CHINA PAY $128 FOR THE PRATA: The Arbitration Gap Exploded and 30 Tons Disappeared from the Safes in One Day

[Igor Pereira]

Traders, the prophecy was fulfilled faster than we expected. While the western market hesitates, China has just set the new floor for Silver.

By Igor Pereira Financial Market Analyst

Official closing data of Shanghai Gold Exchange (SGE) and Shanghai Futures Exchange (SHFE) Today, January 27, show that the "real" price of metal has already exceeded our short-term technical target.

Analysis of the numbers that prove that the West is selling Silver with an unsustainable discount.

The price gap has become absurd. The Chinese market is paying a massive agium to secure the metal.

• The Data: Silver in sight (Ag T+D) closed in GES worth $128.48/oz, a high +6.66% on the day.

• Futures (SHFE): The future contract closed $126.47/oz, climbing +7.25%.

• Reading: Remember our previous analysis of the Gold/Silver Reason projecting $128. China You're there.. This means that any price below $120 in the international market (COMEX/London) is a temporary distortion that will be corrected violently via arbitration.

The price goes up because the metal is disappearing.

• The Draw: Only today, the SHFE vaults recorded a net output of 29,566 kg (almost 30 tons) of silver.

• The Meaning: This corroborates the reports of "shenzhen scarceness" that we have previously analyzed. The industry is taking everything they can, draining the stock from the stock exchange to feed the factories. With only 544 tons remaining in SHFE's coffers, at this rate of looting, the stock can zero in weeks.

While Silver shines, the rest of the metal complex shows mixed movements, typical of portfolio adjustment.

• Gold: Stay firm above $5.100, closing the $5,107.93 in GER (+0.79%). The support of $5k is concrete..

• Platinum and Palladium: They suffered profit (Profit Taking) after yesterday's high explosive. Platinum's down - 4.61% and the Palladium -2.08% China. This is healthy and offers a reentry point for those who have lost the initial rally.

The Western market has no choice but to go up to find the Chinese price.

My Vision: The window of opportunity to buy Silver "barata" (under $108) is closing.

1. Arbitration:New York market potential will open pressure to rise, and wallStreet set the short-term trend.

2. Volatility: Expect sudden movements at the American opening, as the banks will try to contain the high, but the physical gravity of China (purchasing $128) is the dominant force.

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