January, 2014

Bitcoin, Gold, and the Quantity of Money

The popular view today is based on the linear Quantity Theory of Money. It seems to be common sense. If more units of a currency are issued, then the value of each unit should fall. Many people may not think of it in explicit terms, but the idea is that the value of one unit […]

Monetary Metals Supply and Demand Report: 26 Jan, 2014

This week, the price of gold rose $16 but the price of silver fell 39 cents. The catalyst for higher prices was early on Thursday morning (west coast USA time), when the euro and yen rose and to a less extent other assets like crude oil. Credit poured forth somewhere, or a sudden fear of […]

Gold Arbitrage and Backwardation Part I

Professor Tom Fischer has written three papers[1][2][3] about gold backwardation and arbitrage. Across these three papers, he makes a case against the ideas of Professor Antal Fekete. I write this response solely on my own behalf. I do not speak on behalf of Fekete or his New Austrian school of Economics. I have two motivations […]

Monetary Metals Supply and Demand Report: 19 Jan, 2014

ffThis week, the prices of gold and silver were drifting slowly downwards until Friday morning. It’s not clear what the driver was (could be rumors of the German financial regulator starting to look at gold trading?) From around 7:30am in NY to 9am, the prices rose to above their close from the previous week. At […]

The Curious Widening of the Bid-Ask Spread in Silver

Last week, I wrote about a curious development in silver. The bid-ask spread widened in November and December. My article concluded: One should regard this as another type of rot in the core of the system. The point of my dissertation is that narrowing spreads is a sign of increasing economic coordination, and widening spreads […]

Monetary Metals Supply and Demand Report: 12 Jan, 2014

On Friday morning, the Non-Farm Payroll report was released. Instantly, the euro spiked 90 cents, silver spiked 44 cents, and every other asset class reacted. Was this buying of gold and silver by hoarders, who decided to raise their bid by 2%? Or was it speculators using leverage to trade their tired Quantity Theory of […]

A Curious Development in Silver

I write frequently about supply and demand in the monetary metals, gold and silver. I’ve argued that one cannot just look at numbers pertaining to “famous” buyers or sellers like India or the People’s Bank of China, while ignoring thousands or millions of anonymous people who are on the other side of the trade. Who […]

Monetary Metals Supply and Demand Report: 5 Jan, 2014

An extraordinary thing is happening in silver. Not to its price, which went sideways, but its supply and demand. Read on. Most people would say that “gold went up” $24. Of course, gold does not go anywhere. It is the dollar, which is jittering around like a seismograph needle during an earthquake. Measured in gold, […]