On Thursday May 12, the price of silver fell about a buck. As with every one of these big price moves, the question is: what really happened? Below is a chart of the day’s action, with price overlaid with basis. Basis = future – spot. It is a great (i.e. the only) indicator of abundance or scarcity of metal to the market. However, here we are using it for a different, simpler purpose. We want to see the relative moves in the spot price and the near futures contract price (i.e. July).
The day was mixed. Before noon (times are GMT), the basis is volatile but tends to fall with the falling price. The basis drops from around -1.1% to -1.5%. But after noon, something changed.
We see falling price and rising basis. The basis tends to follow the shape of the price line,

The last few days of trading in silver have been a wild ride.
On Wednesday morning in New York, six hours before the Fed was to announce its interest rate hike, the price of silver began to drop. It went from around $22.65 to a low of $22.25 before recovering about 20 cents.
At 2pm (NY time), the Fed made the announcement. The price had already begun spiking higher for about two minutes.
As an aside, we wonder a bit about how they keep privileged traders from peeking at such announcements before the rest of the world gets to see it.
If there was not central planning which ruled our fates with its every edict, this issue would not exist.
Anyways, the price moved up 23 cents by 2:05. It moved sideways waiting for the Fed press conference. Within 11 minutes of the

The price of silver has been going down, and then down some more. From over $28 a year ago, and over $26.50 a month ago, it’s now at a new low under $22.50. Four bucks down in a month.
However, it’s been behaving differently than gold behind the scenes. Let’s look at the gold and silver basis charts to see.
Gold Fundamentals – Gold Basis Analysis
The gold basis (i.e. abundance to the market) was humming along around 0.5%. Then, as the price began to rise, it rose also, now around 1.5%. Gold would seem to be more abundant, first with a higher price (inverse to the price of the dollar, as measured in gold, indicated on the chart). Now, the gold basis is showing that it still looks abundant, even at a lower price.

.
Now look at silver.
Silver Fundamentals – Silver

Part III – Gold Standards, the good, the bad, and the ugly. Gresham’s law and gold. Is it even possible to return to a gold standard today? Is Russia leading the push, or do we need something else?  
What A Gold Standard Isn’t 
Can we all recognize the simple fact that every government price-fixing scheme, ever, has failed? 
For example, banana republics have declared their pesos to be worth $1. But when the market decides to redeem pesos for dollars 1-to-1, the central bank abandons the peg. A less-understood example is when the Swiss National Bank decided to hold its franc down to €0.77. It boasted it could print as many francs as necessary to keep the franc down. But it hit its stop-loss limit, and was forced to abandon this peg just like all the banana

[unable to retrieve full-text content]Part I – Unpacking the narrative of how Russia is going to change the global monetary system. There is a Narrative about Russia and how it will change the monetary system. Many analysts in the gold community are promoting this story. There’s just one problem with this Narrative. It is like how Michael Crighton described the Gell-Mann Amnesia Effect, stating that the newspaper is full of stories explaining how “wet streets cause rain.”

Keith Weiner is founder and CEO of Monetary Metals, an investment firm that pays interest on gold, and the founder of the Gold Standard Institute USA. Weiner’s mission is to provide entrepreneurial services and education to help restore gold as the world’s money par excellence.
Mentioned in the Episode and Other Links of Interest:
The YouTube version of this interview
Keith Weiner’s bio at Monetary Metals
Weiner’s Forbes article on gold and silver coins not circulating
?For more information, see BobMurphyShow.com. The Bob Murphy Show is also available on Apple Podcasts, Google Podcasts, Stitcher, Spotify, and via RSS.
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Can Russia Enact a Gold Standard?
In Part I we discussed how the fallout from the Russian invasion of Ukraine will lead to inflation, but not in the way most people think.  In Part II we discuss the possibility of Russia repudiating the dollar and going on a gold standard. Can they do it? How would the world react? Why not enact a Bitcoin Standard instead?
The Russian central bank reportedly has over 2,000 tonnes of gold. We have seen three arguments repeated many times, both in finance/economic articles and on social media.
One is that Russia can pay gold for goods, to work around being locked out of the SWIFT payments system.
Two is that Russia could use this to declare a gold standard, which would really piss off the Western powers.
Three is that a number of

To listen to the audio version of this article click here.
Every once in a while, one regrets not acting sooner, or not acting soon enough. In our case, we did not publish this Tuesday evening. We should have. Today the price is down, and others may also call for lower silver prices.
Oh well. Our consolation is that they most likely are not calling for lower silver prices based on the same indicator we observe.
The basis.
Here is the chart.

Silver Price Basis Chart
Look at that moonshot!
basis = future(bid) – spot(offer)
cobasis = spot(bid) – future(offer)
As the price has risen since February 25, from under $24, to yesterday around $27, the silver basis shot up. It went from 0.67% to 4.18%.

.
Silver Buyer Beware
Folks, it does not get any clearer than this. The

In March, I flew for the first time since the start of Covid health theater. I was invited to speak at the Austrian Economics Research Conference in Auburn, AL. My talk covered Jimi Hendrix, and an infamous bridge collapse. In other words, I discussed my theory of interest and prices.
At the end of November, I flew to London for two weeks of business meetings. This was my first international trip since the Covid lockdown. I offer three comments. One, the UK government forces you to get a Covid test to visit the country and the US government forces you to get another test to be allowed to board a flight back home. Yes, even US citizens. No, I do not think this is constitutional (but who cares about that old document).
Two, by the way, having a stick jammed up your

To listen to the audio version of this article click here.
The Ship of Theseus is an old philosophical thought experiment. It asks a question about identity. Suppose you replace all of the boards of a ship with new ones—is it still the same ship?
We are not going to try to resolve this millennia-old paradox. Instead, we are going to add one more element, and then tie it to the monetary system. The additional element is what if the replacement boards are adulterated in some way. That is, each new board is warped, or weakened, or otherwise not fit for purpose.
It should be clear that replacing boards with unsound wood does not alter reality, only the ship. It does not remove any constraints such as the need to be watertight. It does not make anything better, only

Listen to the audio version of this article here!
In the last Supply and Demand update, we discussed some different theories which attempt to explain what causes the gold and silver prices to move. We mentioned the:
“…attempt to hold up a famous buyer of metal, while ignoring the thousands of not-famous sellers who sold the metal to said famous buyer.”
Since then, Ireland has bought gold for the first time in over a decade. And predictably, most voices in the gold community see this as a bullish sign.
By the way, we did not see any data about the prices paid on what dates, but the articles on December 1 mention a series of buys over a few months. Assuming a few means two, it looks like Ireland may have paid more than the current price.
The Different Theories on

Opposing Monetary Directions
“Real estate is the future of the monetary system,” declares a real estate bug.
Does this make any sense? We would ask him this.
“OK how will houses be borrowed and lent?”
“Look at this housing bond,” he says, pointing to a bond denominated in dollars, with principal and interest paid in dollars.
“What do you mean ‘housing’ bond’,” we ask, “it’s a bond denominated in dollars!”
“Yes, but housing is the collateral.”
OK, so it’s not a housing bond. It’s a dollar bond used to finance the purchase of houses. These are not the same thing at all, the way chalk and cheese are not the same thing, despite both being single-syllable words beginning with the letters “ch”.
El Salvador’s Bitcoin Gamble
A few weeks back, we looked at the investor’s

To listen to the audio version of this article click here
Opposing Monetary Directions
“Real estate is the future of the monetary system,” declares a real estate bug.
Does this make any sense? We would ask him this.
“OK how will houses be borrowed and lent?”
“Look at this housing bond,” he says, pointing to a bond denominated in dollars, with principal and interest paid in dollars.
“What do you mean ‘housing’ bond’,” we ask, “it’s a bond denominated in dollars!”
“Yes, but housing is the collateral.”
OK, so it’s not a housing bond. It’s a dollar bond used to finance the purchase of houses. These are not the same thing at all, the way chalk and cheese are not the same thing, despite both being single-syllable words beginning with the letters “ch”.
El Salvador’s

[unable to retrieve full-text content]Breaking Down the Dollar Monetary System If you ask most people, “what is money?” they will answer that money is the generally accepted medium of exchange. If you ask Google Images, it will show you many pictures of green pieces of paper. Virtually everyone agrees that money means the dollar.

[unable to retrieve full-text content] Prices move up and down, in the restless churn of our irredeemable monetary system. There are several schools of thought whose theories attempt to describe, if not predict, the next price move.

Picture, if you can, a world in which gold circulates as the medium of exchange. People pay for everything, from groceries to rent, in gold. Employers pay wages in gold. Productive enterprises borrow gold to finance everything from food production to constructing apartment buildings. In other words, picture a world where there’s abundant opportunities to earn a yield on gold and finance productive businesses in gold.
What Happened to Gold After the Gold Standard?
It is difficult to picture because it is so different from the world of 2021. In our world, the government first established a central bank in 1913, then prohibited gold ownership and voided all gold contract clauses in 1933. It finally severed the tie between gold and its official currency, in 1971. It

Many voices in the gold community are making a simple point. Look at the prices of oil, copper, and other commodities. They are skyrocketing. The mainstream explanation—shared by Keynesians, Monetarists, and many Austrians—is that the cause of this skyrocketing is the increase in the quantity of what is called “money”. 
The price of gold has not been going up. The inference is that it should be going up (note the word “should” is very dangerous in trading). The default assumption is there can only be one possible explanation: price suppression. We aren’t going to debunk, yet again, this conspiracy theory. Our definitive proof is in our response to Ted Butler. Nor address, yet again, the fact that the dollar is not money, nor is it an objective measure of the

Can you remember back to when you were two or three years old? Toddlers often think that there are little people inside the TV (or maybe this was only true when the TV was about as deep as it was wide—and maybe kids today don’t think this when looking at a 60-inch flatscreen…)
Anyways, it’s normal to grow out of this naïve view of television. No one believes it past the age of eight, much less into adulthood.

Purchasing Power and Intrinsicism
This is a simple instance of the philosophic concept of intrinsicism. To think of external characteristics as if they are inside or an integral part of an object. Actors are not inside the TV, nor are video production studios. Not even the content is inside the TV. The TV is nothing more than a medium to render video.
You

The price of silver dropped a dollar, or over 4% on Wednesday. Some voices in the precious metals press want you to think that there is only one conceivable cause. We should coin a term for this form of logical fallacy: argumentum ad ignorantia. This is an argument of the form: “the cause must be XYZ, as I cannot conceive of anything else.”
The Same Old Song and Dance
In this case, XYZ is that the alleged cartel, the bullion banks and/or central banks, sold silver futures in mass quantity. Also, allegedly, inflation-fearing masses are buying physical gold.
What would happen if the price of futures were pushed down, while the price of physical were pushed up? We will be charitable, and say that physical only went up a penny. Let’s give a hint:
Basis = future – spot

This time, we start with the gold-silver ratio. Let’s revisit something we said on 23 August:
“…the supply and demand fundamentals of silver are stronger here than they have been since the Covid crisis.
… physical silver is scarcer than gold.”
This corresponds to the peak where we have drawn an arrow on the gold-silver ratio chart.
Soon after we said that, the ratio moved down about 5% (i.e. in favor of silver).
And now we see a similar pattern in the ratio of the gold basis to silver basis / gold cobasis to silver cobasis, as we saw on 23 August. The following chart shows the relative abundance / scarcity of the metals.

Gold-silver ratio – Click to enlarge

Gold and Silver Price Fundamentals
As the ratio of the cobases falls (i.e. gold is becoming less scarce

This time, we start with the gold-silver ratio. Let’s revisit something we said on 23 August:
“…the supply and demand fundamentals of silver are stronger here than they have been since the Covid crisis.
… physical silver is scarcer than gold.”
This corresponds to the peak where we have drawn an arrow on the gold-silver ratio chart.
Soon after we said that, the ratio moved down about 5% (i.e. in favor of silver).
And now we see a similar pattern in the ratio of the gold basis to silver basis / gold cobasis to silver cobasis, as we saw on 23 August. The following chart shows the relative abundance / scarcity of the metals.

Gold-silver ratio – Click to enlarge

Gold and Silver Price Fundamentals
As the ratio of the cobases falls (i.e. gold is becoming less scarce

Picture, if you will, a government that deliberately inflicts bad policy on the people. I know this sounds crazy, and could never happen, but please bear with me.
Suppose the government criminalizes hiring someone who produces less than an arbitrary threshold. Or it forces the closure of all businesses deemed to be non “essential”. Or it makes all employers obtain government permission for a long and growing list of things, and then denies permission arbitrarily and capriciously to some, while constantly raising the compliance burden—and hence cost—to the dwindling survivors.
Whatever the high-minded intentions, the end result is that these policies render some people unemployed and unemployable. Change happens at the margin. The marginal worker loses his job. And

[unable to retrieve full-text content]One way to look at the price of gold, is that it dropped from its high around $1,900 in early June. Another way is to zoom out, and look at the big picture. Here is a 10-year chart of gold and silver prices.
For over four years, after the peak around $1,900 ten years ago (early September 2011), the price of gold moved down. By December 2015, it was just over $1,000. Then it was a sideways market until three years ago (August 2018), when the price was well under $1,200. It spent two years rapidly rising, to well over $2,000 a year ago (August 2020). Since then, it has been down and sideways to its current level under $1,800.
The silver price has had a greater fall, and did not begin to rise until later (it was under $12 until the onset of the Covid

Sometimes, bad luck can strike. But other times, a catastrophe comes from a series of bad decisions, each the reaction to the consequences of the previous one.
On August 15, 1971, President Nixon decreed that the US dollar would no longer be redeemable for the gold owed, even to foreign governments. This bad decision is the latter, a desperate attempt to avoid the consequences of previous bad decisions.
Tricky Dicky’s Catastrophe
Richard “Tricky Dicky” Nixon decided, with advice from Milton “Free to Choose” Friedman, to end gold convertibility. He claimed it was just temporary, but his decree was a dishonorable default on the obligations of the US government.
My God, I wish that we the people did not grant such power to the government!
The Power to debauch the

The following article was written by Keith Weiner, CEO of Monetary Metals, as a counterpoint to this article, POINT: Should the US Return to the Gold Standard? No
It was originally published at InsideSources, here: COUNTERPOINT: Is the Gold Standard the Economists’ Punching Bag?
In many gyms, there is a punching bag in the corner. When someone feels frustrated or wants to show off, he can hit it. The gold standard is the punching bag in the economists’ gym.
In an InsideSources op-ed, David Beckworth and Patrick Horan argue, “A new gold standard would do much more harm than good.” They posit that we should not return to the currency price-fixing scheme of 1944-1971. They are convincing, but unfortunately, they knocked down a straw man.
The authors concede that the

No sooner did we write Silver Rorschach Test, than the price of gold flash-crashed, or was smashed down. On Sunday afternoon in Arizona—i.e. Monday morning in Australia and Asia—the gold price dropped sharply. Gold bug sources claim that the drop was $100, but as we can see from the price graph included in this report, the actual crash itself was about $70.
Some of these sources were very quick to assert that the drop was caused by naked selling of gold futures contracts. This is an allegation that is either supported by the data, or not.
Our comment yesterday regarding silver applies to gold as well:
“Price moves in themselves do not support any particular theory of who the actors are, what motivates them, or what they did (other than, broadly, buy or sell).”

When we saw the following comment from a prominent otherwise-free-marketer, we knew it was time to write this article.
“…the value of the Fed’s “liabilities”(which are so in name only) [scare quotes and parenthetic comment in original] bears only a very loose connection to the value of its assets.”
This statement seems so simple. The Fed is the issuer of America’s and the world’s reserve currency (mainstream pronunciation “muhn-ee”).
Observing that this paper has value in the market, Fed apologists (and critics alike) imbue it with an almost mystical power: it has value because the government says so (and because the government has nuclear bombs). Therefore, it will always have value (though declining in inverse proportion to its rising quantity).
Oh, and let’s

[unable to retrieve full-text content]We’re seeing the argument, again, that silver stocks are being consumed in solar panels, medical applications, and of course, electronics. This argument has a certain temptation. After all, the standard assumption is that value is inversely proportional to quantity. Purchasing power is widely believed to be 1 / N (N is number of units of currency issued).

There is sometimes a tendency to confuse ends and means. For example, in traveling through an airport there is extensive inspection of passengers. Before you are allowed to board an airplane, you must go through a process that is intrusive and increasingly invasive. This is deemed to be security. How do we know it makes us secure?
Because it is annoying.
See the switcheroo? The degree of disruption of your schedule and possessions bears only a faint relationship to the degree of safety.
So it is with many other regulated areas. Banking is no exception. It’s worse, actually, as the governments and their central banks offer trillions of perverse incentives for banks to act in ways that are most unsafe. Ultra-low interest rates provide both the means and the motive