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Additional resources for earning interest in gold

8 responses to “Silver Rocket Report 6 Dec, 2015”

  1. If the price of the dollar continues its “neat correlation with the cobasis” then the price of gold in dollar terms may continue to rise simply from a fall in the USD vs other currencies.

    This would have very little to do with supply demand fundamentals but merely reflect a repricing of gold against general dollar weakness. For example, say the FED chickens out and does not raise rates as anticipated next week. I would presume this would be bearish USD and positive GLD even with no change in fundamental price.

    Therefore, if the pricing of gold in USD terms as much about the value of the dollar vs other currencies as it is about gold fundamentals then the predictive use of your model is only partially relevant.

  2. Keith the fundamental price of gold has been over the market for many months by a fair margin who would be covering the cost of this in the futures market is it the midnight dumper in the early hours sovereign backed whoever or just speculators funding and losing on there bets. Or is it some entity taking both sides long and short to wean the market lower. And do you see a time where the fundamental price is well under the market.

  3. Keith: This was one of your best posts yet on these topics! From the opening explanations of the speculators’ cornered (vs cornering) market stature to the silver term structure curve–this was good stuff. I suppose your traveling this quarter has been a good stimulator to organizing these ideas.

    Thanks,
    Greg

  4. Yes Keith, I do understand that. I was just making the point that the price of gold can rise even with no change in the supply / demand fundamentals simply via a decline in the USD.
    My take is that the Central Bank heads will be working out a way to talk “king dollar” down because they must realise if they don’t then major sovereign and corporate defaults in the commodity space are going to happen very soon. The corporate credit market is flashing red on this already especially in the energy sector. They cant allow the dollar to keep rising or the system will crash. This “currency war” via FED speak will be inversely beneficial for the price of gold even if the cobasis does not change.

  5. Hi Keith
    Technical analysis has kept me from buying any silver since I sold nearly all of my holdings at the very peak a few years ago..the day before Bin Laden was ?murdered.

    Good luck most likely.
    However when it comes to looking at a MONTHLY chart of silver it is clear that there has been zero signal to buy the stuff at all.

    In fact I have lost interest in the stuff completely.
    Gold is a no risk proposition.
    That is not the case with silver.

  6. Keith,

    http://www.kitco.com/news/2015-12-08/Bank-Of-Canada-Still-Has-Room-To-Maneuver-As-BOC-s-Poloz-Introduces-Idea-Of-Negative-Interest-Rates.html

    …”Poloz’s comments about possible negative interest rates also come less than a week after the European Central Bank cut its deposit rate by 10 basis points, bringing it down to negative 0.30% from 0.20%.

    Poloz added that the Bank of Canada is also monitoring Switzerland’s monetary policy, which includes a negative rate of 0.75%.”

    wow. so what’s going on over there?

    and this sounds good:

    “Another tool the bank highlighted is large-scale asset-backed purchases, something that the Bank of Canada talked about in 2009 but never had to use. Finally, the last unconventional tool for the central bank is funding for credit.

    “The idea is to make sure that economically important sectors continue to have access to funding even when the supply of credit is impaired. In this case, the central bank would provide collateralized funding at a subsidized rate as long as banks met specified lending objectives,” he said.”

    i think he means war.

  7. Hey Keith, it`s clear that the cobasis is your measure of scarcity of gold to the market. This spread price should also be the same (percentage wise) across all world currencies as there is a global price of gold. Your report attempts to establish a fundamental price based on how the cobasis changes in relation to changes in the price of the dollar. In your August 16, 2015 report this fundamental-market price differential data was plugged in to a discount-premium chart for both metals.

    If however, we change the green line of the dollar on your chart and replace it with another currency in milligrams of gold, we could quite easily obtain a very different picture of gold being under or over valued.

    Let`s say the cobais remains flat for a month at 0.3% annualized, and the dollar also flat at 28.8mg. There would be no change in scarcity, market price or “fundamental price”. If however, the Norwegian krone (NOK) loses 15% against both gold and the US dollar, you will have a steeply rising price of gold in NOK (or falling green line) but the cobasis would not fall in response to indicate less scarcity.

    If you plug this scenario into the algorithm, what does it say? The fundamental price of gold in NOK is now a long way above the market price? Would the chart show the market price in NOK is ABOUT TO EXPLODE!?

    Do you believe your fundamental price alogrithm is valid for measuring whether gold is under/over valued in other currencies?

    If not, how can this method be valid using the US dollar, but not valid with another currency?

    You once claimed:
    “we are looking at data that captures the whole market, not just the move from one corner of the market to another.”

    But it would appear that this fundamental price analysis is only looking at gold market data through the prism of the US dollar. Those trading dollars for gold, and those trading gold for dollars.

    Regardless, I appreciate your work. Interested in what you think of the effects and meaning of plotting another currency in place of the dollar on your basis chart.

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