Monetary Metals Supply and Demand Report: 7 Dec, 2014

The price of gold went up $25, and silver 84 cents. But that’s not the main news in the gold market. A big reversal has occurred in the fundamentals of both metals. Few people know where to look, or would understand even if they saw it. We have written before about the news cycle promoting [...]

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7 replies
  1. RD says:

    I am amazed by the end of this article.

    Most people say gold is down in dollars not because they want necessarly to hoard dollars in the future (some could) but because it means that with the same quantity of gold, they could be able to buy less farmland, factories, real estate, art works (all things being equal) and so on.

    Using dollars to mesure relative prices at a determined time is just more convenient for a discussion.

      • RD says:

        Why ? Because we know that prices of other assets in fiat term have a much smaller volatility so that it is easier to compare at a determined time.

        it is indeed a problem to mesure for example average house price in zurich in term of silver has it can experience a 100% rise in a few months…

        Another thing is that I would not be surprised that in europe some transactions may be forbidden if not made in fiat, so you have to use this way of exchange even if for a small period of time, that’s a reason why measuring in fiat is more convenient.

  2. miamonaco says:

    If we find this Friday that short futures contracts were liquidated or longs increased in the COT report, then shouldn’t that effectively confirm that someone (central banks?) dumped gold on the marked to stamp out the backwardation?



    • Keith Weiner says:

      Mark: COT can tell us how many contacts there are, but of course every contract has a long and a short. It cannot tell us if the short is naked or arbitraged. And the number of contracts does not necessarily change as a result of price action.

      In any case, if the backwardation in gold was cured by central banks dumping metal, then how do we explain what happened in the silver market?

  3. magnus says:

    Keith, do you have a view if the carry trade on long Nikkei/short gold (that was described over at ZH last week)? Further can the exposure of this trade last week have anything with the reversal in cobasis to to? Could potentially explain the divergence in gold silver as well. Just a thougt.

  4. opusnz says:

    Thanks Keith,

    As usual, a no nonsense, “just the facts” article.

    I have been blown away by how people who were talking about backwardation and lease rates and kept saying “looky here” totally ignored it when the lease rates completely reversed.

    Some of them who claim to be in the know still published gold bullish articles after the negative GOFO rates had completely evaporated. I really wonder how these hypocrites who keep asking for a higher standard and who keep claiming manipulation can look at themselves in the mirror.

    I consider myself a goldbug and believe in the long term prospects of gold but these kind of people are just yanking people around and aren’t doing me any favors.

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