Category Archives: Investment

(Bloomberg) — Gold hit a new all-time high as the dollar pushed lower and traders sought safety amid concerns over … Continue reading →

A well-meaning bill filed in the Arizona Senate seeks to establish a state-sanctioned transactional currency backed 100 percent by gold and silver, along with a state-operated bullion depository.

Interestingly, the state would also issue physical gold and silver coins, even as such actions by a state are explicitly barred by the U.S. Constitution.

The legislation seeks to create government infrastructure to facilitate the everyday use of sound money, while also offering a government-run alternative to private-sector storage for precious metals.

Sen. Jake Hoffman and Sen. Rachel Jones filed Senate Bill 1096. The legislation would establish the Arizona Bullion Depository to serve as storage for precious metals and facilitate the issuance of state-minted gold and silver coins, along with a specie-backed transactional currency.

The depository provisions are based on a similar law that was passed in Texas and signed into law by Gov. Abbott in 2015.

The government-run bullion depository would serve as the “custodian, guardian and administrator of certain bullion and specie that may be transferred to or otherwise acquired by this state or an agency, a political subdivision or another instrumentality of this state.”

The proposed law specifies that the state treasurer “may deposit a portion of state monies in the depository in the form of bullion, and that bullion deposit is considered part of this state’s financial reserves.”

While many private options are already available, individuals and businesses could alternatively choose to deposit their bullion into the government’s own depository.

Gold and Silver Transactional Currency

Under SB1096 the Director of the Arizona Department of Insurance and Financial Institutions would be required to issue specie (gold and silver coins) and establish a transactional currency “as the director determines to be practicable.”

Article 1 Section 10 of the U.S. Constitution, however, states that “No State shall… coin Money,” an activity that is delegated to Congress and reserved to the people themselves.

Specie is defined as “a precious metal that is limited to gold and silver and that is stamped into coins of uniform shape, size, design, content and purity that are suitable for or customarily used as currency, as a medium of exchange or as the medium for purchase, sale, storage, transfer or delivery of precious metals in retail or wholesale transactions.”

A transactional currency is defined as “a representation of actual precious metals, specie, and bullion held in a depository account by a depository account holder that may be transferred by electronic instruction and that reflects the exact unit of physical precious metals, specie or bullion in the pooled depository account in its fractional troy ounce measurement.”

The government depository would manage the transfer of the digital transactional currency between parties and ensure it is backed 100 percent by physical gold or silver held there.

Practical Impact

Despite its drafting problems, this legislation is representative of an exciting increase in support for sound money reforms.

Ownership of gold and silver gives people a way to shield themselves from the rapid loss of purchasing power inherent in the fiat dollar, and state policymakers across the nation are increasingly backing sound money proposals to address these problems.

Private gold transactional currencies already exist. For instance, any citizen may spend their gold and silver coins, bars, and rounds, so long as the other party is willing to accept them as payment.

Also, some services enable folks to do business using a debit card that seamlessly converts gold and silver to fiat currency in the background.

The existence of private options for facilitating gold and silver transactions is a fact that has not escaped legislators in other states – and this reality has so far created significant headwinds for passing complex bills of this nature.

Background

The United States Constitution states in Article I, Section 10, “No State shall…make any Thing but gold and silver Coin a Tender in Payment of Debts.” Currently, all debts and taxes in most states are either paid with Federal Reserve Notes (dollars) which were authorized as legal tender by Congress, or with coins issued by the U.S. Treasury – very few of which have gold or silver in them.

The Federal Reserve destroys this constitutional monetary system by creating a monopoly based on its fiat paper currency. Without the backing of gold or silver, the central bank can easily create money out of thin air.

This not only devalues your purchasing power over time; it also allows the federal government to borrow and spend far beyond what would be possible in a sound money system. Without the Fed, the U.S. government wouldn’t be able to maintain all of its unconstitutional wars and programs. The Federal Reserve is the engine that drives the most powerful government in the history of the world.

State laws that facilitate and encourage the use of sound money create a playing field where people can push back against the Fed’s monetary malfeasance. Ultimately, it could create a scenario where people can drive out the “bad” fiat money with “good” sound money. Continue reading →

The Fed is usually remarkably consistent.

Every year during the second week of January, going all the way back to 1997, the Fed announces their earnings for the period just ended. Continue reading →

Gold steady ahead of the release of the Fed minutes later today as investors await further signals on the pace … Continue reading →

Cryptocurrencies are emerging as a form of digital assets preferred by retail and institutional investors. Institutions and high-net-worth individuals are … Continue reading →

(Bloomberg) — Gold steadied — following a steep drop on Monday — as traders weighed President Donald Trump’s latest tariff … Continue reading →

Excerpt from this week’s: Technical Scoop: Domination Impact, Golden Performance, Energetic Pressure

Performance of Selected Indices since the Election November 5, 2024

Source: www.stockcharts.com

Emerging markets have been weak, primarily because of the strength of the US$ Index. Many of these countries have debt denominated in U.S. dollars. As a result, a strengthening US$ Index implies that what they now have to pay back will rise as their revenues are in the local/home currency. Surprisingly, while tariffs could hurt the economy, they help strengthen the U.S. dollar. A stronger U.S. dollar makes U.S. exports more expensive but does it make U.S. imports cheaper? Will a rise in the US$ Index offset any tariffs placed on U.S. exports?  

Which way will the U.S. dollar go? Trump has shaken many corporations with his recent speech at Davos, WEF. He’s also threatening the Fed to lower interest rates setting up a potential fight with the Fed that would shake markets. As a result, are we seeing the start of a sell-off of the US$ Index? That bottoming pattern suggested a potential move for the US$ Index to 114. The high at 110.01 implies the index has achieved at least minimum targets so far. A firm break under 107 could send the US$ Index lower.

Source: www.stockcharts.com

As we have noted, the precious metals have been the best performers so far in 2025. Gold crossed above our $2,750 threshold this past week, telling us we should make new all-time highs above $2,801. Once above targets could be $3,050–$3,100. Our big concern is that silver and the gold stocks are nowhere near confirming gold’s run. Silver remains down roughly 37% from its all-time high set in 1980 and 2011 near $50, while the Gold Bugs Index (HUI) remains down 52% from its 2011 high and the TSX Gold Index (TGD) is off 17% from its 2011 high. As with the DJI and DJT, the averages are not confirming each other. It’s been an ongoing concern.

On the week, gold was up 1.1%, silver was weak but rebounded and closed up 0.1%, platinum had an okay week, up 0.7%, while palladium was a winner, up 4.4%. Copper fell 1.1% even as it remains up 7.2% in 2025. The HUI gained 3.1% while the TGD was up 2.8%. Now if only some of the positive vibes for the senior/intermediate/junior producing gold stocks would flow over to the junior exploration plays. We’re seeing some stirring but nothing substantial, with very small exceptions.

Helping gold this past week was a turnaround for the US$ Index, plus Trump calling for lower interest rates. Indeed, Trump’s remarks at Davos helped push the US$ Index lower. The USDX fell 1.8% this past week as the currencies benefitted. The euro was up 2.2%, the Swiss franc up 1.0%, the pound sterling up 2.6%, the Japanese yen gained 0.2%, while the Canadian dollar was up 1.0%.  With Trump threatening everyone with tariffs, it weighed heavily on the USDX.

Dominant economic issues for 2025 the U.S. debt and budget deficits, tariffs and trade, income inequality, and immigrants. Already, kicking out immigrants (illegal or otherwise) has met with resistance and desertion. Fruit and vegatable fields are suddenly lying fallow as the pickers flee. A few factories have seen a chunk of their workforce either arrested or fleeing. And this is just the first week.

All this should weigh on the US$ Index and ultimately be good for gold. Oil doesn’t know what to do as tariffs could impact oil as well. Trump’s repeated promises for increased drilling been met with resistance by some companies because the conditions or the prices aren’t there. WTI oil fell this past week, off 3.5%, while Brent crude dropped 4.1%. Natural gas (NG) bounces around with the weather as NG at the Henry Hub fell 12.7% while the EU Dutch Hub saw NG rise 4.9%. The energy stocks were negative with the ARCA Oil & Gas Index (XOI) off 2.6% and the TSX Energy Index (TEN) down 0.4%. WTI oil still appears to us to be forming a huge base for a launch. But if we break under $63/$65 all bets are off.

Gold’s seasonals are usually positive during this period, often topping out in March around the time of the Prospectors and Developers Association of Canada’s Conference (PDAC) on March 2–5. We need to see more positive response from silver and the gold stocks. Silver needs to get over $32 and especially over $34 to think of new highs above $35. The TGD needs to clear 400 to suggest new highs there as well.

We remain positive on this sector as we proceed into 2025 as it’s a haven when things become volatile and uncerrtain. Since January 20, the uncertainty is sure to rise.

Read the FULL report here: Technical Scoop: Domination Impact, Golden Performance, Energetic Pressure

Disclaimer

David Chapman is not a registered advisory service and is not an exempt market dealer (EMD) nor a licensed financial advisor. He does not and cannot give individualised market advice. David Chapman has worked in the financial industry for over 40 years including large financial corporations, banks, and investment dealers.  The information in this newsletter is intended only for informational and educational purposes. It should not be construed as an offer, a solicitation of an offer or sale of any security.  Every effort is made to provide accurate and complete information. However, we cannot guarantee that there will be no errors. We make no claims, promises or guarantees about the accuracy, completeness, or adequacy of the contents of this commentary and expressly disclaim liability for errors and omissions in the contents of this commentary.  David Chapman will always use his best efforts to ensure the accuracy and timeliness of all information. The reader assumes all risk when trading in securities and David Chapman advises consulting a licensed professional financial advisor or portfolio manager such as Enriched Investing Incorporated before proceeding with any trade or idea presented in this newsletter. David Chapman may own shares in companies mentioned in this newsletter. Before making an investment, prospective investors should review each security’s offering documents which summarize the objectives, fees, expenses and associated risks.  David Chapman shares his ideas and opinions for informational and educational purposes only and expects the reader to perform due diligence before considering a position in any security. That includes consulting with your own licensed professional financial advisor such as Enriched Investing Incorporated.   Performance is not guaranteed, values change frequently, and past performance may not be repeated. Continue reading →

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Investors’ extreme bearish sentiment on silver is ironically bullish from a contrarian perspective.

I strongly believe in applying contrarian logic to analyze financial markets and investments. The core idea behind this approach is that “the crowd” or so-called “dumb money” tends to be wrong more often than it is right, especially at major market turning points.

At market peaks, they become excessively bullish, and at market bottoms, overly bearish. Consequently, adopting a strategy that goes against the crowd often proves successful—this is precisely the approach taken by insiders or “smart money.”

Currently, the crowd’s sentiment toward silver is deeply bearish, which should be music to the ears of contrarians and silver bulls alike.

Contrarian investors use various methods for analyzing financial markets, often focusing on gauging market sentiment through surveys, polls, or patterns of bullish and bearish trading behavior.

One effective approach is examining short interest—the number of shares sold short and yet to be covered for a particular financial instrument.

When short interest is unusually high, for example, it signals that the crowd has adopted an excessively bearish stance. This often indicates a strong likelihood that a market bottom is near, paving the way for a bullish reversal.

An analysis of the popular iShares Silver ETF (ticker symbol: SLV) reveals a significant spike in short interest immediately following the U.S. presidential election, reaching approximately 47 million shares—the highest level since August 2022 and notably elevated compared to much of the past 15 years.

This surge is also reflected in the short interest ratio, which divides short interest by the stock’s average daily trading volume. The ratio climbed to 3, an unusually high level for this ETF, signaling extreme bearish sentiment.Chart courtesy of Macro Ops

The spike in short interest in the iShares Silver ETF aligns with what I’ve observed through managing a large social media presence and this newsletter: retail investors have grown increasingly frustrated and disinterested in silver following the U.S. presidential election, marking a dramatic shift in sentiment toward precious metals.

However, I firmly believe that the future is bright for both gold and silver. I encourage everyone to remain patient and steadfast.

The current wave of extreme bearish sentiment in silver is setting the stage for a short squeeze, where bearish investors are forced to cover their short positions, driving prices sharply higher.

One reason for the pessimistic sentiment toward silver since the election is the Trump administration’s focus on supporting cryptocurrencies while largely ignoring precious metals—a shortsighted and foolish approach, in my view.

Consequently, nearly every cryptocurrency, from Bitcoin to Dogecoin, has soared in value since the election, creating eye-popping gains—at least on paper—for many speculators.

Highlighting the current climate of reckless speculation, “Fartcoin”—yes, you read that correctly—has astonishingly skyrocketed by 18,500% since its launch on October 21st.

This phenomenon has made prudent investing appear laughable to many retail investors who might otherwise have shown greater interest in precious metals, particularly silver.

Amid the frenzy surrounding the current crypto mania, it’s important to recognize that many retail investors are falling into the classic trap: becoming overly bullish on flimsy assets that have already experienced significant price increases, a behavior that typically results in serious losses.

Additionally, much of the cryptocurrency space is gripped in a massive speculative bubble, with most cryptocurrencies trading at prices far exceeding their intrinsic value.

The current infatuation with crypto, combined with the neglect of gold and silver, is deeply misguided. In my view, investors would be wise to take the opposite approach.

From a technical standpoint, silver continues to trade within the same consolidation pattern it has been stuck in since the election. This lack of movement has contributed to investor boredom, as many tend to lose interest when an asset is quietly “coiling” like a spring, preparing for its next significant move.

That’s exactly how I view Silver right now. This is not the time to lose focus but rather to recognize the great opportunity forming. I’m watching closely for silver to break out of its current consolidation pattern, which I believe will signal the start of a substantial rally.I’ve developed an indicator to help confirm price movements in silver, called the Synthetic Silver Price Index (SSPI). This index averages the prices of copper and gold, with copper adjusted by a factor of 540 to prevent gold from disproportionately influencing the index.

The SSPI closely mirrors silver’s price movement, even though silver itself is not an input. I’m encouraged to see that the SSPI recently bounced off its uptrend line, signaling underlying strength.

The SSPI is rapidly approaching the 2,600–2,640 resistance zone, which has served as a key ceiling for much of the past year. A decisive close above this zone would signal a strong bullish breakout, indicating a likely upward move for silver itself.Gold, one of the two components of the Synthetic Silver Price Index, has recently broken out of a triangle pattern, signaling the start of the next phase in its bull market.

This breakout is also bullish for silver, given gold’s strong influence on silver’s price movements.Copper, the other component of the Synthetic Silver Price Index, is also showing positive signs as it recently rebounded off the $4 support level, as I had expected. It is currently trading within a triangle pattern, and a breakout to the upside should provide a strong tailwind for silver.

Copper demand is projected to surge over the coming decades and why this trend is also likely to be bullish for silver.I’m also keeping an eye on the U.S. Dollar Index, which has been on a relentless surge since October. Its strength has exerted downward pressure on commodities like gold, silver, and copper. A major driver of this rally has been anticipation of President Trump’s protectionist policies.

However, the index experienced a sharp pullback on inauguration day in a classic “sell the news” reaction. I’m closely monitoring the 107.5 support level—if this level is breached, it would signal a deeper correction in the Dollar Index, which would be bullish for commodities.In summary, retail investors are overwhelmingly bearish on silver at the moment, distracted by the allure of speculative cryptocurrencies and tech stocks.

However, for contrarian investors—the “smart money”—this widespread negativity is a strong indicator that silver’s best days are still ahead. Staying committed to sound money assets like gold and silver requires faith and vision, especially while the crowd chases fleeting trends in assets with no historical track record as reliable stores of value.

I am confident that when the world inevitably returns its focus to fundamentals, these timeless assets will richly reward those who remain steadfast in their belief. Continue reading →