Monetary Metals Supply and Demand Report: 15 Dec, 2013

The gold and silver prices recovered about half their drop the previous week, ten bucks in gold and 21 cents in silver. Is this the blastoff of the metals, long heralded in song and hoped-for by goldbug blogs? Read on, and we promise no Obi Wan Kenobe imitations this time… Here is the graph of [...]



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12 replies
  1. bvigorda says:

    In other words, you believe gold has bottomed out? Possibly a good time to start accumulating?
    I highly value your commentaries, but am sorry I have so much trouble understanding.

  2. Keith Weiner says:

    Thanks for your comments and James for your kind words. 🙂

    bvigorda: I can’t give investment advice but I can clarify why I said above. The gold price has dropped since early August, but the supply and demand dynamic has loosened. Hoarders are less aggressive in buying and/or more aggressive in selling, at $1240 now, than they were in August at $1325.

    Could the gold price go lower? It could. Could it go higher? It could. At the moment, supply and demand isn’t changing much, and the price moves are driven by the fickle leveraged speculators.

  3. allenching says:

    Rising gold cobasis, hence rising scarcity of gold, is correlated to rising dollar (measured in gold ounce)? Why is that? Rising scarcity of gold should be correlated to higher gold price (measured in dollar). I used the term ‘correlated’ as I do not know the causation (whether rising scarcity leads to higher gold price measured in $ OR higher gold price measured in $ leads to rising scarcity due to the giffen good nature of gold). In fact, the basis/ cobasis graph could be at best move closely with or at worst lagging behind the price graph. Please correct me if i am wrong:)

    • Keith Weiner says:

      Allen: it just shows that speculators are pushing the price around. When speculators buy, the price rises and at the higher price gold is a bit less scarce. When they sell, the price drops and with it gold availability to the market.

  4. cbarton says:

    Keith, according to your analysis, the overall pattern seems to be that the higher prices go, the more supply starts hitting the market. Conversely, lower prices tend to make the metals more scarce.

    I am not taking issue with your analysis, but simply note that it seems rather counterintuitive that availability should be determined by the price, rather than the other way around. Normally, higher prices are a symptom of shortage in the market, not of abundance, and lower prices are a symptom of abundance, not of shortage.

    Your thoughts?

  5. JTRIndustries says:

    Hi Keith,

    Today is my first day on your website as a member.

    Thanks for your video that was featured on December 19, 2013 ” Measuring Gold and Silver Supply and Demand”. I appreciate the non-sensational approach to evaluating gold and silver. Also, I learned quite a bit in a few short minutes of the video. Your explanation which gives the “big picture” of supply and demand was quite useful. It has changed my perspective.

    I have hoarded gold and silver over the last several years for one simple reason: The purchasing power of the US Dollar seems to have gone down quite a bit in time. This is simply my observation. I don’t know how to calculate the actual figure.

    Here’s a question I hope you can answer: As you evaluate the prices of precious metals, how do you factor in the purchasing power of the dollar? It seems logical that if the precious metal prices “in dollars” fall, it is somewhat of a double negative, since those dollars are actually worth less than they were before. It also seems that there’s a handicap to the upside when precious metals increase in dollar value. If the dollars have less buying power, then the increase is diminished.

    I realize that the US dollar has no actual value but it is still exchanged for commodities such as precious metals.

    Marc

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