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The Curious Case of Falling Gold and Silver Prices
A curious thing happened last week. The prices of both monetary metals have been falling for a week and a half through February 15. No, that’s not the curious part. There is no law of nature that says the prices have to go up, but if they go down it must be artificial somehow. The curious thing is that the price fell while open interest in futures rose, which is not typical of how the market has actually been behaving in recent years.
Now let’s look at the data.
Silver loses about 6.6%, and gold about 4%; thus the gold:silver ratio gains about 2.6%.
Next, let’s look at the open interest data, which is the number of futures contracts in each metal.
One possible explanation is the notorious “naked short sellers”. If so, they made money. Prices did fall. However, there is more data that doesn’t quite fit this theory.
As we showed, silver open interest was already quite high. It increased a few thousand contracts (under 2%) during the period through February 15. Gold open interest was not high by recent historical standards, and its open interest rose by 25,000 contracts (around 6%).
Now let’s look at the basis data (here is a short tutorial on the basis). This adds additional color to the data provided above.
The gold basis has been falling for a long time. The basis generally (but not always) moves in the opposite direction of the cobasis, and this linked article showed the cobasis rising. The falling gold basis is not news in itself.
Let’s look at the silver basis.
The silver basis for December has been in a rising trend since at least last July (which uptrend is not yet broken, in our opinion). Here in this graph, we see it is not much changed from start to end. The May basis is falling, which is interesting as it occurs against the contract “roll” from March-May, now occurring. The “roll” is when “naked longs” must sell because they cannot take delivery, and typically they buy the next month if they want to keep exposure to the metal.
The above data shows: (1) falling prices, (2) rising open interest, and (3) falling basis in gold and slightly more ambiguously in silver. We have provided all of the data comprising this curious circumstance. You can form your own conclusion.
Or you can read Part II of this article (free enrollment required for full access) for our analysis and surprising (though tentative) conclusion.
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He didn't say it had intrinsic value. He only implied that it is not "fiat": it is not issued by a central authority and its use is not enforced by a central authority.
We need more Cowbell !!!
Well done Sir !!!
damn str8 skippy!
*offers some extra cowbell as a reward for truth to power!*
Alas, benfukked's got his equity mania. We all know what happens next.
ZHers tell stories about shortages of physical PMs. Last week I was in my local coin shop to buy 1,000 Silver Maple Leafs. They apologized for the inconvenience and asked me if I could wait 2 weeks for delivery. They said demand is strong among a select group. A dude had walked in earlier in the day and bought 3,000 Silver Maples. When you get people coming into a coin store with $100,000 cheques, you can't deny the demand for physical
Call Monex and get it 1% over spot, and 3-5 day standard delivery to your home. Minimum is 100 ounces.
Two ZH'ers walk into a coin shop
and ...
...and they both rid themselves of all their extra fiat for shiny stuff; then talk about Blythe's nasty gap and Jew-water carrying bank lackies like Jamie crotch-sniffer Dimon and then go boating.
One ZH'er goes to APMEX, and finds there is no tight supply.
The other ZH'er goes to Provident, buys at 69 cents over spot and cheaper shipping than APMEX.
No popcorn at Christmas however.
Wrong Moe, just checked Goldshark and Provident is spot plus $2.61 per oz.
See, it's the popcorn that keeps me a loyal customer. Provident needs to play hardball and offer pretzels, or something similar. I did purchase a ".999 fine copper bullion" bar (lol) from Provident, once, as a gag for a friend. He politely declined the gift. It's now a paperweight on my desk.
Yes, only high prices...
Hey, I've got silver priced at $75/oz. No takers? Then the market must not be tight since I still have it available. Using Apmex as a metric of market tightness is a wee bit off in my opinion.
I stopped in the local coin shop today—great guys, don't charge city sales tax, since they're located in an exclave of county land—and asked them about business, while perusing their inventory. Walked out with some shinies, at a fair price (and they had plenty to choose from). All this talk of scarcity is nonsense.
A friend went to a LCS to buy his first silver eagles. He was offered some $4000 worth at $35 and change for each. It took him four hours to get back there with his money and the price changed to $43, so he left without.
Winning at the game. Good luck to you.
It's NO different than the market floating higher and higher as people are pulling their money out.......... The Bernack is pushing the market higher while slamming down gold and silver....... this is his way to subdue inflation
Please tell me you guys here at ZH have figured that out, right?
Edit: subdue the perception of inflation.
The inflation is real enough to anyone who drives or eats.
i know that there is no inflation, and if it is, it's undercontrol. anybody from ny metro area ride the trains?? prices just went up a bit above the 'fed' target. or maybe it didn't.
There is no CORE inflation. Sure prices of "stuff" are up, but that is just in those pesky, volatile "Food and Energy Sectors" that just need to be "excluded" so as to get to the CORE INFLATION, which is what REALLY matters.
I do that every month. I simply "EXCLUDE Food and ENergy Sectors" from my budget and spending, and everything is fine. Sure the Mrs. and the kids are cold, hungry, and walking a lot, but we all have Faith In The System. Faith in the System and Faith In The Fiat, and Fiat in the Faith.......that's what matters.
There is certainly no inflation in salaries!
there is no inflation
in seals
unless you blow
in their noses...
or goes to the doctor or has kids in college or has house repairs....
Just about time to max out a couple "no interest" credit card offers on a replacement boat anchor.
800 plus credit score
i do the same thing
every time they send new no interest credit card
buy 100 oz ..pay it off by the 11 th month
use their capital, interest free for the year
keeps my cash sidelined ..just because
Paper and silver gold will eventually go to 0 :). I guess its starting to happen.
yup,
banksters are pulling physical off the market and selling paper to the unwashed. once the unwashed realize what's up, the banksters will default on paper (no deliveries), fuck the unwashed and call it a reset. corzined.
What is silver gold?
electrum?
This curious circumstance in " the Market" .... WTF! Anybody that see the market as anything other than a tool of the Central Bankers.... is a tool, fool.
The fuckin American con game continues as the gangster banks use freshly printed dollars to ruin real money. What a disgusting fraud to watch!
1.
85 Billion a month in fresh confetti to buy 99% of all new US debt
2.
No budget in the Senate for 3 years
3.
Trillion dollar deficits as far as the eye can see
4.
Europe’s economies in a depression
5.
No employment growth globally
6.
China and Russia buying Gold Bullion hand over fist
7.
A fiscal cliff that cannot be cured because you have a clown at the helm
8.
A devalued currency
9.
Spain, Venezuela, Egypt, Switzerland in trouble in the last week
10.
Collapse of the Yen
No need to go on and gold is down over $100 per ounce, Silver destroyed while paper stocks higher on media lies about economic growth. And this my friends is the New American banking cartel at work destroying Gold as they benefit from naked shorting which is illegal for you and me. Time to rise up and time to end the banking fraud in America. This is the fraud capital of the west and those of you who believe this bullshit will live to regret your election of this clown and the lies his propaganda machine in the media are telling you. We are on the course of self-destruction led by Goldman Sachs, JP Morgan and HSBC banks while they benefit on your pain.
Romney would have been no different, but that's not the point. Or maybe it is.
The sheep had one last chance in Ron Paul and they flushed it like a fat turd down the shit hole. They deserve everything they have comming to them. Dum fucks!. And the GOP screwed him to boot. This is my country and I'm going to get those mother fuckers out of office some how.
If voting changed anything, you bet your sweet ass Congress would outlaw it.
Just checked my physical gold (and silver) - it was still intact ;) Headed out to get some moar today.
May I add $123 trillion in US unfunded liabilities that are growing at $6.9 trillion a year to your list.
Or maybe gold is just telegraphing sequester.. so flush now and explode higher when Benny has to double up printer output to compensate for the blip lower in nominal GDP
Jim Sinclair seems to be of that mind
It’s a radical new twist in market manipulation for which some trader is certain to get recognized for innovative achievement, not to mention a huge bonus. This time they are going to dump before they pump.
Personally, I just keep selling silver puts with a $26 strike. If and when they hand it over, I'm converting all the paper shit to real metal the next day.
The price is set in the City of London. What else is there to know.
Jews in the city of London. Cities don't set prices, Jews do.
When discussing Israel we need to look at the root cause of the conflict - have a look at this video The Israeli General's Son – the video Israeli does NOT want you to see was made by the son of the general who lead the 73 Israeli offensive - and later turned against Israel's foreign policy
A real eye-opener, pass this around http://www.youtube.com/watch?feature=player_embedded&v=TOaxAckFCuQ
Couple of red arrows I see........
Have you watched the presentation? It's not some crazy Jew hating nonsense. It is the son of the Israeli General who lead the 73 ground forces discussing the lies that began at the very founding of Israel.
Live in ignorance or educate yourself.
Your choice
"Couple of red arrows I see..
Have you watched the presentation?"
There are board monitors always watching the popular boards like this one. The ADL doesn't want this presentation to be watched. Too many of the Goyim are liable to wake up to their slavery and to what's to become of them and their children.
Chances are the ADL won't want you reading this either, LOL!
SYNAGOGUE OF SATAN RISING... WWW.SYNAGOGUERISING.COM
nah we just really don't give a fuck.
bunch of jews lied to the sand niggers and took their olive trees.
because you know, yankees never lied to the indians or gave them small pox or shot them for sport.
Not that we give a fuck about that either. What of history is any different, nobody cares.
keep buying your shiney coins though, bitchez.
lmao
spin masters have this sort of thing covered... Like Gilad Atzmon, he is just 'self hating'....
Just because there is a bull market in PMs this doesn't mean that there will not be severe corrections on the way to the top. In fact bull markets are characterized by very nasty corrections, take a look at 20 years of oil prices to see what happened between $15 and $150 a barrel.
It appears that we have a longer term imbalance developing between the ability of the Fed to print $ and the ability of the economy to destroy $ via defaults, paying back, etc. The bond bear is awake and looking to eat.