Monetary Metals Supply and Demand Report: May 26, 2013

On the week, the gold price went up about $30. Silver was up $0.11. The gold bugs may be wondering if it’s safe to come out now. One recurrent theme of ours is that it is exceedingly difficult to trade gold against the US dollar. Without leverage, it’s not possible to make a profit in [...]



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8 replies
  1. eugenioca says:

    Hi Mr. Weiner,
    which is in Your opinion the best theory (and practice) book about basis trading?
    are somewhere avalaible historical gold and silver basis and cobasis charts? Is it possible to find the highest cobasis and the lowest basis mark for every contract, going back in time, possibly till 1999?
    tnx

  2. Keith Weiner says:

    eugenioca: If by basis trading you mean when to enter long or short, I am not aware of any books or much published material at all (other than the work of Antal Fekete and of course my work on this site). As to historical data, it is very hard to come by because one needs contemporaneous bids and asks. Historical (cleared) prices are not sufficient. I do not believe there was backwardation in gold prior to Dec 2008. Since then it is the “new normal”.

    petter: Here is what I wrote to someone who asked a similar question in the comments for last week’s basis report:

    “You are spot on to look at when a contract goes into backwardation. I do think it is significant that August entered earlier in the cycle than did June. Here are the dates:
    – Apr first backwardated Feb 15, 30 trading days before April 1
    – Jun first backwardated Apr 4, 42 trading days before June 1
    – Aug first backwardated May 16, 55 trading days before Aug 1

    All else being equal, this is a bullish sign because gold is becoming scarcer and scarcer.”

    I haven’t pulled up all of my data, but yes I do think 55 days is either a record or fairly close.

  3. monetary says:

    In other news, physical gold is now selling at $1950/oz… at least, that’s what the US Mint is pricing 1/10oz coins at. With a cap on production of 20,000 coins.

      • Keith Weiner says:

        Also, that’s 1/10 oz coins, not bullion. The premium reflects demand for that small-sized coin in the context of inelastic manufacturing capacity.

        I would like someone to show me where I can sell big bars at $1900 an ounce, or even 1 ounce bullion coins such as Eagles or Krugerrands.

  4. steevan16 says:

    Dr.Keith,

    You are not a proponent of the quantity money theory from what I read, so printing new dollars need not propel gold proportionately. Is this theory valid between currencies too?

    For example, if new dollars are printed tomorrow, the rupee value against the dollar need not go up when no rupees are printed in that epoch?

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