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Bitcoin Jumps as Ordered –  Precious Metals Supply and Demand

Summary:
Digital Asset Rush The only part of our April Fools article yesterday that was not said with tongue firmly planted in cheek was the gold and silver price action (though framed it in the common dollar-centric parlance, being April Fools): “Gold went down , while silver dropped about 1/3 of a dollar. Not quite a heavy metal brick in free fall, but close enough.” Bitcoin, hourly – a sudden yen for BTC breaks out among the punters. [PT] It also turned out that our bitcoin call was prescient (though said in jest): “The technicals say “buy” because, bitcoin is just breaking out above its Bollinger band, the RSI is high but not above 70, MACD is good, and because hope springs eternal. But mostly because hope springs eternal.” Bitcoin was

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Digital Asset Rush

The only part of our April Fools article yesterday that was not said with tongue firmly planted in cheek was the gold and silver price action (though framed it in the common dollar-centric parlance, being April Fools):

“Gold went down $21, while silver dropped about 1/3 of a dollar. Not quite a heavy metal brick in free fall, but close enough.”

Bitcoin, hourly – a sudden yen for BTC breaks out among the punters. [PT]

It also turned out that our bitcoin call was prescient (though said in jest):

“The technicals say “buy” because, bitcoin is just breaking out above its Bollinger band, the RSI is high but not above 70, MACD is good, and because hope springs eternal. But mostly because hope springs eternal.”

Bitcoin was up on late Monday over $1,000 or almost 25%. In about 45 minutes. It is fading as we write this. Indeed, all markets traded the way they are “supposed” to trade.

That is: selling Treasuries to buy everything from junk bonds to commodities. The inflation bet is that the Fed can continue to force/induce them to keep doing this and doing it for years more. Maybe…

We will just say that, unlike a junk bond, gold has no risk of default. And unlike real estate, gold has no risk of widening bid-ask spreads.

Fundamental Developments

Anyway, let us look at the only true picture of the supply and demand fundamentals of gold and silver. But, first, here is the chart of the prices of gold and silver.

Bitcoin Jumps as Ordered –  Precious Metals Supply and DemandGold and silver priced in USD

Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio (see here for an explanation of bid and offer prices for the ratio). It was up last week.

Bitcoin Jumps as Ordered –  Precious Metals Supply and DemandGold-silver ratio

Here is the gold graph showing gold basis, co-basis and the price of the dollar in terms of gold price.

Bitcoin Jumps as Ordered –  Precious Metals Supply and DemandGold basis, co-basis and the USD priced in milligrams of gold

The scarcity (i.e., the co-basis) increased a little bit, as the dollar rose. So the selloff was (mostly) in futures.

The Monetary Metals Gold Fundamental Price subsided $5 to $1,507.

Now let’s look at silver.

Bitcoin Jumps as Ordered –  Precious Metals Supply and DemandSilver basis, co-basis and the USD priced in grams of silver

Look at that spike in the co-basis. The May contract is in backwardation (co-basis > 0). This is what we call temporary backwardation, a term we coined to refer to the pathology that many contracts go into backwardation as they head into expiry.

The silver basis continuous does not show the same exuberance, being up only a little.

And the Monetary Metals Silver Fundamental Price was up 30 cents to $16.29.

© 2019 Monetary Metals

Charts by: cryptowat.ch, Monetary Metals

Chart and image captions by PT

Dr. Keith Weiner is the president of the Gold Standard Institute USA, and CEO of Monetary Metals. Keith is a leading authority in the areas of gold, money, and credit and has made important contributions to the development of trading techniques founded upon the analysis of bid-ask spreads. Keith is a sought after speaker and regularly writes on economics. He is an Objectivist, and has his PhD from the New Austrian School of Economics. He lives with his wife near Phoenix, Arizona.

 

 

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Bitcoin Jumps as Ordered –  Precious Metals Supply and Demand 
 

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Keith Weiner
Keith Weiner is president of the Gold Standard Institute USA in Phoenix, Arizona, and CEO of the precious metals fund manager Monetary Metals. He created DiamondWare, a technology company that he sold to Nortel Networks in 2008. He writes about money, credit and gold. In March 2015 he moved his column from Forbes to SNBCHF.com.

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