• 1 hour $5 Million Gold Toilet Vanishes
  • 1 hour Gold On The Rise After Fed Rate Cut
  • 4 hours Oil Trader Loses $320 Million On Derivative Bets
  • 1 day S&P 500 Officially In An Earnings Recession
  • 1 day Miners Are Weathering The Trade War Storm
  • 1 day UK Credit Card Interest Rates Are Skyrocketing
  • 2 days From Frenzy To Flop, The Death Of This Year’s Most Hyped IPO
  • 2 days Are Smart TVs Spying On Us?
  • 2 days Is Fossil Fuel Divestment A Waste Of Time?
  • 3 days A Russian Billionaire’s Space Quest To Save Humanity
  • 3 days Markets Take Breather As Consolidation Continues
  • 3 days Economic Woes Weigh On Copper Prices
  • 3 days World's Largest IPO At Risk Following Drone Strikes
  • 4 days Gold Is Beating Buffett’s Berkshire Hathaway
  • 4 days What’s Behind The Silver Sell-Off?
  • 4 days The Retail Apocalypse Is Accelerating
  • 4 days The Top Tech Stocks Of The Year
  • 5 days America’s Workforce Elderly Workforce To Double By 2028
  • 5 days Toyota Tests Solar-Powered Prius
  • 6 days Why The Gold Rally Flatlined
The Problem With Modern Monetary Theory

The Problem With Modern Monetary Theory

Modern monetary theory has been…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

Billionaires Are Pushing Art To New Limits

Billionaires Are Pushing Art To New Limits

Welcome to Art Basel: The…

Keith Weiner

Keith Weiner

Keith is founder of the Gold Standard Institute USA in Phoenix, Arizona, and CEO of precious metals fund manager Monetary Metals. He created DiamondWare, a…

Contact Author

  1. Home
  2. Markets
  3. Other

Silver Futures Market Assistance

This week, the prices of the metals moved up on Monday. Then the gold price went sideways for the rest of the week, but the silver price jumped on Friday. Is this the rocket ship to $50? Will Trump's stimulus plan push up the price of silver? Or just push silver speculators to push up the price, at their own expense, again?

This will again be a brief Report this week, as we are busy working on something new and big. And Keith is on the road, in New York and Miami.

Below, we will show the only true picture of the gold and silver supply and demand fundamentals. But first, the price and ratio charts.

The Prices of Gold and Silver

Prices of Gold and Silver

Next, this is a graph of the gold price measured in silver, otherwise known as the gold to silver ratio. It fell this week.

The Ratio of the Gold Price to the Silver Price

Ratio of the Gold Price to the Silver Price

For each metal, we will look at a graph of the basis and cobasis overlaid with the price of the dollar in terms of the respective metal. It will make it easier to provide brief commentary. The dollar will be represented in green, the basis in blue and cobasis in red.

Here is the gold graph.

The Gold Basis and Cobasis and the Dollar Price

Gold Basis and Cobasis and the Dollar Price

Again, we see a higher price of gold (shown here in its true form, a lower price of the dollar) along with greater scarcity (i.e. cobasis, the red line).

This pattern continues. What does it mean?

First, it means the price of gold is being pushed up by buyers of physical metal. Not by buyers of futures (which would push up the basis, and reduce scarcity).

Second, if it continues too much more, it means nothing good for the banking system. There is one force that can make all the gold in the world—which mankind has been accumulating for thousands of years—disappear faster than you can say “bank bail in”. The force is fear of counterparties, fear of banks, fear of currencies, fear of central bank balance sheets... fear of government finances.

We want to emphasize that the gold basis is not signaling disaster at the moment. It is merely moving in that direction, for the first time in a long time. It has a ways to go yet.

Our calculated fundamental price is up another $40 (on top of last week's +$40). It is now about $130 over the market price.

Now let's look at silver.

The Silver Basis and Cobasis and the Dollar Price

Silver Basis and Cobasis and the Dollar Price

Note: we switched to the May contract, as March was becoming unusable in its approach to expiry.

In silver, the story is a bit less compelling. The scarcity of the metal is holding, as the price rises. However, scarcity is not increasing.

Were we to take a guess, we would say there is some good demand for physical, and the price action had futures market assistance.

While the market price moved up 44 cents, our calculated fundamental price moved up ... 46 cents.

 

Back to homepage

Leave a comment

Leave a comment