Silver Price Driven by Reservation Demand
The price of gold went up a buck last week, but the price of silver dropped back 13 cents. And the gold-silver ratio marches further upwards.
Keith spoke at a conference this week, about how to analyze the fundamentals of supply and demand in gold and silver. He talked about the basis of course.
Silver coins – silver prices are partly influenced by an industrial demand component, but the fact that they move most of the time with the price of gold indicates that the main price driver remains reservation demand by investors. [PT]
A Loose Relationship
The Dow Jones Industrial Average made another concerted run at the elusive 27,000 milestone over the last several weeks. But, as of this writing, the index has stalled out short of this psychosomatic barrier. By our estimation, this is for the best.
Since early 2018 the DJIA has gone nowhere, albeit in interesting ways… [PT]
Lira Comeback?
The price of gold jumped 35 bucks last week, and that of silver 48 cents. The dollar is now down to 23 milligrams of gold.
Keith is on the road this week, so we will just comment on one thing. If Italy is serious about moving back to the lira, that will make the euro less sound (to say nothing of the lira). That will drive people mostly to the dollar, but also to gold.
Italian deputy prime minister Matteo Salvini (as the leader of the Lega party he is actually the most powerful politician in Italy, despite not being prime minister). In the course of an escalating dispute with the European Commission over the country’s budget deficit and debt, he threatened that Italy would consider introducing a parallel currency in the form of so-called “mini-BOTs” – non-interest bearing Italian treasury notes which the Italian state would print and accept in payment. Not quite a return to the lira yet, as mini-BOTs would actually be denominated in euro, but they would certainly represent a lira-in-waiting. The people who have come up with the idea apparently believe that such a scheme would be in compliance with EU/ euro zone regulations. We are not so sure about that, but ultimately Brussels would not really be able to do much about it. No-one seems to be taking the threat seriously at the moment, but if the Italian government were to go through with it, it would undoubtedly undermine the euro. [PT]
A Plan for Everything!
The run-up to the presidential primaries offers a funhouse reflection of American life. Presidential hopefuls, hacks, and has-beens turn to focus groups to discover what they think the American electorate wants. Then they distill it down to hollow bumper stickers. After that, they pump their fists and reflect it back with mindless repetition.
A plea for clemency from Mr. 1/1024th crow. [PT]
Traders and Analysts Caught Wrong-Footed
Over the past week gold and gold stocks have been on a tear. It is probably fair to say that most market participants were surprised by this development. Although sentiment on gold was not extremely bearish and several observers expected a bounce, to our knowledge no-one expected this:
Gold stocks (HUI Index) and gold, daily. As noted in the annotation above, a Wells Fargo gold analyst turned bearish at the worst possible moment – exactly one day before gold took off like a scalded cat. We mention this mainly because it demonstrates that markets often defy widespread expectations.
May Gone in June…
Yes, now that June is here, it is indeed the end of May. Theresa May, to be precise, the henceforth former British Prime Minister. After delivering her unparalleled masterclass in “how to completely botch Brexit”, British cartoonists are giving her a well-deserved send-off, which we are documenting below.
But first, in case you don’t know anything about Ms. May’s heroic “Brexit”-related efforts, here is an explanation of how she tried to finagle the best possible deal out of the Juncker Empire (instead of just waving good-bye and leaving). A visit at a Burger Kind is used to great effect to illustrate the situation:
Theresa May’s “Brexit” in a nutshell, by Alistair Williams
Shifting Patterns
In the last issue of Seasonal Insights I have discussed Bitcoin’s seasonal pattern in the course of a year. In this issue I will show an analysis of the returns of bitcoin on individual days of the week.
Bitcoin, daily – since bottoming in early December, BTC has advanced quite a bit. It remains an excellent trading sardine. [PT]
Is Silver Still Useful as a Monetary Metal?
The price of gold jumped a whole twenty bucks last week. We imagine that the marginal gold bug is relieved to be rid of his gold, in this opportunity afforded by the highest price since early April. OK, all kidding aside, the price of silver went up a penny.
The gold-silver ratio keeps hitting new highs recently (this is actually a long-term trend, frequently interrupted by strong rallies of silver against gold). Is silver losing its usefulness as a monetary metal? [PT]
The Ugly End of Globalization
Sometime in the fall of 2018 a lowly gofer at the New York Stock Exchange was sweating bullets. He had made an honest mistake. One that could forever tag him a buffoon.
Art Cashin the living hat-stand, going through a succession of DJIA milestone hats. He promised was going to crack a smile for the Dow 27,000 hat photo, alas, it was not to be. [PT]
Money Supply Growth Continues to Decelerate
Here is a brief update of recent developments in US true money supply growth as well as the trend in the ratio of industrial production of capital goods versus consumer goods (we use the latter as a proxy for the effects of credit expansion on the economy’s production structure). First, a chart of the y/y growth rate of the broad US money supply TMS-2 vs. y/y growth in industrial & commercial loans extended by US banks.
At the end of April, growth in US TMS-2 (black line) stood at a measly 2% y/y, which is well below the threshold traditionally required to maintain bubble conditions. The red line depicts y/y growth in C&I loans – and the recent slowdown may be significant.
The Money of the Free Market, not of Governments
Monday was Memorial Day holiday in America. Last week the price of gold rose 8 bucks, and silver 16 cents. With Keith traveling in Asia right now, this will be a brief report. But speaking of Asia, everyone seems to be talking about China’s (and other countries, such as Russia) accumulation of gold.
Accumulation of gold reserves over the past decade by various emerging market central banks (from the new Incrementum In Gold We Trust 2019 Report) [PT]
Most read in the last 20 days:
A Surprise Move in Gold
Traders and Analysts Caught Wrong-Footed Over the past week gold and gold stocks have been on a tear. It is probably fair to say that most market participants were surprised by this development. Although sentiment on gold was not extremely bearish and several observers expected a bounce, to our knowledge no-one expected this: Gold stocks (HUI Index) and gold, daily. As noted in the annotation above, a Wells Fargo gold analyst turned bearish at the worst possible moment...
May Away
May Gone in June... Yes, now that June is here, it is indeed the end of May. Theresa May, to be precise, the henceforth former British Prime Minister. After delivering her unparalleled masterclass in “how to completely botch Brexit”, British cartoonists are giving her a well-deserved send-off, which we are documenting below. But first, in case you don't know anything about Ms. May's heroic “Brexit”-related efforts, here is an explanation of how she tried to finagle the best...
US Money Supply Growth and the Production Structure – Signs of an Aging Boom
Money Supply Growth Continues to Decelerate Here is a brief update of recent developments in US true money supply growth as well as the trend in the ratio of industrial production of capital goods versus consumer goods (we use the latter as a proxy for the effects of credit expansion on the economy's production structure). First, a chart of the y/y growth rate of the broad US money supply TMS-2 vs. y/y growth in industrial & commercial loans extended by US banks. At...
Elizabeth Warren’s Plan to Bamboozle American Voters
A Plan for Everything! The run-up to the presidential primaries offers a funhouse reflection of American life. Presidential hopefuls, hacks, and has-beens turn to focus groups to discover what they think the American electorate wants. Then they distill it down to hollow bumper stickers. After that, they pump their fists and reflect it back with mindless repetition. A plea for clemency from Mr. 1/1024th crow. [PT] Change We Can Believe In. Feel the...
The Ugly End of Globalization
The Ugly End of Globalization Sometime in the fall of 2018 a lowly gofer at the New York Stock Exchange was sweating bullets. He had made an honest mistake. One that could forever tag him a buffoon. Art Cashin the living hat-stand, going through a succession of DJIA milestone hats. He promised was going to crack a smile for the Dow 27,000 hat photo, alas, it was not to be. [PT] After trading sideways for most of the spring, the Dow Jones Industrial...
Gold vs. Silver - Precious Metals Supply and Demand
Is Silver Still Useful as a Monetary Metal? The price of gold jumped a whole twenty bucks last week. We imagine that the marginal gold bug is relieved to be rid of his gold, in this opportunity afforded by the highest price since early April. OK, all kidding aside, the price of silver went up a penny. The gold-silver ratio keeps hitting new highs recently (this is actually a long-term trend, frequently interrupted by strong rallies of silver against gold). Is silver...
Fed Chair Powell’s Plan to Pickle the Economy
A Loose Relationship The Dow Jones Industrial Average made another concerted run at the elusive 27,000 milestone over the last several weeks. But, as of this writing, the index has stalled out short of this psychosomatic barrier. By our estimation, this is for the best. Since early 2018 the DJIA has gone nowhere, albeit in interesting ways... [PT] While not always apparent, the stock market generally maintains a loose connection to the underlying...
Paul Tudor Jones Likes Gold
Gold is Paul Tudor Jones' Favorite Trade Over the Coming 12-24 Months In a recent Bloomberg interview, legendary trader and hedge fund manager Paul Tudor Jones was asked what areas of the markets currently offer the best opportunities in his opinion. His reply: “As a macro trader I think the best trade is going to be gold”. The relevant excerpt from the interview can be viewed below (in case the embedded video doesn't work for you, here is a link to the video on...
The Italian Job - Precious Metals Supply and Demand
Lira Comeback? The price of gold jumped 35 bucks last week, and that of silver 48 cents. The dollar is now down to 23 milligrams of gold. Keith is on the road this week, so we will just comment on one thing. If Italy is serious about moving back to the lira, that will make the euro less sound (to say nothing of the lira). That will drive people mostly to the dollar, but also to gold. Italian deputy prime minister Matteo Salvini (as the leader of the Lega party he is...
Bitcoin: What is the Best Day of the Week to Buy?
Shifting Patterns In the last issue of Seasonal Insights I have discussed Bitcoin’s seasonal pattern in the course of a year. In this issue I will show an analysis of the returns of bitcoin on individual days of the week. Bitcoin, daily – since bottoming in early December, BTC has advanced quite a bit. It remains an excellent trading sardine. [PT] It seems to me that Bitcoin is particularly interesting for this type of study: it exhibits spectacular price...
Silver Remains a Monetary Metal - Precious Metals Supply and Demand
Silver Price Driven by Reservation Demand The price of gold went up a buck last week, but the price of silver dropped back 13 cents. And the gold-silver ratio marches further upwards. Keith spoke at a conference this week, about how to analyze the fundamentals of supply and demand in gold and silver. He talked about the basis of course. Silver coins – silver prices are partly influenced by an industrial demand component, but the fact that they move most of the time with...
Austrian Theory and Investment
Realtime Charts
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