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’Inside the mind of a gold bug
Warning: this is a very scary place to be. Rampant inflation, conspiracy, socialism, totalitarianism and Ayn Rand can be found at every turn.
Presenting the latest Thunder Road report from former resource analyst Paul Mylchreest:
Correlation… still really high
“When the storm comes, everyone gets wet.”
Remember when we facetiously told you to shelve your adviser? Probably no need to bring him back yet.
The quote above and the chart below are in the latest monthly update of 30-day correlations from ConvergEx,
Anything for collateral…?
The inversion of the gold forward rate curve continued to intensify on Tuesday, with seven out of eight banks that submit quotes to the London Bullion Market Association quoting short-term (one or two month) rates above 12-month rates:
The life of Bryan, or what did monetary policy ever do for us?
To understand why Rick Perry this week picked a fight with Ben Bernanke and why media pariah Ron Paul continues to attract a cult following, it helps to know what happened on the evening of June 20, 1790 at a New York dinner party.
Virtual money, from real central bank mistrust
What happens when you cross computer geeks with populist outrage at central banks?
Bitcoins happen.
New Scientist reports in its latest edition that a new virtual currency is harnessing peer-to-peer networking and high-tech computer-run algorithims to rival central-bank issued money.
What do silver lease rates have to do with fund redemptions?
These are the silver lending rates for 2011 from the London Bullion Market Association, as derived from Libor minus the silver forward rate (Sifo):
This, meanwhile, is the number of shares outstanding (inverted) in the iShares Silver Trust over the same period:
Silver and short covering – a theory
John Kemp at Reuters has already written about how it wasn’t necessarily the froth in the market that caused the parabolic rise in silver over April:
Now, on Friday, Pragmatic Capitalism has a post explaining why the CFTC’s committment of traders report possibly proves it was indeed short covering which was responsible for the rise,
The ‘Asia connection’ to the commodity rout
Our colleagues on the paper-side drew attention last week to the fact that silver trading in Asian hours experienced a clear pickup into the lead up to the commodity rout.
Jack Farchy wrote, citing Edel Tully,
Which came first – the margin call or the commods mayhem?
Silver prices rose by over 60 per cent between the start of the year and April 25.
They’ve now fallen by over 30 per cent — unwinding some 80 per cent of the upward move in the space of two weeks, according to Société Générale figures.
Commodity rout – Mark 2
Right…
So here’s the story.
After dumping last week, silver staged a rather spectacular recovery over the current week. It was led in part by a major inflow of fresh money into silver exchange traded funds…
The financing pyramid and margin debt
Here’s an interesting point from Cullen Roche at Pragmatic Capitalism on Monday.
Margin debt — the amount that speculators borrow to buy stocks (or other assets for that matter) — is rising quickly.
Deutsche chimes in on the commodities rout – it’s the QEnding
Still pondering possible reasons behind the recent commodities rout?
Deutsche Bank says it’s all because of the coming QEnding, or the end of the Federal Reserve’s second bout of quantitative easing,
There’s still room for more oil slides, Goldman says
Just what everyone has been waiting for!
The latest thoughts from Goldman Sachs’ energy gurus on the most recent commodity mega-slide.
And don’t forget: they did predict it.
First… what they think caused it:
What drove the commodities rout?
The quick answer is… nobody knows.
Although JBC Energy has come up with a helpful summary of points that they feel could be behind the Thursday rout.
Here’s the list:
-”disappointing global economic headlines”
Fall-out from the imploding commodities complex
It was inevitable that Thursday’s commodites rout would claim some victims … just as Friday’s further slide in commodities prices will inevitably cause more casualties.
The FT’s Lex column, describing the sell-off as an “epic rout”
Rout
A bloody day across the commodities complex.
Commodity sell-off 2011: is this it?
Some commodity market curios on Thursday May 5, 2011:
Number 1 – Standard deviations.
Courtesy of Reuters’ John Kemp, and regarding the day’s exceedingly epic oil price move (as illustrated below):
The silver crowd
The wonders of Google auto-suggest, silver vox pop edition:
Which is the perfect lead-in to John Kemp’s excellent take on the generalised commodities sell-off of recent days.
As the Reuters columnist wrote on Thursday:
Volatile silver
It turns out that bank holidays can make for interesting silver markets:
As Dow Jones noted, two weeks of gains for the precious metal were erased in only 11 minutes as markets opened for electronic trading in Asia on Monday,
A rouble re-run
It’s also central bank run, of sorts.
Belarus news specialist The Telegraf reports that the nation’s central bank has stopped exchanging gold for Belarusian rubles. That’s after the National Bank of Belarus said the volume of gold and foreign exchange reserves dropped by $68m to $5,512m last month ahead of a widely-expected devaluation.
Some curious silver forward patterns
Another day, another reoccurring pattern in London silver forward fixings.
For example, spot the negative oddity here:
It’s been apparent for at least three days on the trot.
And nope, we don’t know exactly what it means either.
Oh, my precious
Gold and sliver spot prices were on a tear on Thursday.
Spot gold rose 0.71 per cent to hit a record high of $1,446.40 per troy ounce:
But it was spot silver which lead advances, rising 1.87 per cent to $38.06 per ounce,
Where is Charlie Sheen’s CFTC comment?
The FT’s Jeremy Grant flagged up an interesting development in the CFTC position limit story via a video interview with Adam Sussman, head of research at Tabb Group.
According to the latter the actor Charlie Sheen — or at least someone calling himself Charlie Sheen –submitted in March a meticulously worded comment to the CFTC on the subject of silver market position limits.
Conspiracies and a lack of contango in silver
It’s finally happened.
Last week silver on the Comex closed in a nearly-complete state of backwardation — that curious situation where the price for future delivery of the metal is lower than for immediate delivery.
The silver market’s conflicting signals
Talk to the precious metal bugs, and you’ll soon come across the story that there is a growing disconnect between what’s happening in the futures market and the physical market.
This, they say, is particularly the case for silver,
More on silver backwardation
We promised some comment on the silver backwardation story we did earlier, and now we have some.
The story continues with Friday’s LBMA silver forward rates (SIFO) settling in at negative as far out as 12 months for the second day in a row.
Silver backwardation is here
Something is definitely up with silver.
Earlier this week we reported that rumours of physical silver shortages were doing the rounds in Europe.
On Friday, something stranger has taken place.
The silver forward rate — known as SIFO and published daily by the London Bullion Market Association — did something very unusual over the course of Wednesday and Thursday.
Silver shortage rumours abound [updated]
The blogosphere has been all-a-flurry with talk of silver bullion shortages this week — although mainly down to one particular website.
Zerohedge.
On Monday, the anonymous blog stated that the UK was the latest region affected by growing silver shortages after the small-scale British bullion dealer ‘Bullionbypost’ notified clients that the company had no remaining silver bars in stock.