Precious Metals
A Chirp from the Deep Level Mines
Back in late 2015 and early 2016, we wrote about a leading indicator for gold stocks, namely the sub-sector of marginal – and hence highly leveraged to the gold price – South African gold stocks. Our example du jour at the time was Harmony Gold (HMY) (see “Marginal Producer Takes Off” and “The Canary in the Gold Mine” for the details).
Mining engineer equipped with bio-sensor
Photo credit: Hulton Archive
You Actually Can Eat Gold, But Its Nutritional Value is Dubious
“You can’t eat gold.” The enemies of gold often unleash this little zinger, as if it dismisses the idea of owning gold and indeed the whole gold standard. It is a fact, you cannot eat gold. However, it dismisses nothing.
Over-the-top garnish: Gold leaf-laced donut (reportedly costs $100), gold-laced cakes, sushi roll with gold leaf (according to Japanese lore, eating it is supposed to bring luck), gold-cake eater in Dubai. Nutritional value of the gold leaf is zero, but at least it isn’t toxic. So yes, one can eat gold, but it won’t relieve hunger pangs. We would like to point out here that absolutely no-one is trying to eat bank note-laced cakes. [PT]
A Piece of Paper Alone Cannot Secure Liberty
The idea of a constitution and/or written legislation to secure individual rights so beloved by conservatives and among many libertarians has proven to be a myth. The US Constitution and all those that have been written and ratified in its wake throughout the world have done little to protect individual liberties or keep a check on State largesse.
Sound money vs. a piece of paper – which is the better guarantor of liberty? [PT]
Running From “Risk-Free” to Not So Risk-Free Debt
The price of gold blipped $13 last week, while the price of silver was unchanged. Speaking of interest rates and central planning by central banks, we note that in mid-2016, a correction (counter-trend move to the main trend) began in 10-year bond yields.
10-year treasury note yield vs. 10-year German Bund yield over the past decade [PT]
The Most Comprehensive Collection of Charts Relevant to Gold is Here
Our friends from Incrementum (a European asset management company) have just released the annual “In Gold We Trust” chart book, which collects a wealth of statistics and charts relevant to gold, with extensive annotations. Many of these charts cannot be found anywhere else. The chart book is an excellent reference work for anyone interested in the gold market and financial markets in general. A download link for the chart book can be found at the end of this post.
Turn of the tides: monetary expansion becomes monetary contraction
Hammering the Spread
The price of gold fell nine bucks last week. However, the price of silver shot up 33 cents. Our central planners of credit (i.e., the Fed) raised short-term interest rates, and threatened to do it again in December. Meanwhile, the stock market continues to act as if investors do not understand the concepts of marginal debtor, zombie corporation, and net present value.
The Federal Reserve – carefully inching forward to Bustville
Speculators vs. Arbitrageurs
The price of gold rose six bucks, and the price of silver rose 26 cents last week. Before we look at the graphs, we want to address a reader question. This week, someone asked about how we calculate the Monetary Metals fundamental gold price.
The theoretical fundamental gold price (black line) vs. the market price for gold since late 2015. Worth noting: most of the time, the fundamental price is leading the market price; whenever the gap between the two prices was very large in the past, the market price would more often than not catch up with the fundamental price. Recent exceptions to this rule of thumb occurred in mid and late 2016, when market prices first rose and then fell and the fundamental price followed their lead, and again this year, when a big surge in the fundamental price failed to lead to a rally in market prices (however, on this occasion the fundamental price corrected quite sharply before an accelerated decline in market prices took hold). Since early July the gap between these two prices has gradually widened again and has become quite sizable. It remains to be seen whether the fundamental price will work as a leading indicator this time. As noted above, in the long term it tends to lead in most cases. [PT]
A Rebound Gets Underway – Will It Have Legs?
Ever since the gold indexes have broken below the shelf of support that has held them aloft since late 2016 (around 165-170 points in the HUI Index), the sector was not much to write home about, to put it mildly. Precious metals stocks will continue to battle the headwinds of institutional tax loss selling until the end of October, to be followed by the not-quite-as-strong headwinds of individual tax loss selling in the final weeks of the calendar year – a fairly regularly recurring script in recent years. Nevertheless, recent developments make it worthwhile to take another look at the situation. Here is a daily chart of the HUI:
The HUI daily, plus two proxies for gold investors shortly after looking at their end-of-August statements. As the annotation indicates, one reason to take a closer look is the recent strong divergence between prices and momentum oscillators such as RSI and MACD. But that is not the only thing that is of interest.
Suspect Predictions, Ill Wishes and Worthwhile Targets of Scorn
This price of gold fell three bucks, and the price of silver fell ten cents last week. Perhaps because of the ongoing $150 price drop so far since April, we saw some doozy email subjects and article headlines this week.
Panic on the inflation Titanic. [PT]
Fundamental Developments
The price of gold dropped five bucks, and that of silver 40 cents last week. But let’s take a look at the supply and demand fundamentals of both metals. Also, we continue to follow the development in the gold-silver ratio.
One can buy a lot of silver for one’s gold these days. Silver has become extraordinarily cheap, but keep in mind that it was even cheaper vs. gold in the early 1990s (see the section on silver further below for the details). Nevertheless, it seems clear that the risk-reward probabilities are increasingly favoring silver.
Fundamental Developments
Last week the price of gold fell three bucks, and that of silver fell a quarter of a buck. But let us take a look at the supply and demand fundamentals of both metals. Also, we have an interesting development in the gold-silver ratio, a topic we have not addressed in a while.
First, here is the chart of the prices of gold and silver.
Gold and silver priced in USD
Fundamental Developments
While the price of gold was up $19 last week, the price of silver was unchanged. Of course, we are not going to bias our discussions of the fundamentals, based on bearish or bullish theory.
This week it turned out that the lighthouse is actually more solid than many people seem to think of late… [PT]
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Austrian Theory and Investment
Realtime Charts
Gold in USD:
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
Gold in EUR:
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_euoz_2.gif)
Silver in USD:
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/silver/t24_ag_en_usoz_2.gif)
Platinum in USD:
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/platinum/t24_pt_en_usoz_2.gif)
USD - Index:
![[Most Recent USD from www.kitco.com]](http://www.weblinks247.com/indexes/idx24_usd_en_2.gif)
