Monetary Metals Supply and Demand Report: 10 Nov, 2013

This week, the prices of gold and silver were down 27 bucks and 34 cents, respectively, gold slightly more as a percentage drop than silver. Technical analysts will note that both metals pierced various moving averages to the downside recently. As always, we want to know: what are the fundamentals? The speculators can run for [...]



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5 replies
  1. Rueffallais says:

    Keith,

    Do you still continue your analysis on when the next contract is backwardated , and the number of days per each contract between the 1st day it entered into backwardation to the end of the contract . Could you share it if so THanks again

    • Keith Weiner says:

      Rueffallais: I would if contracts were plunging into backwardation earlier and earlier. The cobasis peaked around early August (and hence backwardation). Since then, the cobasis has come down significantly. We see it rising in the December contract only. It is not especially high, nor notably early, as far as temporary backwardations go.

  2. Rueffallais says:

    Keith,

    What is your analysis on the matter , in August there was a tension on physical that is receding ?
    Your analysis is quite correlated to the GOFO rates in AUgust maximum negativity then receding then negativity, just right now GOFO rates are positive but cobasis positive (probably the rolling of the contract).
    It seems anyway that the tension is not there at the moment

    What do you think

  3. petter_w says:

    Hi Keith,

    just a thought on the falling prices of gold and silver: Do you think it is related to the falling velocity of money? The fascinating thing about the monetary system is that credit expands but velocity falls while at the same time bankruptcies and capital destruction increase. Do you agree with this analysis?

  4. WallyB says:

    Since the carry trade and the decarry trade are simultaneous trades (buying and selling at the same time in order to arbitrage) does not each trade have its corresponding effect on the bid price and the ask price? For example, in backwardation, the more actors who decarry the trade the more the bid in the spot would be depressed and the ask in the futures lifted. The same would be true vice versa. What makes temporary backwardation a unique and noteworthy phenomenon is the fact that dollar profits are being dangled in front of actors and for one reason or another (unwilling to relinquish gold hoards) they are not being seized. Is that fair to assume and true to your theory?

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