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The only part of our April Fools article yesterday that was not said with tongue firmly planted in cheek was the gold and silver price action (though framed it in the common dollar-centric parlance, being April Fools):

 

“Gold went down $21, while silver dropped about 1/3 of a dollar. Not quite a heavy metal brick in free fall, but close enough.”

 

Bitcoin, hourly – a sudden yen for BTC breaks out among the punters. [PT]

 

It also turned out that our bitcoin call was prescient (though said in jest):

 

“The technicals say “buy” because, bitcoin is just breaking out above its Bollinger band, the RSI is high but not above 70, MACD is good, and because hope springs eternal. But mostly because hope springs eternal.”

 

Bitcoin was up on late Monday over $1,000 or almost 25%. In about 45 minutes. It is fading as we write this. Indeed, all markets traded the way they are “supposed” to trade.

That is: selling Treasuries to buy everything from junk bonds to commodities. The inflation bet is that the Fed can continue to force/induce them to keep doing this and doing it for years more. Maybe…

We will just say that, unlike a junk bond, gold has no risk of default. And unlike real estate, gold has no risk of widening bid-ask spreads.

 

Fundamental Developments

Anyway, let us look at the only true picture of the supply and demand fundamentals of gold and silver. But, first, here is the chart of the prices of gold and silver.

 

Gold and silver priced in USD

 

Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio (see here for an explanation of bid and offer prices for the ratio). It was up last week.

 

Gold-silver ratio

 

Here is the gold graph showing gold basis, co-basis and the price of the dollar in terms of gold price.

 

Gold basis, co-basis and the USD priced in milligrams of gold

 

The scarcity (i.e., the co-basis) increased a little bit, as the dollar rose. So the selloff was (mostly) in futures.

The Monetary Metals Gold Fundamental Price subsided $5 to $1,507.

Now let’s look at silver.

 

Silver basis, co-basis and the USD priced in grams of silver

 

Look at that spike in the co-basis. The May contract is in backwardation (co-basis > 0). This is what we call temporary backwardation, a term we coined to refer to the pathology that many contracts go into backwardation as they head into expiry.

The silver basis continuous does not show the same exuberance, being up only a little.

And the Monetary Metals Silver Fundamental Price was up 30 cents to $16.29.

© 2019 Monetary Metals

 

Charts by: cryptowat.ch, Monetary Metals

 

Chart and image captions by PT

 

Dr. Keith Weiner is the president of the Gold Standard Institute USA, and CEO of Monetary Metals. Keith is a leading authority in the areas of gold, money, and credit and has made important contributions to the development of trading techniques founded upon the analysis of bid-ask spreads. Keith is a sought after speaker and regularly writes on economics. He is an Objectivist, and has his PhD from the New Austrian School of Economics. He lives with his wife near Phoenix, Arizona.

 

 

 

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Dear Readers!

You may have noticed that our so-called “semiannual” funding drive, which started sometime in the summer if memory serves, has seamlessly segued into the winter. In fact, the year is almost over! We assure you this is not merely evidence of our chutzpa; rather, it is indicative of the fact that ad income still needs to be supplemented in order to support upkeep of the site. Naturally, the traditional benefits that can be spontaneously triggered by donations to this site remain operative regardless of the season - ranging from a boost to general well-being/happiness (inter alia featuring improved sleep & appetite), children including you in their songs, up to the likely allotment of privileges in the afterlife, etc., etc., but the Christmas season is probably an especially propitious time to cross our palms with silver. A special thank you to all readers who have already chipped in, your generosity is greatly appreciated. Regardless of that, we are honored by everybody's readership and hope we have managed to add a little value to your life.

   

Bitcoin address: 12vB2LeWQNjWh59tyfWw23ySqJ9kTfJifA

   
 

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