We harp on it all (and I do mean all) the time in NFTRH. There is most likely no end to the commodity-adversarial deflationary phase until silver is bid higher than gold. People intellectualize things that they see with their own eyes like rising costs in the economy, and think inflation is coming. I think it is too, but market signals will tell when the market is ready.
As it stands, silver is getting bid down worse than gold and that has been a trend since the last inflation phase blew out in 2011. There is no signal.
You remember the end of the last cycle, I am sure. It was called nearly to the week by Bill Gross’s short of the long bond (loudly broadcast across financial media) due to inflation expectations. We had a different view; one that stated ‘maybe, but let’s tap the breaks for a moment and see if we can break the Continuum first…’
We didn’t. We simply added the 2nd to last red arrow on said Continuum…
Have a nice weekend folks.
By Monetary Metals
A 14 Handle on Silver for Now
In gold terms, the dollar went up a small 0.15 milligrams gold. The price of the dollar in silver went up considerably more as a percentage, 0.08 grams to 2.18g. Most people would say that gold went down and silver went down (though we continue to ask why should the prices of the monetary metals be measured in terms of the unstable dollar).
As always, we’re interested in one thing: did the fundamentals change, or did speculators sell off a bit more?
We call such price changes unimportant. That is not to say that it doesn’t matter to someone betting on the price to move in the opposite direction! We’re simply saying that not all price moves affect the fundamentals. Some do, some don’t.
Continue reading A 14 Handle on Silver…
By Monetary Metals
A 14 Handle on Silver, Again
What’s the difference between the Supply and Demand Report 1 November and the Supply and Demand Report 8 November? Just a minor punctuation change. Last week, we asked (rhetorically) if silver would have a 14 handle again.
This week, the market answered. Why yes, yes we can!
Silver closed the week, trading at $14.78. This is down $0.76 from last Friday and almost 20 cents under our fundamental price from that date. The price of gold also dropped, $52. This is quite a discount to what we calculate as its fundamental price.
Continue reading 14 Handle on Silver…
The build up in gold and especially silver’s CoT commercial net short positions (and corresponding over bullishness by large and small specs) was troubling. So too was a meeting of interest rate manipulators last week (never goes well for Team Honest Money). Combine the two and the anticipated correction hit the gold sector.
A problem I have had is that it usually takes weeks to unwind a terrible CoT situation. Since my tin foil hat is in the shop for repairs I cannot chase around those that may or may not be manipulating gold and silver. I play it straight. But it sure did seem like a convenient buildup into the FOMC’s word play and tough guy act and sure enough, we had post-FOMC pukage in the metals and miners.
Now however, GDX has dropped to NFTRH’s target zone (14 to 14.50) in quick time. The only way CoT is going to have proved (come Friday) to have unwound the bearish alignment that quickly is if indeed gold and silver were purposefully gooned up in what we might call a focused and coordinated operation. i.e. wax on, wax right the hell off again.
Whatever, for now I covered my silver and gold miner shorts very profitably but am in no hurry to get bullish and add to my small group of ‘relative quality’ miners until I get a better read on the CoT situation. May even short again. Who knows? I am going to let the market tell me, not the other way around.
I understand that the miners can (and should) lead gold in a bullish phase. Here is the daily view of GDX-GLD looking pretty good.
And it had better look pretty good because the long-term (HUI-Gold) looks pretty horrific.
So maybe the miners are done with their correction and ready to lead the still struggling metals. Then again, maybe not. All I can tell you is that if the rally resumes (we have HUI 150’s open) this will have been the quickest smack down and recovery in recent memory. It would also be a ripple in the bear market’s character. It’s interesting to say the least.
By Monetary Metals
biiwii comment: technical target, even if rally is to resume, extends down into the 14’s first
A 14 Handle on Silver Again?
The prices of the metals dropped by 20 bucks and 20 pennies this week. In other words, the dollar went up ½ milligram gold or 30 mg silver. It wasn’t the euro, which ended the week unchanged. It wasn’t the US stock market, which ended up seven bucks.
What was it?
To answer this, we are reminded of a curious panel at the London Bullion Market Association conference a few weeks ago in Vienna. One of the panelists said “it’s hard to predict the price.” It seemed a lot like saying it’s hard to bend silverware by mind power. The panelists all agreed that the price of gold will fall, to like $800 or so. Readers know that we don’t see any such price in the data (and we don’t heed such predicts based on flawed methodology). Of course the fundamentals could change, but it’s no way to make predictions based on, “well things could change”.
Continue reading A 14 Handle on Silver?
By Monetary Metals
At the risk of being boring, there’s not a lot to say about the markets for gold and silver this week (and frankly being on a challenging travel itinerary, flying from Vienna to Sydney to give a keynote at the Gold Symposium this week, is part of it). There was a modest drop in the prices of the metals, $13 in gold and 21 cents in silver. As it usually does, the silver price moved more than the gold price.
Of course, it’s only boring if you aren’t in the markets. If you are then quiet weeks are OK, but you still pay attention.
It’s the basis that tells us what this means, if anything.
Read on for the picture of supply and demand fundamentals…
Continue reading Little Change to Gold and Silver Supply/Demand
By Monetary Metals
No backwardation in gold and silver…
The dollar dropped about half a milligram gold, and 50mg silver.
But who wants to read about the universal currency falling, failing? Few people are so barbarous as to think of the dollar’s value as being priced in terms a monetary metal. As all right thinking folks know, the value of these commodities is only whatever dollar price they may fetch. In that case, it’s more exciting to report that popular betting commodities are back in a bull market.
“Gold went up $21 and silver went up $0.20.”
OK that said, what we are always interested in is the fundamentals. Every week, we say, “read on, for the only true picture gold and silver supply and demand fundamentals.” What do we mean by that?
Continue reading And Then There Was None (Backwardation)
Because well, it’s only the thing I am most obsessed with in the financial markets …
Gold vs. Commodities (DBC)
Continue reading Daily Gold Ratios
Another one of those simple ‘Gold vs.’ posts. You have endured my blabbing for years about the meanings, so with a combination of laziness and time constraint I am just going to throw some weekly gold ratios up for your review and conclusions.
Continue reading Gold vs….