#12 When the Price Stops Telling the Story
Silver’s recent sell-off suggested demand was fading. China’s behaviour suggests something very different. There is an old survival story sailors used to tell about lifeboats in the North Atlantic. When a ship started taking on water, panic never began when passengers noticed the damage. It began when crew members quietly started lowering the boats before anyone else realised the ship was sinking. That was the signal. Not the shouting above deck. Not the reassurances. The people closest to the structure always moved first. The silver market is beginning to look the same. In June, silver had fallen almost 55% from its January high of $121/Oz. Investors assumed the story had changed. Higher Treasury yields, a stronger dollar and fears that Federal Reserve Chair Kevin Warsh might keep tightening policy pushed the metal to its weakest level in eight months. Then the market changed its mind. Speaking in Sintra, Portugal, Warsh struck a noticeably less hawkish tone than markets had spent weeks preparing for. Softer US employment data followed. The dollar retreated from fourteen-month highs. Silver recovered more than 6% in a single week. Markets had spent weeks preparing for another round of tightening. By Thursday afternoon, that assumption already looked stale. Prices fell. Buying didn’t.
