Merry Christmas, Report 26 December, 2016

This will be a short Report, due to the Christmas and Boxing Day holidays (which is also why it is coming out on Monday evening Arizona time, a day later than our usual). We wish everyone a Merry Christmas!

The price of gold moved sideways, whereas that of silver had a plunge on Friday.

Below, we will give an update on the supply and demand picture and the fundamental prices. But first, here’s the graph of the metals’ prices.

The Prices of Gold and Silver

Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. It rose further this week.

The Ratio of the Gold Price to the Silver Price

For each metal, we will look at a graph of the basis and cobasis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide brief commentary. The dollar will be represented in green, the basis in blue and cobasis in red.

Here is the gold graph.

The Gold Basis and Cobasis and the Dollar Price

The red cobasis line (i.e. scarcity) rose a bit this week. With a sideways price, that means supply and demand got a bit tighter.

Whereas last week, our calculated fundamental was just under $1,160, this week it’s $1,165.

Now let’s look at silver.

The Silver Basis and Cobasis and the Dollar Price

The dollar gained even more, rising from 1.94 grams last week (and 1.85 the week before) to 1.98g. The silver cobasis did rise a bit.

And our calculated fundamental price moved up to $15.60.


© 2016 Monetary Metals

2 replies
  1. palacefan says:

    Why is the silver basis at a new low ( is the tightest ) for a year where the silver co basis is not showing Silver to be at a new one year high .Why is the co basis a more reliable guide than the basis of the underlying tightness and why do they give a slightly different reading when one is simply the inverse of the other

  2. Pizza Genie says:

    They are not inverses of one another. The basis is future bid minus spot ask, the cobasis is spot bid minus future ask. The basis reflects the cost to carry gold, the cobasis reflects the cost to de-carry gold. Both of them in theory could be negative, at most only one of them could be positive.

    Latest numbers for gold:

    Dec 29 2016 00:06:56 EST
    Gold Feb’17 Cobasis: -0.580%
    Gold Feb’17 Basis: 0.407%
    Dollar @ 27.075mg gold

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