Monetary Metals Supply and Demand Report: 23 Mar, 2014

The gold price fell about fifty bucks, and the silver price fell about a buck twenty, which is even more as a percentage. It’s interesting to see what happened to the fundamentals of supply and demand along with these moves. Here is the graph of the metals’ prices. The Prices of Gold and Silver We [...]

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7 replies
  1. Rueffallais says:

    Your analysis is more and more convincing even the stubborns and non believer should have a look at what you are writing.
    One more question however , the basis increasing while the cobasis decreasing wouldn’t it saying that the futures are more traded than the physical whether buying or selling .

    sell more futures than buy physical spot : basis increasing
    sell less physical spot than buy futures : cobasis increasing

    if physical comes however to the market , in the international contex being quite tense from where it comes from ?

  2. brpaul says:

    quite easy: this physical gold is coming from ukrainian central bank.
    All or part of it have been shipped to NY just as the new “prime minister” has been back from washington. Read the news.

    At the maximum, only 36t of gold was stored in ukraine (WGC dec 2013 data). At the rate of buy currently on COMEX, this means about 1 month of new supply. A small delay, but a delay.

    Of course, this is not official CB gold sales (WGC data will not change), just leasing/rehypothecating as usual, ie fraud.

  3. hitchee says:

    so much for the bullish outlook for gold, Keith?

    would the unwinding of the Chinese commodity financing deals play a role here, with them selling spot and unwinding their futures shorts? or am I comparing apples to oranges?

    if the above is true, where are they dumping the physical… where is it actually not scarce, in London or in Shanghai? I find it hard to believe that China would allow any gold to leave mainland in any significant numbers, probably a good buying opportunity for the locals and PBOC…

    • Keith Weiner says:

      hitchee: I am sure the technical analysts would look at the chart now and call for further correction in the gold price. They may be right. I will wait at least one more week before coming out with an actual bearish call. Silver is coming down nicely, as I have been predicting, both in dollar terms and in gold terms.

      You make an astute observation. I am working on an article now about the Chinese commodity play reported by Zero Hedge. The unwind of their trade would be sell spot / buy future. That could very well explain the rising basis and falling cobasis in gold. I agree, they will sell it wherever they find the strongest bid. Is that still in Shanghai? I dunno, but it would not surprise me in the slightest if that’s no longer the case, maybe.

      • hitchee says:

        thanks for your reply Keith and for confirming that there might be a connection. I’ll be looking forward to your take on this topic, though should gold loose Chinese spot bid it might get nasty (let’s just hope that the unfolding credit implosion and banking mini-panic in China will push more of their mainstream into physical gold).

        I might have missed it, but have you ever taken a stab at the potential impact of a deflationary collapse on gold price/purchasing power? On the surface it seems that gold might suffer due to “rising purchasing power” of the fiat (can’t believe I wrote that), but then again if all fiat money is backed by debt which in case of deflation would implode thus removing the backing, the fiat becomes worthless…interesting how this dynamic might unfold and what would be the timeline.

        Keep up the good work, much appreciated even if sometimes the message is difficult for the bugs…

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