Send this article to a friend: November |
Eating the Seed Corn – Precious Metals Supply and Demand Misguided Incentives The price of gold subsided a few bucks, and the price of silver blipped a few pennies. Not much action last week, groceries neither pumped into nor drained out of this asset class. Those who look to exchange capital goods for groceries need to find a different asset. The best-laid plans… [PT] Not even the S&P 500 Index provided a gain in groceries this week. It certainly wasn’t the much-vaunted store of groceries, Bitcoin, which leaked 12 of them last week. 10-year treasuries picked up some purchasing power, but not a lot. Maybe President Trump can order the Fed to fire up its tried and true grocery printing machine. If not, how can the strong economy stay strong? How can GDP keep growing, if the incentive to convert capital to income, to consume, is withdrawn? Speaking about eating the seed corn, we came across this post on Facebook. It is quite poignant:
Ukraine, 1933: malnourished children scrabbling for potatoes in a frozen field… Stalin’s collectivization policy triggered a terrible famine that killed millions of Ukrainians. This may explain why people in the country were so eager to pull down statues of former Soviet leaders a few years ago. [PT] The Ukrainians suffered the consequences of the Soviets eating their seed corn. We fear that people in the West will once again learn the consequence of eating their seed corn. But right now they cheer a rising GDP, heedless that the Fed’s trick is to fuel it with seed corn.
Finally found: grandpa’s bottle with seeds – 80 years too late. [PT] Fundamental Developments Let’s 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. Gold 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 fell last week. Gold-silver ratio, bid and offer Here is the gold graph showing gold basis, co-basis and the price of the dollar in terms of gold price. It rose this week. Gold basis, co-basis and the USD priced in milligrams of gold There was a slight drop in scarcity (i.e., the co-basis) along with the rise in the price of the dollar (i.e., the drop in the price of gold, measured in dollars). Note that this close to the December contract expiry, we have shifted to the February 2020 contract (and to the March contract for silver). The Monetary Metals Gold Fundamental Price, was down another $8 this week, to $1,457 Now let us look at silver. Silver basis, co-basis and the USD priced in grams of silver In silver, scarcity is falling, and abundance is rising. The Monetary Metals Silver Fundamental Price fell by another 19 cents, to $16.13. © 2019 Monetary Metals Charts by Monetary Metals Chart and image captions by PT
|
Send this article to a friend: