Monetary Metals Supply and Demand Report: 13 Apr, 2014

On Wednesday, the Federal Open Market Committee released the minutes of their last meeting. This news helped make a good week for gold speculators. An ounce of gold now exchanges for 16 bucks more than it did at the close last Friday. That’s about 1.5% more of our favorite green paper, for those who count [...]



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4 replies
  1. knackers says:

    Keith,
    Thanks for the update. Have you any thoughts on GOFO 1 and 2 months have gone negative and the 12 month down to the lowest level I have noticed for quite some time. I think I remember you saying that the rot will have really set in if the far out months go into backwardation.
    Cheers,
    Knackers

    • Keith Weiner says:

      knackers: Thanks for your comment.

      It has been a while since I plotted GOFO against the gold basis (http://monetary-metals.com/what-drives-negative-gofo-and-temporary-gold-backwardation/) but they correlate highly.

      A negative basis or GOFO means that you lose money if you try to carry gold. That said, I think a positive cobasis is a better criteria for backwardation than a negative basis. A positive cobasis means there is a profit to be made in decarrying the metal.

      We’re close, but not there yet. What’s interesting is that the cobases for all the contracts in through 2014 are jumbled up in the -0.15% to -0.2%. I don’t recall them all being so close or so high before. The Dec 2015 cobasis is just -0.3%, so there is hardly any downslope.

      Is it any wonder that open interest in gold is so low?

  2. Rueffallais says:

    Keith,

    GOFO are quite negative now , The 12 months while being positive is probably at his lowest point ever , it seems it doesn’t match your basis/cobasis analyses as the JUne cobasis is not positive . Any clarification please ?

    Thank you

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