dcsimg
Sat May 27, 2017 05:00
Login Password    Forgot password?    Member's Privilege  
 Advanced Search
   FEATURES:
   QuamIR
   Gazette
   Learning
   Newsletter
   Info Center
Keith Weiner | Michael Pento | Kam Hung Yu | Jean Li | Liz Kim | Laurent Ettedgui | OilPrice.com | 黃韋皓   | Chloe Luo
Keith Weiner
Keith Weiner is CEO of Monetary Metals, a precious metals fund company in Scottsdale, Arizona. He 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. He is founder of DiamondWare, a software company sold to Nortel in 2008, and he currently serves as president of the Gold Standard Institute USA. Weiner attended university at Rensselaer Polytechnic Institute, and earned his PhD at the New Austrian School of Economics. He blogs about gold and the dollar, and his articles appear on Zero Hedge, Kitco, and other leading sites. As a leading authority and advocate for rational monetary policy, he has appeared on financial television, The Peter Schiff Show and as a speaker at FreedomFest. He lives with his wife near Phoenix, Arizona.
Click here to toggle text size
Fed Rate Hike Causes Gold Price Drop, Report 18 December, 2016
19 Dec 2016

The price action was not what most of those in the gold community hoped for (or predicted). The price of gold dropped another $24 and that of silver nearly a whole dollar.

The big news of course is that the Fed hiked rates another 25 basis points. So far, stock market speculators don’t seem to care. They should. The present value of all future earnings depends on the interest rate, and every upwards tick is a substantial downward revision of earnings in out years. However, the bull is so strongly entrenched that it may take a while for this to sink in. We also think of the companies who were borrowing to buy their own shares, and for that matter borrowing to pay dividends. At what interest rate do those two trades stop?

Are higher interest rates bad for gold and badder for silver? Are we close to capitulation in the metals? Readers of last week’s Report know that we put the fundamental prices of gold and silver at $1,190 and just over $15. Where are they now after this week’s action?

Below, we will give an update on those fundamental pricess. But first, here’s the graph of the metals’ prices.

 The 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 rose sharply this week.

The 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
 

Last week, we said the dollar was shooting the moon. It was then 26.8 milligrams gold. Now it is 27.4, and we had to expand the graph to see the new height.

When speculators sell off their positions, the red cobasis line (i.e. scarcity of gold) moves with the dollar. That is not, however, what we saw this week. Gold became less scarce at $1,135 on Friday than it was at $1,159 a week ago.

That is the fact, and we call it as we see it. Fundamental price is still over the market, just under $1,160.

What makes this both exciting and challenging is that the price at which metal would clear keeps moving, along with the speculators’ effect on the quoted market price. This week, real metal came to market. This is what caused the price drop.

Now let’s look at silver.

The Silver Basis and Cobasis and the Dollar Price
 

In terms of silver, the dollar rose even more, from 1.85 to 1.94 grams. Unlike in gold, the silver cobasis did rise though not a lot.

And our calculated fundamental price moved up to $15.50.


© 2016 Monetary Metals
 

Disclaimer: The above views are the opinions of the author or his/her company and do not represent the views of Quamnet.
Share :TwitThis   Facebook   LinkedIn       Forward to a friend
Gnome Underpants Gold Model 22 May 2017
A Bumper Under that Silver Elevator, Report 16 May 2017
Silver Elevator Keeps Falling 08 May 2017
Silver Takes the Elevator Down 02 May 2017
To Frexit or Not to Frexit 26 Apr 2017
Gold-Silver Divergence 18 Apr 2017
Mea Culpa, Report 10 Apr 2017
The Balance of Gold and Silver, Report 03 Apr 2017
Putting Pennies in the Fusebox 27 Mar 2017
Why Did Silver Fall, Report 13 Mar 2017
Market Update
Watch List
Quamnet Research
Lenovo (992): Core earnings could have bottomed 26 May 2017
Golden Egg Portfolio: Aviation & aerospace theme 26 May 2017
Quammentary: Oil price retreats as OPEC’s production cut extension well expected 26 May 2017
First comment: Update on PRC telecom industry for 4M17 26 May 2017
Moody’s has downgraded Hong Kong’s credit rating 25 May 2017
Quamnet:

Help  |  Sitemap  |  About Us  |  Contact Us  |  Advertise with Us  |  Job Opportunities  |  Disclaimers  |  Privacy     
Quam Group:
Quam Limited Quam Capital Quam Securities  
Quam Private Wealth Quam IR Quam Asset Management  
A founding member of:
MyQuamnet members get:
[Free Real Time Stock Quote] [Stock Charting Analysis] [Chart] [Hong Kong Stock Chart] [Industry Analysis] [Hong Kong Stocks Information] [Warrants] [CBBC] [Depositary Receipt] [Financial News] [Hong Kong Stock News] [US Stock News] [HKEx News] [New Stock] [Hong Kong Stocks Analysis] [Stocks Watch List] [Portfolio] [Finance Seminar] [Investment Seminar] [FOREX] [FX]
Quamnet Financial Services:
[Hong Kong Equity] [Hong Kong Stock] [Hong Kong Stock Quote] [Stock Quote] [Bid] [Ask] [Last Price] [Open] [Previous Close] [Board Lot] [Market Cap] [P/E] [P/B] [Real Time Price] [Past Prices] [Day High] [Day Low] [52 Week High] [52 Week Low] [Buy Ratio] [Sell Ratio] [Volume][Turnover] [Warrants Quote] [CBBC Quote] [Finance] [Stocks] [Investment] [Block Trades] [Chart Analysis] [Technical Indicator]
[Hong Kong Listed Companies Information] [Hong Kong Stocks Analysis] [HK Stock Quote] [Prospectus] [IPOs News] [Market Move News] [GEM] [Hang Seng Index] [HKCEI][Shenzhen A, B Index] [Shanghai A, B Index] [Hang Seng China AH Premium Index] [Forex] [Commodities Futures] [Gazette] [Commentary][Financial Columnists] [Fund House Report] [Shenzhen Stock Market] [Shanghai Stock Market] [Hong Kong Islamic Index] [Stock Trading Strategy] [Stock Monitoring Tools] [Commerce & Industry] [Financial] [Telecom, Media & Technology] [Conglomerates] [Healthcare] [Transportation] [Energy] [Property] [Utilities] [Global Alliance Partners] [Asset Management] [Securities Brokerage] [Personal Financial Advisory Solutions] [Futures] [US Stock] [ETFs] [HSI Futures] [Options] [Japanese yen] [US dollar] [Euro] [Pound sterling] [Australian dollar] [New Zealand dollar] [Canadian dollar]

Quamnet Subscription Services:
[Quam Research Main][Quam Research][Ask Quam][Columnists][Quam Wise][Market Move Signal] [Warrant Monitor][Investment Tools] [Quam Stock Monitor] [Stock Quote Ticker][Smart Database][Metastock][Quam Radar][Stable Growth Portfolio] [Aggressive Growth Portfolio][Fund Analysis][Wealth Management][Market Analysis] [Investment Base][Red Chip][H Stock][Bond][Mid - Short Term Stocks Investment Recommendations][Traders Corner][Rico][Mid - Short Term Investors][Traders Corner Portfolio][Stock Perspective][Newest Signal][Leader Trend][New Stock Pursuit][Smart Investor] [Smart Investor Adventurer Version] [Alex Wong] [Market Forecast][Pedder St Investor][Thomas Ng][Weekly Market Comment][Mid - Long Term Stocks & Investment Recommendations][IsaacsDaily] [Isaac] [Tony's collection][Value Perspective][Vincent Lam][Value Perspective upgraded version] [The Daily Perspective] [The Macro Perspective] [Market Oracle] [Henry Chan] [Economic Review] [Intelligent Observer] [Red Monkey][KL][Investment Monitoring List][FX Hunter] [Victor Ho] [Trading Comments][Invest Pro] [Paul Pong] [Global Market Analysis][Weekly Market Analysis][Virtual Stock Portfolio][Virtual Fund Portfolio] [Strategy updating] [Investment Strategy] [Sky Cheung]