Digital Asset Rush

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.

 

 

 

Emigrate While You Can... Learn More

 


 

 
 

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

   
 

Your comment:

You must be logged in to post a comment.

Most read in the last 20 days:

  • Repo Quake – A Primer
      Chaos in Overnight Funding Markets Most of our readers are probably aware that there were recently quite large spikes in repo rates. The events were inter alia chronicled at Zerohedge here and here. The issue is fairly complex, as there are many different drivers at play, but we will try to provide a brief explanation.   There have been two spikes in the overnight general collateral rate – one at the end of 2018, which was a first warning shot, and the one of last week,...
  • Curious Events in Risk-Free Collateral-Land - Precious Metals Supply and Demand
      Liquidity Shortage Last week the price of gold rose $28, and silver $0.53. But the prices of the metals was not the big news last week. The price of repo — a repurchase agreement, to sell and repurchase a treasuries — skyrocketed. Banks were thirsty for liquidity, and only cash can quench it.   Last week's “oops” moment in repo land as the overnight general collateral rate briefly soared to 10% (we will soon publish a detailed summary of the sequence of events that...
  • The Inexorable Final Collapse
      Groping in the Dark This week central planners pursued their primary mission with steadfast conviction. They planned. They prodded. They prearranged tomorrow to save us from ourselves. Some also grubbed a little graft for their trouble. Other central planners took to debasing the dollar to price fix the federal funds rate within a narrow band of tolerance.  What in the world do they think they are doing?   Central planning committee in the analysis and forecasting phase......
  • Elizabeth Warren’s Plans to MAGA
      21st Century Hooverville There are places in Los Angeles where, although the sun always shines, they haven’t seen a ray of light in over 100-years.  There’s a half square mile of urban decay centered on the Union Rescue Mission at 545 South San Pedro Street, where depravity, chaos, addiction, insanity and archaic diseases multiply and ricochet about like metastatic cancer.   One of LA's modern-day Hoovervilles in San Pedro Street...  In 2015 it was reported that Union...
  • The System Scrapes By - Precious Metals Supply and Demand
      An Accident in Waiting The price of gold dropped $20, and silver 43 cents. For reference, $20 was once worth just about an ounce of gold. Dollar was a unit of measure, a weight of gold equal to 1/20.67 ounce of fine gold.   A gold certificate from the time when the dollar still represented a fixed weight of gold [PT]   Today, it is an irredeemable currency, defined not as a unit of weight but as a unit of central bank liability which is backed by government debt,...
  • Zugzwang - Precious Metals Supply and Demand
      Respectable and Not so Respectable Assets The price of gold went up 8 bucks, and the price of silver went up a penny last week. These were not among the capital assets that could be liquidated for greater quantities of consumer goods last week. Nor were equities.   A respectable, mother-in-law-proof speculation: the 10-year US treasury note. [PT]   However, the consumer goods stockpile stored in treasury bonds (to extend our half sarcastic, half tongue-in-cheek...
  • Fed Chair Powell’s Inescapable Contradiction
      Under the Influence   “This feels very sustainable.”  – Federal Reserve Chairman Jerome Powell, October 8, 2019   Understandable confusion... [PT]   Conflict and contradiction.  These were two of the main themes reverberating around the world of centralized monetary planning this week. On Tuesday, for instance, a novel and contradictory central banker parlance – “reserve management purposes” – was birthed into existence by Fed Chair Jay...

Support Acting Man

Austrian Theory and Investment

j9TJzzN

The Review Insider

Archive

Dog Blow

THE GOLD CARTEL: Government Intervention on Gold, the Mega Bubble in Paper and What This Means for Your Future

Realtime Charts

 

Gold in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Gold in EUR:

[Most Recent Quotes from www.kitco.com]

 


 

Silver in USD:

[Most Recent Quotes from www.kitco.com]

 


 

Platinum in USD:

[Most Recent Quotes from www.kitco.com]

 


 

USD - Index:

[Most Recent USD from www.kitco.com]

 

Mish Talk

 
Buy Silver Now!
 
Buy Gold Now!