Silver shorts must be worried

Gold is tickling new all time highs yet silver is 50% away from all time highs, silver shorts are ripe for an attack.



Gold is moving up with JPY and EUR, gold in USD terms will soon follow.

Backwardation stress in silver is showing a bullish signal set up.

Silver should be at least $15 USD higher, near $30 to $40 USD now!

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Is FED balance sheet expansion on the table in 2023?

Will the FED cash bazooka be used to balance the US books in 2023?


Note: Members can keep up with the news on these subjects via our RTT Plus commentary service.


Chart 1 - US Deficit 2023 Forecast +$2 Trillion

The U.S. ran about a US$1.4 trillion deficit in 2022, this will swell to US$2.5 trillion in 2023 (dotted black line, left axis).

Here is some big numbers why:

- Interest on the debt is going up with higher rates adding about US$200 billion.
- In 2022 about US$600 billion in capital gains tax got paid and that won't happen in 2023.
- There was an 8.7% increase in social security etc. that adds about US$120 billion.
- Then you have student loan forgiveness and Ukraine aid so we can easily go to a US$2.5 trillion deficit.
- If a recession sets in, tax receipts will go down too. This would likely push the deficit near or over $3 trillion

More..

The orange line is the year over year value change purchase of US Treasuries (UST) by foreign and domestic institutions. The difference between the orange and black line are the unsold UST. These unsold USTs are purchased mostly buy the US Federal reserve (the blue line, now over $8 trillion) and placed on their balance sheet. Notice how before the 2008 GFC the USA had no trouble selling its debt (or USTs). A visible loss in confidence.

POINT: A 2023 US deficit over +$2 trillion will force the FED to once more buy US debt (USTs) or QE. More monetary debasement for the hard money markets (gold, silver, bitcoin) to absorb.  

Chart 2 - Foreigners buying US Treasuries

A strong US dollar deters foreign investors from buying USTs. Manipulating the US dollar down makes the US debt (USTs) more attractive, a weaker US dollar also allows are larger quantity of USTs to be sold, resulting in less unsold USTs for the Federal Reserve to buy. A larger 2023 US deficit will place huge pressure on the US dollar. 

Chart 3 - Debasement of money is a reduction of purchasing power. 

Investors can protect their purchasing power by investing in hard money. Bitcoin (BTC) is a most volatile hard money asset, and will do well if the US Federal Reserve if forced to once again buy USTs (or QE) in 2023 (and 2024/25).

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Hot pick for 2023 - 2

This is pick number 2. It is number 2 as the volatility is extreme and a new low is not off the table.


Ethereum is likely to recover off its lows, however unlikely to make new highs in 2023.

Some points: 

- Both Bitcoin and Ethereum are managing supply shocks (BTC - MT Cox coin release, ETH - Stacking release post merge) to ensure price recovers. 

- Big down moves end on big bad news, the FTX crash should be the bad news to end the crypto sell off (well pending).

- New liquidity is arriving to world markets via the Chinese re opening and a lower US dollar.

- The FED's balance sheet reduction is being offset by the Dept of Treasury (Yellen) use of the TGA account.

- The reduction of world wealth via Bonds, Crypto, World Stock markets is near $30 trillion USD, the damage has been done to lower inflation concerns. The inflation fix is working.

- The greatest pain trade is for sold off risk on markets to recover. 

- The US has a balance of payments issue in 2023, who will buy excess USTs. The FED of course!



Chart ETH - Notice how $ETH moves between green channel support and resistance lines. 

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