes on city property owners.
Hochul quickly responded to Mamdani’s request, telling him to cut spending.

Guess Margaret Thatcher was correct when she stated that the trouble with
socialism is that sooner or later, you run out of other people’s money.
Governor Ron DeSantis of Florida offered some perspective on the New
York City budget. The City of New York has 8 million people and an annual
budget of $127 billion. The State of Florida has more than 23 million
people and an annual budget of $117 billion.

Warren Buffett, a Stock Seller In His Last Quarter as Berkshire Hathaway CEO

In his last quarter as CEO of Berkshire Hathaway, Mr. Buffett sold even more Amazon, Bank of America, and Apple stock, and purchased Chevron and Chubb.

Mr. Buffett steps down as CEO, leaving his successor $382 billion in cash, a record level for Berkshire Hathaway.

This Week on RLA Radio

The RLA radio program this week features an interview that I conducted with Doug Casey.

I get Doug’s take on all world financial markets, and find out what he’s advising his
subscribers. The interview is posted. Click on the "Podcast" tab on this page.

Quote of the Week
“Once you learn to quit, it becomes a habit.”
                            Vince Lombardi