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Silver Gets Frisky – Precious Metals Supply and Demand

Summary:
Speculators Finally Wade Into Silver Well, wasn’t this an interesting week! The price of gold was up a pedestrian , mere noise in the long-term signal. But in silver, we see plus one dollar. It was practically inevitable with the gold-silver ratio at an all-time high, after a big run up in the gold price with no corresponding run in silver. 1000 oz. good delivery silver bars – one COMEX futures contract refers to five of these shiny door stops. Recommendation: do not let them fall on your toes. [PT] When the silver speculators get their game on, they can push the price up far more in percentage terms than in gold (which is a much larger, deeper, more liquid market). Fundamental Developments This will be a short Report, due to

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Speculators Finally Wade Into Silver

Well, wasn’t this an interesting week! The price of gold was up a pedestrian $10, mere noise in the long-term signal. But in silver, we see plus one dollar. It was practically inevitable with the gold-silver ratio at an all-time high, after a big run up in the gold price with no corresponding run in silver.

1000 oz. good delivery silver bars – one COMEX futures contract refers to five of these shiny door stops. Recommendation: do not let them fall on your toes. [PT]

When the silver speculators get their game on, they can push the price up far more in percentage terms than in gold (which is a much larger, deeper, more liquid market).

Fundamental Developments

This will be a short Report, due to Keith’s challenging travel schedule. Now let’s look at the only true picture of supply and demand for gold and silver. But, first, here is the chart of the prices of gold and silver.

Silver Gets Frisky – 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). The ratio dropped substantially last week.

Silver Gets Frisky – Precious Metals Supply and DemandGold-silver ratio, bid and offer

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

Silver Gets Frisky – Precious Metals Supply and DemandGold basis, co-basis, and the USD priced in milligrams of gold

We see little change in the scarcity of gold (i.e., the co-basis), and the price did not change that much either.

The Monetary Metals Gold Fundamental Price fell $4 to $1,403. We note that the fundamental price is now below the market price for the first time since the end of 2017 (which was a brief spike down in the fundamental price, a flash in the pan).

Now let’s look at silver.

Silver Gets Frisky – Precious Metals Supply and DemandSilver basis, co-basis and the USD priced in grams of silver

With silver, we can see the scarcity continuing to follow the dollar price. That is, silver becomes scarcer when it sells, and more abundant when it is bid up.

The Monetary Metals Silver Fundamental Price moved up just as much as the market price, one dollar: from $15.52 to $16.50.

The Monetary Metals calculated fundamental gold-silver ratio fell from 90.6 to 85.0. If this, too, is not just a flash in the pan, watch out!

© 2019 Monetary Metals

Charts by: 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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Silver Gets Frisky – 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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