Mechanical market signals are giving credence to the probability that the Federal Reserve and other centrall banks will provide additional support for the global economy. The U.S. Dollar is going opposite to gold and silver because of fears of inflation that central bank and treasury actions printing more money will produce. ETF's are adding to their holdings of precious metals for the past 20 straight sessions. Yesterday alone added 228,559 ounces of gold bring total annual purchases to 23.6 million ounces. Bank of America said precious metals funds saw the 2nd largest ever weekly inflow of $3.8 billion for the week ending July 22nd. Silver ETF holdings jumped by nearly 10 million ounces in one day and the I-shares Silver Trust alone saw 9.5 million ounces flowing in. Many analysts are predicting a near-term "all time high" for gold. U.S. Treasury yields are back down to the lowest since the height of the virus anxiety in March. That gives credence to a "safe haven" environment entrenched. Mining shares and other futures commodities have pretty much all shown strength in the past week. Open interest has been rising in gold and silver on large volumes. The silver market seems more likely than gold to forge a corrective setback. But contradicting that is a narrow trading range in silver. So the main factor in all this seems to be strong ETF buying. ETF holdings in platinum are also increasing significantly.

The founder and CEO of First Majestic Silver spoke with Kitco after realizing silver was finally making a move after appearing stalled for the last 18 years. Demand has increased from green technology manufacturers, precious metal investors, and Covid-19 is hampering mine production by causing suspensions, all aiding silver. Tightness in silver supply is only goinv to get worse as we go green the CEO said, as before we didnt have solar and panels and electric cars to as great a degree. Solar panel makers have become the largest consumers of silver. As the coronavirus spread, Mexican officials and other Latin-American nations implemented strict lockdown measures, and Mexican mines were not considered essential services even though they accounted for 28% of global silver production.

First Majestic's San Dimas mine produced 35% less than the previous quarter of silver, a total of 2.4 million ounces. Two other mines had production at 63% and 45% lower as a result of suspending operations in April. Despite this, the CEO projects 21.5 million ounces of silver to be produced in 2020 versus a similar might for 2019.

Pan American Silver (PAAS) said it was moving its Huaron and Morococha operations in Peru into care and maintenance in response to several workers testing positive there. In 2019, they each produced 3.8 million and 2.5 million ounces of silver respectively.

In the very latest data as of this writing, gold futures continued to rally but silver and platinum may have suffered key reversals and showed some weakness. However, recent moves have been much bigger percentagewise for silver than for gold. A wave of short covering has been produced for silver. The European Union's recovery fund allocated a huge chunk of tis spending to environmental initiatives and alternate energy development. That allowed solar energy and silver to be two of the best-performing niches in various sub-sectors so far this year. Solar panesls and batteries needed to store energy at night both require specialty metals like silver. And Tesla has become a "hot stock" in anticipation of increased production of Tesla's solar panels and batteries.

The gold/silver ratio has been narrowing as a result of silver's recent surge. One Kitco advisor said that the real reason for silver's surge is that investors in their '30's amd '40's have realized the need for safe haven diversity in case of a stock market bubble. The ratio is around 83, but was as high as 124 in March.

Some analysts think there is no alternative to gold and silver, especially silver, because China and the USA are saber rattling, shutdowns are stifling economies, and the Fed has hired a goldbug. One prominent trader, Bill Baruch of Blue Line Capital sees a further 30% rally in silver. Silver is sitting close to a seven-year high.

The Federal Reserve is printing money at the rate of 25% more year over year. But the 2nd Quarter U.S. GDP is forecast to be down 34.7%. To better understand this:
M1 includes money in circulation plus checkable deposits in banks.
M2 includes M1 plus savings deposits less than $100,000 and money market mutual funds.
M3 includes M2 plus large time deposits in banks.
M4 includes all despoits in PO savings, excluding national savings certificates.

M2 is seeing the worst velocity in history at -34.7%.. And the Federal Reserve's corporate bond holdings, in which it recently engaged in merrily purchasing for the first time, include two of the top four purchases being in German auto makers Volkswagen and Mercedes, more than its purchases of Verizon or General Motors. Ford is near the bottom of the list of purchases and Chrysler hardly seen. A decline in money velocity is an indication of a weak real economy where money is not changing hands at a robust pace. M2 velocity suggests that economic activity is the weakest since 1959. This is not the case, but affecting by increased money reserves required to be held by banks. Some economists see this as a disaster, but others say that due to a change in policy of the Fed during the Greenspan years as its principal responsbility to control inflation resulted in money aggregates having no predictive power with respect to prices. No agreement is seen on the effects of the unusual changes in money supply relationships. They appear so far to be largely being ignored.