Silver has risen another 1.4% today to a high of $34.44/oz and above the 31-year interday high of $34.33/oz reached last Tuesday (February 22nd). Silver is higher in all currencies this morning, especially the Japanese yen. The news that Saudi Arabia may be sending tanks to crush anti-government protests in Bahrain saw buying of silver, gold and oil.
Silver rose another 2% yesterday and reached a new 30-year record high close, but remains more than 30% below its March 1980 record nominal high, when silver reached a record high of $50.35/oz (see long term chart below).
Gold is also higher in all currencies as oil prices remain near recent highs on geopolitical concerns. Both gold and silver would be expected to see a period of consolidation after the sharp gains seen in February. However, the strong fundamentals may lead to further upward pressure on prices.
Silver remains in backwardation going out as far as the December 2014 contract which is trading at $33.03/oz while spot (for immediate delivery) is at $34.25/oz.
The majority of the media continues to completely ignore the developments in the gold market and, especially, in the silver market. Tech stocks and speculation regarding banks, Twitter, Facebook and other individual companies remain far more fashionable and the primary focus of the mainstream media (not to mention Charlie Sheen and Lady Gaga).
The backwardation and news regarding delays and difficulty of securing silver bullion in volume including the Royal Canadian Mint having difficulty sourcing physical bullion from bullion banks suggest that silver could soon break out and move sharply higher.
The moves in silver have been greeted with the usual silence by mainstream financial media with little or no coverage or fanfare about the record highs. Indeed, only those who peruse the specialist press and make it their business to inform themselves about silver, would even be aware of the record highs.
CNBC ran a piece on silver yesterday which was unusually bullish and suggested (as we have done since 2004) that in time silver could reach its inflation adjusted high in 1980 of over $130/oz.
The Financial Times reports on the front page of their Company and Markets section that Italian banks are seeking to use gold in order to strengthen their balance sheets ahead of coming stress tests. They wish to mark-to-market the considerable gold reserves of the Bank of Italy (Italian central bank), of which they are shareholders, in order to transform their core capital ratios.
As of December 2010, the Bank of Italy had gold reserves of 2451.8 metric tonnes (68.6% of their foreign exchange reserves) which makes them the fourth largest sovereign owner of gold in the world - after the US Federal Reserve, the German Bundesbank and the International Monetary Fund (IMF).
Senior bankers say taking into account the surge in gold prices the Bank of Italy could have a mark-to-market value of about €30 billion.
The move would mark a further remonetisation of gold in the world financial and monetary systems and may be a prelude to similar actions (revaluation of gold reserves or possible devaluation of currencies versus gold reserves) being done by other central banks.
The Federal Reserve may be forced into such an action in order to protect the US dollar. The Federal Reserve's financial position has deteriorated drastically in recent years and is being constantly diminished by quantitative easing and the electronic creation and printing of money to buy mortgage backed, Treasury and other securities.
The Fed's asset holdings in the week ended February 23rd, climbed to $2.537 trillion and have expanded almost US$225 billion in just the last 16 weeks.
This is currency debasement on a scale never before seen in history and will have ramifications for bond markets, interest rates, the dollar and all fiat currencies.